Most IT firms don't actually lack a leave policy. They have one buried in an onboarding PDF nobody's opened since 2022. What they lack is a policy that's enforced consistently, understood by employees, and reflected in the system people use day to day. That gap is where disputes, payroll errors, and "how many days do I have left?" Slack messages come from.
What Do CL, SL, and EL Actually Mean?
Casual Leave (CL) covers short, planned personal absences: a half-day for an appointment, a day for a family event. Most IT companies allocate 6–12 days a year, capped at 2–3 consecutive days without extended justification.
Sick Leave (SL) covers illness and recovery. A typical range is 6–12 days a year, with a medical certificate required beyond 2–3 consecutive days. Self-certification for single-day sick leave reduces friction for distributed teams without opening the door to abuse.
Earned Leave / Privilege Leave (EL/PL) is accrual-based leave tied to tenure, usually 15–21 days a year, earned monthly (1–1.75 days) rather than granted upfront. It's the leave type most often carried forward or encashed, so it needs the clearest rules of the three.
How Much CL, SL, and EL Should an IT Company Offer?
There's no legal standard that fits every region, but a leave policy for an IT company that holds up in practice generally lands in these ranges:
| Leave type | Typical annual allocation | Carry-forward | Encashment |
|---|---|---|---|
| Casual Leave (CL) | 6–12 days | Usually not carried forward | Rarely encashed |
| Sick Leave (SL) | 6–12 days | Sometimes, capped low | Rarely encashed |
| Earned Leave (EL/PL) | 15–21 days | Yes, up to a cap | Yes, per policy |
Adjust based on your local labor law minimums first. This table is a starting point, not a compliance guarantee.
How Should Carry-Forward Rules Work?
Carry-forward is where most policies get vague, and vague carry-forward rules are what create year-end disputes. A workable structure:
- CL: Doesn't carry forward. It resets each year, which keeps casual leave from becoming a second earned-leave pool.
- SL: Either doesn't carry forward, or carries forward with a low cap (e.g., max 5 days), since unused sick leave isn't meant to be a savings account.
- EL/PL: Carries forward up to a defined cap (commonly 30–45 days accumulated), after which excess either lapses or gets auto-encashed at year-end. Without a cap, EL balances grow indefinitely and become a rising liability on your books.
Write the cap into the policy, not just the software
State the cap explicitly in the policy document, not just in the HR system's configuration. Employees should be able to read the rule, not just discover it when their request gets rejected.
What Are Comp-Offs, and How Should They Be Handled?
Comp-off (compensatory off) applies when someone works a scheduled off-day: a weekend deployment, a client emergency, an on-call shift. Common mistakes:
- No expiry. Open-ended comp-offs pile up and resurface as disputes months later. Set a usage window, typically 30–60 days from the date earned.
- No logging at the source. If comp-off eligibility isn't tied to actual attendance records, it becomes a manual, trust-based process that doesn't scale past a few teams.
- Ambiguous conversion. Decide upfront whether comp-off is time-off only or can be encashed, and apply it consistently.
What Should EL Encashment Rules Look Like?
Encashment is usually the most contested part of a leave policy for an IT company, because it involves money directly. A clean structure: encashment applies only to EL/PL (not CL or SL), calculated at basic pay or a defined formula, and triggered either at year-end for balances above the carry-forward cap, or at full and final settlement on exit. Publish the exact formula in the policy. "As per company discretion" is the line that generates the most exit-time disputes.
FAQ
How many casual leaves does an IT company usually give?
Most IT firms offer 6–12 CL days per year, often with a 2–3 day consecutive-use cap.
Can unused sick leave be encashed?
Rarely. Most policies treat SL as non-encashable and cap or eliminate carry-forward to discourage stockpiling.
What happens to EL balance when an employee resigns?
Unused EL/PL is typically encashed as part of full and final settlement, calculated per the policy's defined formula.
Turning the Policy Into Something That's Actually Followed
A written policy only works if the system enforces it the same way every time: same carry-forward cap for every team, same approval chain, same comp-off expiry, regardless of who's approving.
Ligo's Leaves & Time-Off module supports CL, SL, and EL/PL natively, with custom policies configurable per team or location, multi-level approval chains, and built-in comp-off logging with carry-forward and encashment rules, so the policy you write is the policy your system applies. Leave data shares the same employee record as attendance and payroll-relevant timesheets, covered in our guide to fixing timesheet compliance, so there's no separate spreadsheet tracking balances that drifts out of sync.
Core HR (the employee directory and org structure) is the foundation every module builds on, so setting up accurate leave policies doesn't require committing to a full HR suite first. You activate the Leaves module only when you need it, at flat per-user pricing.