Leave Policy Gujarat 2026 — Gujarat Shops and Establishments Act and Factories Act Complete Reference
Leave entitlements in Gujarat are governed by two primary laws depending on the nature of your establishment. The Gujarat Shops and Establishments (Regulation of Employment and Conditions of Service) Act 2019 applies to offices, shops, IT companies, and all commercial establishments. The Factories Act 1948 applies to all registered manufacturing units and factories. Getting this wrong is one of the most common HR compliance errors in Gujarat.
Which Law Applies to Your Organisation
The Gujarat S&E Act 2019 applies to all shops, offices, IT companies, hotels, restaurants, commercial establishments, and other non-factory establishments employing 10 or more workers. As per the 2026 Amendment effective 16 December 2025, establishments employing less than 20 workers are now exempt from most provisions — though following statutory minimums is still strongly recommended.
The Factories Act 1948 applies to all manufacturing units registered under the Act — establishments with 10 or more workers using power, or 20 or more workers without power.
Gujarat S&E Act 2019 — Section 18 — Statutory Leave Entitlements
The following are mandatory minimums under Section 18 of the Gujarat Shops and Establishments (Regulation of Employment and Conditions of Service) Act 2019. These are not company policy — they are statutory rights of every worker.
Casual Leave — Section 18(2)
Every worker is entitled to 7 days casual leave with wages per calendar year. Credited at the beginning of the year. Lapses completely if un-availed at year end. Cannot be carried forward or encashed under any circumstance.
Sick Leave — Section 18(3)
Every worker is entitled to 7 days leave on medical grounds with wages per calendar year. Credited at the beginning of the year. Lapses if un-availed at year end. Cannot be carried forward or encashed.
Earned Leave — Section 18(4)
Every worker who has worked 240 days or more in a calendar year shall be allowed earned leave in the subsequent year at the rate of 1 day for every 20 days of work performed. For a worker working the full year this equals 18 days. Minimum entitlement for a worker working exactly 240 days is 12 days.
Earned Leave Accumulation — Section 18(5)
Maximum accumulation of earned leave permitted is 63 days. Beyond this threshold leave lapses.
Encashment — Section 18(6)
If employer refuses to sanction earned leave when applied 15 days in advance, the worker shall have the right to encash leave in excess of 63 days. On retirement, resignation, death or permanent disability — the employer shall pay full wages for all pending earned leave due to the worker.
Festival Holidays — Section 18(7)
Every worker is entitled to 8 paid festival holidays per calendar year — 26 January, 15 August, 2 October, and 5 other festival holidays as agreed between employer and workers before the commencement of the year. If a worker is required to work on any of these days, double wages plus compensatory leave on another day must be given.
Weekly Off — Section 18(1)
Every worker shall be allowed a weekly holiday with wages. If a worker is denied weekly off, compensatory leave must be given within 2 months of the weekly holiday.
Leave Summary — Gujarat S&E Act 2019:
Casual Leave — 7 days — Section 18(2) — No carry forward — Lapses at year end
Sick Leave — 7 days — Section 18(3) — No carry forward — Lapses at year end
Earned Leave — 12 to 18 days — Section 18(4) — Carry forward up to 63 days
Festival Holidays — 8 days — Section 18(7) — Not applicable
Weekly Off — 1 day per week — Section 18(1) — Comp off within 2 months if denied
Working Hours — Gujarat S&E Act 2019 as Amended in 2026
Normal working hours — 9 hours per day and 48 hours per week under Section 12. Post 2026 Amendment daily limit extended to 10 hours per day with Inspector approval.
Mandatory rest break — at least half an hour after every 6 hours of continuous work. This was 5 hours before the 2026 Amendment.
Spread-over — maximum 10.5 hours per day. For intermittent or urgent work — maximum 12 hours under Section 14.
Overtime wages — twice the ordinary rate of wages under Section 15.
Overtime limit — 144 hours per quarter as per the Gujarat S&E Amendment Act 2026. This was 125 hours per quarter under the earlier provision.
Weekly off — minimum 24 consecutive hours of rest per week mandatory under Section 16(2).
Women employees — as per the 2026 Amendment, women employees may now work night shifts between 9pm and 6am subject to written consent and fulfilment of prescribed safety conditions including shelter, rest room, night crèche, ladies toilet, protection from harassment, and transportation to doorstep.
Factories Act 1948 — Section 79 — Leave Entitlements
For factory workers in Gujarat, Section 79 of the Factories Act 1948 is the governing provision. There is no statutory CL or SL under the Factories Act — these are provided voluntarily through standing orders or company HR policy.
Earned Leave — every worker who has worked for 240 days or more in a factory during a calendar year shall be entitled to leave with wages in the subsequent calendar year.
Adult worker — 1 day for every 20 days of work performed. For a worker working 300 days this equals 15 days earned leave.
Child worker — 1 day for every 15 days of work performed. For a worker working 300 days this equals 20 days earned leave.
Carry forward — maximum 30 days for adult workers and 40 days for child workers. Any un-availed leave beyond this limit lapses.
Leave wages — calculated at daily average of total full time earnings in the preceding month, excluding overtime and bonus but inclusive of dearness allowance.
Advance notice — leave application must be submitted at least 15 days in advance to the factory manager. No notice required in medical emergencies.
On separation — on discharge, dismissal, resignation, superannuation or death — all un-availed earned leave must be encashed and wages paid before expiry of the second working day.
Comparison — Gujarat S&E Act 2019 vs Factories Act 1948:
Casual Leave — 7 days statutory under S&E Act — Not mandated under Factories Act
Sick Leave — 7 days statutory under S&E Act — Not mandated under Factories Act
Earned Leave — 18 days maximum under S&E Act — 15 days approximately under Factories Act
Carry Forward — 63 days under S&E Act — 30 days adult, 40 days child under Factories Act
Festival Holidays — 8 days under S&E Act — Not specified under Factories Act
OT Rate — 2x ordinary wages under both Acts
OT Limit — 144 hours per quarter under S&E Act — 50 hours per quarter under Factories Act
Key Compliance Points for Employers
→ 7 CL and 7 SL are statutory rights under Gujarat S&E Act 2019 — not company discretion
→ Both CL and SL lapse at year end — no carry forward under any circumstance
→ Earned leave accumulation capped at 63 days under Gujarat S&E Act
→ Festival holiday list must be agreed with workers before start of calendar year
→ Earned leave applied 15 days in advance cannot be denied — denial creates encashment obligation
→ Overtime limit is now 144 hours per quarter as per 2026 Amendment — update your HR policy
→ Women night shift engagement now permitted subject to prescribed safety conditions
→ Leave register must be maintained in prescribed format and produced on Inspector demand
→ Non-compliance penalty up to ₹50,000 under Section 29 of Gujarat S&E Act 2019
→ Contravention resulting in accident — imprisonment up to 6 months or fine up to ₹50,000 or both under Section 30
Download Free Leave Policy Template
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Which Law Applies to Your Organisation
The Gujarat S&E Act 2019 applies to all shops, offices, IT companies, hotels, restaurants, commercial establishments, and other non-factory establishments employing 10 or more workers. As per the 2026 Amendment effective 16 December 2025, establishments employing less than 20 workers are now exempt from most provisions — though following statutory minimums is still strongly recommended.
The Factories Act 1948 applies to all manufacturing units registered under the Act — establishments with 10 or more workers using power, or 20 or more workers without power.
Gujarat S&E Act 2019 — Section 18 — Statutory Leave Entitlements
The following are mandatory minimums under Section 18 of the Gujarat Shops and Establishments (Regulation of Employment and Conditions of Service) Act 2019. These are not company policy — they are statutory rights of every worker.
Casual Leave — Section 18(2)
Every worker is entitled to 7 days casual leave with wages per calendar year. Credited at the beginning of the year. Lapses completely if un-availed at year end. Cannot be carried forward or encashed under any circumstance.
Sick Leave — Section 18(3)
Every worker is entitled to 7 days leave on medical grounds with wages per calendar year. Credited at the beginning of the year. Lapses if un-availed at year end. Cannot be carried forward or encashed.
Earned Leave — Section 18(4)
Every worker who has worked 240 days or more in a calendar year shall be allowed earned leave in the subsequent year at the rate of 1 day for every 20 days of work performed. For a worker working the full year this equals 18 days. Minimum entitlement for a worker working exactly 240 days is 12 days.
Earned Leave Accumulation — Section 18(5)
Maximum accumulation of earned leave permitted is 63 days. Beyond this threshold leave lapses.
Encashment — Section 18(6)
If employer refuses to sanction earned leave when applied 15 days in advance, the worker shall have the right to encash leave in excess of 63 days. On retirement, resignation, death or permanent disability — the employer shall pay full wages for all pending earned leave due to the worker.
Festival Holidays — Section 18(7)
Every worker is entitled to 8 paid festival holidays per calendar year — 26 January, 15 August, 2 October, and 5 other festival holidays as agreed between employer and workers before the commencement of the year. If a worker is required to work on any of these days, double wages plus compensatory leave on another day must be given.
Weekly Off — Section 18(1)
Every worker shall be allowed a weekly holiday with wages. If a worker is denied weekly off, compensatory leave must be given within 2 months of the weekly holiday.
Leave Summary — Gujarat S&E Act 2019:
Casual Leave — 7 days — Section 18(2) — No carry forward — Lapses at year end
Sick Leave — 7 days — Section 18(3) — No carry forward — Lapses at year end
Earned Leave — 12 to 18 days — Section 18(4) — Carry forward up to 63 days
Festival Holidays — 8 days — Section 18(7) — Not applicable
Weekly Off — 1 day per week — Section 18(1) — Comp off within 2 months if denied
Working Hours — Gujarat S&E Act 2019 as Amended in 2026
Normal working hours — 9 hours per day and 48 hours per week under Section 12. Post 2026 Amendment daily limit extended to 10 hours per day with Inspector approval.
Mandatory rest break — at least half an hour after every 6 hours of continuous work. This was 5 hours before the 2026 Amendment.
Spread-over — maximum 10.5 hours per day. For intermittent or urgent work — maximum 12 hours under Section 14.
Overtime wages — twice the ordinary rate of wages under Section 15.
Overtime limit — 144 hours per quarter as per the Gujarat S&E Amendment Act 2026. This was 125 hours per quarter under the earlier provision.
Weekly off — minimum 24 consecutive hours of rest per week mandatory under Section 16(2).
Women employees — as per the 2026 Amendment, women employees may now work night shifts between 9pm and 6am subject to written consent and fulfilment of prescribed safety conditions including shelter, rest room, night crèche, ladies toilet, protection from harassment, and transportation to doorstep.
Factories Act 1948 — Section 79 — Leave Entitlements
For factory workers in Gujarat, Section 79 of the Factories Act 1948 is the governing provision. There is no statutory CL or SL under the Factories Act — these are provided voluntarily through standing orders or company HR policy.
Earned Leave — every worker who has worked for 240 days or more in a factory during a calendar year shall be entitled to leave with wages in the subsequent calendar year.
Adult worker — 1 day for every 20 days of work performed. For a worker working 300 days this equals 15 days earned leave.
Child worker — 1 day for every 15 days of work performed. For a worker working 300 days this equals 20 days earned leave.
Carry forward — maximum 30 days for adult workers and 40 days for child workers. Any un-availed leave beyond this limit lapses.
Leave wages — calculated at daily average of total full time earnings in the preceding month, excluding overtime and bonus but inclusive of dearness allowance.
Advance notice — leave application must be submitted at least 15 days in advance to the factory manager. No notice required in medical emergencies.
On separation — on discharge, dismissal, resignation, superannuation or death — all un-availed earned leave must be encashed and wages paid before expiry of the second working day.
Comparison — Gujarat S&E Act 2019 vs Factories Act 1948:
Casual Leave — 7 days statutory under S&E Act — Not mandated under Factories Act
Sick Leave — 7 days statutory under S&E Act — Not mandated under Factories Act
Earned Leave — 18 days maximum under S&E Act — 15 days approximately under Factories Act
Carry Forward — 63 days under S&E Act — 30 days adult, 40 days child under Factories Act
Festival Holidays — 8 days under S&E Act — Not specified under Factories Act
OT Rate — 2x ordinary wages under both Acts
OT Limit — 144 hours per quarter under S&E Act — 50 hours per quarter under Factories Act
Key Compliance Points for Employers
→ 7 CL and 7 SL are statutory rights under Gujarat S&E Act 2019 — not company discretion
→ Both CL and SL lapse at year end — no carry forward under any circumstance
→ Earned leave accumulation capped at 63 days under Gujarat S&E Act
→ Festival holiday list must be agreed with workers before start of calendar year
→ Earned leave applied 15 days in advance cannot be denied — denial creates encashment obligation
→ Overtime limit is now 144 hours per quarter as per 2026 Amendment — update your HR policy
→ Women night shift engagement now permitted subject to prescribed safety conditions
→ Leave register must be maintained in prescribed format and produced on Inspector demand
→ Non-compliance penalty up to ₹50,000 under Section 29 of Gujarat S&E Act 2019
→ Contravention resulting in accident — imprisonment up to 6 months or fine up to ₹50,000 or both under Section 30
Download Free Leave Policy Template
Download a free Leave Policy template in Word format — ready to customise for your company name, effective date, and applicable provisions.
👉 businessbazar.in/resources/leave-policy-gujarat-shops-act-factories-act-2026
Need help drafting or reviewing your HR policies? Find verified HR consultants on BusinessBazar —
businessbazar.in/services/hr-consultant/ahmedabad
Download Free Leave Policy Template
Download a free Leave Policy template in Word format — ready to customise for your company name, effective date, and applicable provisions.
Need Help Drafting a Legally Compliant Leave Policy?
This article is for general informational and educational purposes only. It does not constitute legal or professional advice. Leave entitlements, working hour provisions, and statutory requirements under the Gujarat Shops and Establishments Act 2019, the Gujarat S&E Amendment Act 2026, and the Factories Act 1948 are subject to change by the Gujarat Government and Central Government. Always verify current provisions with the official gazette notification and consult a qualified HR or legal consultant before implementing any leave policy in your organisation. BusinessBazar accepts no liability for any errors, omissions, or outcomes arising from the use of this information or the template provided.
Need a verified HR Consultant? Find one at businessbazar.in/services/hr-consultant/ahmedabad
Need a verified HR Consultant? Find one at businessbazar.in/services/hr-consultant/ahmedabad