Setting Up Leave Categories
Leave categories define the types of time off available to employees in your organization. Before you can create leave policies or process leave requests, you must configure the leave categories that apply to your workforce — such as Casual Leave, Sick Leave, Privilege Leave, and others.
This chapter walks through the process of creating, editing, and managing leave categories in Udyamo HRMS.
What You Will Learn
- What leave categories are and how they relate to leave policies
- How to navigate to the leave category settings
- How to create a new leave category
- The difference between paid and unpaid leave types
- Common leave categories used by Indian organizations
- How to edit and delete existing categories
- How leave type classification affects payroll (Loss of Pay)
Prerequisites
Required: You must have an Administrator or HR Manager role to configure leave categories. The Leave feature toggle must be enabled under Settings > Features.
Understanding Leave Categories
A leave category is a classification of time off. Each category has a name, a type (paid or unpaid), and optional attributes like color coding and description. Leave categories serve as the foundation for the entire leave management system:
- Leave categories define what kinds of leave exist (e.g., Sick Leave, Casual Leave).
- Leave policies define how many days of each category employees earn and how balances accumulate.
- Leave requests are filed by employees against a specific category.
Every leave request in Udyamo HRMS must be associated with exactly one leave category.
Navigating to Leave Categories
To access leave category configuration:
- Click Settings in the left sidebar.
- Select Leaves & Attendance from the settings menu.
- Click Categories.
The Categories page displays all existing leave categories in a list, showing each category's name, type, color, and current status.
Creating a New Leave Category
To create a leave category:
- Navigate to Settings > Leaves & Attendance > Categories.
- Click the Add Category button.
- Fill in the category details in the form that appears.
- Click Save to create the category.
Category Fields
| Field | Description | Required |
|---|---|---|
| Name | The display name of the leave category (e.g., "Casual Leave"). | Yes |
| Short Code | An abbreviated code used in reports and leave balances (e.g., "CL"). | Yes |
| Type | Whether the leave is Paid or Unpaid. | Yes |
| Description | An optional explanation of the category, visible to employees when applying for leave. | No |
| Color | A color used to visually distinguish this category in calendars and reports. | No |
Paid vs. Unpaid Leave
The Type field determines how the leave category interacts with payroll:
- Paid leave — The employee receives their normal salary for days taken under this category. No payroll deduction occurs.
- Unpaid leave — Days taken under this category result in a Loss of Pay (LOP) deduction during payroll processing. The payroll system calculates LOP days based on unpaid leave consumption and reduces the employee's gross pay proportionally.
Tip: If you need a leave type that does not deduct salary but also does not draw from an earned balance (such as a company-granted special day off), create it as a paid leave category with a separate policy that grants exactly the required number of days.
Step-by-Step Example: Creating Casual Leave
- Navigate to Settings > Leaves & Attendance > Categories.
- Click Add Category.
- Enter the following details:
- Name: Casual Leave
- Short Code: CL
- Type: Paid
- Description: Short-term leave for personal matters, appointments, or emergencies.
- Color: Select a blue shade.
- Click Save.
The new Casual Leave category now appears in the category list and is available for use in leave policies.
Common Indian Leave Categories
Indian labor laws and standard HR practices call for several common leave types. The table below lists the categories most organizations configure:
| Category | Short Code | Type | Typical Entitlement | Notes |
|---|---|---|---|---|
| Casual Leave | CL | Paid | 7 -- 12 days/year | For short personal needs; usually cannot be carried forward |
| Sick Leave | SL | Paid | 7 -- 12 days/year | For illness or medical appointments; may require a medical certificate for extended absences |
| Privilege Leave / Earned Leave | PL / EL | Paid | 15 -- 30 days/year | Accrues over time; typically can be carried forward; used for planned vacations |
| Maternity Leave | ML | Paid | 26 weeks | As per the Maternity Benefit Act, 2017; applicable to women employees |
| Paternity Leave | PTL | Paid | 5 -- 15 days | Not mandated by central law but commonly offered |
| Compensatory Off | CO | Paid | As earned | Granted when an employee works on a holiday or rest day |
| Leave Without Pay | LWP | Unpaid | No limit | Used when all paid leave balances are exhausted |
| Bereavement Leave | BL | Paid | 3 -- 5 days | For the death of an immediate family member |
| Marriage Leave | MRL | Paid | 3 -- 5 days | Offered by some organizations for an employee's own marriage |
| Restricted Holiday | RH | Paid | 2 -- 3 days/year | Employee can choose from a list of optional holidays |
Tip: You do not need to create all these categories at once. Start with the mandatory ones for your state and industry (CL, SL, PL/EL), then add others as your policy evolves.
Editing a Leave Category
To modify an existing leave category:
- Navigate to Settings > Leaves & Attendance > Categories.
- Locate the category you want to edit in the list.
- Click on the category name or the Edit icon.
- Update the desired fields (name, short code, type, description, or color).
- Click Save to apply the changes.
What Changes Are Safe to Make
| Change | Impact |
|---|---|
| Renaming the category | Updates the display name everywhere; existing leave records are preserved. |
| Changing the color | Visual change only; no impact on data. |
| Updating the description | Informational change; no impact on existing records. |
| Changing type (Paid to Unpaid) | Affects future payroll calculations. Existing processed payroll records are not retroactively changed. |
Warning: Changing a category from Paid to Unpaid (or vice versa) affects how future leave under that category is treated in payroll. Review all associated leave policies and pending leave requests before making this change.
Deleting a Leave Category
To delete a leave category:
- Navigate to Settings > Leaves & Attendance > Categories.
- Locate the category you want to remove.
- Click the Delete icon next to the category.
- Confirm the deletion when prompted.
Deletion Restrictions
A leave category cannot be deleted if:
- There are existing leave requests (in any status) associated with it.
- There are active leave policies referencing the category.
- There are leave balance records tied to the category.
If you need to retire a category that has historical data, the recommended approach is to:
- Remove the category from all active leave policies so that no new accruals occur.
- Allow existing balances to lapse at year-end.
- Leave the category in place for historical reporting purposes.
Tip: Rather than deleting a category with historical data, consider renaming it to include "(Discontinued)" so that HR staff know it is no longer in active use.
Leave Category Impact on Payroll
The relationship between leave categories and payroll is critical to understand:
Paid Leave Categories
When an employee takes leave under a paid category and has sufficient balance, no payroll deduction occurs. The leave days are treated as regular working days for salary calculation purposes.
Unpaid Leave Categories (LOP)
When an employee takes leave under an unpaid category, those days are recorded as Loss of Pay (LOP) days in the payroll system. During payrun processing:
-
The system counts the total LOP days for the payroll period.
-
LOP days reduce the paid_days count in the PayrollRecord.
-
The employee's gross pay is calculated on a pro-rata basis:
Pro-rata salary = (Monthly salary / Total working days) x Paid days
-
The LOP deduction appears as a separate line item on the payslip.
Paid Leave With Insufficient Balance
If an employee applies for a paid leave category but has insufficient balance, the behavior depends on your organization's policy:
- The leave request may be rejected by the approver.
- If approved despite insufficient balance, the excess days may be treated as LOP during payroll processing.
Warning: Ensure your leave policies and approval workflows align so that employees are not inadvertently marked for LOP deductions. Train managers to check leave balances before approving requests.
Best Practices
- Use descriptive names and short codes. "Casual Leave (CL)" is clearer than "Type A Leave."
- Assign distinct colors. Color coding helps employees and managers quickly identify leave types on calendars and reports.
- Document your descriptions. Include eligibility criteria, documentation requirements, and any restrictions in the description field so employees can self-serve.
- Keep the number of categories manageable. Most organizations need 5 to 8 active categories. Too many categories lead to confusion.
- Align with your state's labor laws. Leave entitlements vary by state in India. Ensure your categories cover all legally mandated leave types for the states where you operate.
What Comes Next
With leave categories defined, the next step is to create leave policies that specify accrual rules, limits, and carry-over behavior for each category. Proceed to Chapter 22: Leave Policies — Accrual, Carry-Over & Limits.