This article explains the leave, holiday, and working-hour requirements under the Karnataka Shops and Commercial Establishments Act. It covers statutory leave entitlements, optional employer benefits, public holidays in Karnataka for 2026, and key policy rules employers must follow. It also highlights common compliance mistakes and how businesses can validate their leave policy using Wisemonk’s leave and holiday policy calculator.
Karnataka Shops and Commercial Establishments Act[toc=Shops & Establishments Act]
The Karnataka Shops and Commercial Establishments Act governs leave and working conditions for most private offices and commercial establishments in the state. It is the primary legal reference for leave compliance.
Employers must grant statutory leave and maintain prescribed records under this Act. The rules apply based on employee location, including remote or distributed teams working from Karnataka.
About Karnataka
Karnataka is one of India’s largest private-sector employment states, particularly for IT, startups, and global capability centres. Most offices and commercial establishments are governed by the Karnataka Shops and Commercial Establishments Act, which sets clear rules on leave, holidays, and working hours. These state-specific provisions apply to both on-site and remote employees based in Karnataka.
What are the statutory leave entitlements in Karnataka?[toc=Statutory Leave Entitlements]
Statutory leave entitlements in Karnataka define the minimum paid leave employees must receive under the Karnataka Shops and Commercial Establishments Act and the central Maternity Benefit Act. These entitlements form the legal baseline that employers must comply with, regardless of internal policies.
Based on our experience helping companies with Employer of Record (EOR) and payroll compliance in Karnataka, here are the statutory leave entitlements employers are required to provide.
Use the Karnataka Leave Policy Compliance Tool
Before locking your leave policy or payroll rules, it’s important to validate whether your earned leave, sick leave, holidays, and working-hour setup actually align with the Karnataka Shops and Establishments Act.
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Use our Holiday & State-Wise Leave Policy Tool to check statutory leave entitlements, state-notified holidays, and accrual rules based on employee work location, so you avoid policy gaps and payroll mismatches.
Now that we’ve covered the statutory baseline in Karnataka, let’s look at the additional leave benefits employers commonly offer beyond legal requirements.
What optional leave benefits do employers offer in Karnataka?[toc=Optional Leave Benefits]
Optional leave benefits in Karnataka are not legally mandated but are commonly offered by employers to enhance employee well-being, retention, and workplace culture. These benefits sit on top of statutory leave and vary by company policy.
Through our experience supporting global companies with EOR and HR policy design in India, these are the most commonly offered optional leave benefits in Karnataka.
With optional benefits covered, the next step is understanding the policy rules that govern how leave is accrued, approved, and managed in Karnataka.
What key policy rules should employers know about leave in Karnataka?[toc=Key Policy Rules]
Leave policy rules in Karnataka determine how leave is accrued, approved, encashed, and managed across the employee lifecycle. These rules directly affect payroll accuracy, exit settlements, and inspection readiness.
With our hands-on experience managing leave compliance through EOR and payroll operations, here are the key policy rules employers should be aware of.
Key Policy Notes
- Maternity leave is mandatory under the Maternity Benefit Act and cannot be reduced or substituted
- Leave encashment is not statutory; employers may choose to allow encashment of earned leave at exit
- Leave Without Pay (LWP) is granted only after paid leave is exhausted and may require documentation and approvals
Once policy rules are clear, the focus shifts to how employees and employers should practically interpret and apply these leave benefits.
How should employees and employers interpret leave benefits in Karnataka?[toc=Understand Leave Benefits]
Leave benefits in Karnataka include both statutory rights and employer-provided enhancements. Clear interpretation ensures accurate leave planning, avoids disputes, and prevents payroll errors.
Based on our experience helping employers manage HR operations and employee lifecycle compliance in Karnataka, this is how leave benefits should be interpreted in practice.
With leave entitlements clarified, it’s equally important to understand how public holidays apply in Karnataka and how they interact with leave policies.
Which public holidays apply in Karnataka in 2026?[toc=Public Holidays]
Public holidays in Karnataka include mandatory national holidays and state-notified cultural and religious observances. These holidays directly impact attendance planning, payroll processing, and statutory compliance.
Having supported companies with multi-state holiday compliance through EOR services, here are the public holidays applicable in Karnataka.
Be sure to check out our detailed guide on “India Holidays 2026: A Complete Guide to Public Holidays” to understand national, state, and optional holidays employers should account for when building compliant leave policies.
After holidays, the final piece of compliance is understanding how working hours and weekly rest rules apply alongside leave and payroll.
What are the working hour and weekly rest rules in Karnataka?[toc=Working Hours]
Working hour and weekly rest rules in Karnataka regulate daily limits, weekly caps, overtime, and rest intervals under the Karnataka Shops and Commercial Establishments Act. These rules are closely tied to wage calculations and overtime compliance.
Through our experience managing payroll and statutory compliance for Karnataka-based teams, here are the applicable working hour rules.
With working hours covered, this completes the full picture of leave, holidays, and working time compliance in Karnataka.
How does Wisemonk simplify leave, holiday, and working hour compliance in India?[toc=How Wisemonk Helps]
Wisemonk is an Employer of Record (EOR) in India that helps global companies hire, pay, and manage employees without setting up a local entity. By taking full ownership of state-wise labor law interpretation, policy design, and ongoing execution, we currently manage 2,000+ employees across multiple industries and Indian states.
Here’s how we help:
- India’s State-Specific Holiday & Leave Policy Tool: We handle state-wise leave rules and mandatory holidays automatically, so your policies stay compliant without manual tracking.
- State-compliant leave and working hour policies: We design and maintain leave, holiday, and working hour frameworks aligned with the exact laws of each employee’s work location.
- Payroll-linked leave and attendance management: We ensure leave accruals, encashments, overtime, and final settlements are calculated accurately and reflected correctly in payroll.
- Multi-state compliance execution: We manage compliance differences across Indian states, helping you scale teams without risking policy or payroll mismatches.
- End-to-end employer compliance ownership: We handle statutory records, inspections, and ongoing labor law updates, so your team stays protected as regulations evolve.
Want to simplify compliance across Indian states? Book a free consultation and see how Wisemonk keeps your workforce compliant from day one.
Frequently asked questions
How do I use Wisemonk’s leave and holiday policy calculator for Karnataka?
Select Karnataka as the employee’s work location, choose the relevant Shops and Establishments coverage, set your leave year, and enter the date of joining and work pattern. The calculator applies Karnataka’s earned, casual, and sick leave entitlements and aligns holidays with the state-notified list.
What happens to leave for mid-year joiners or exits in Karnataka?
Leave accrues based on actual days worked. Earned leave typically accrues after completing 240 days in a year. Casual and sick leave are granted annually and usually lapse if unused. On exit, eligible unused earned leave must be paid as wages according to Karnataka regulations.
Can companies offer more leave than the Karnataka statutory minimum?
Yes. Karnataka’s Shops and Establishments law sets minimum leave entitlements only. Employers can provide additional earned leave, extra casual or sick leave, or more holidays. Any enhanced leave must be included in the written policy and applied consistently across employees.
How should leave balances appear on payroll records in Karnataka?
Payroll records should clearly show opening balance, leave accrued, leave taken, leave encashed, and closing balance for each leave type. These figures must match statutory leave registers maintained under Karnataka rules to ensure transparency and readiness for inspections.
What are common leave policy compliance mistakes in Karnataka?
Common errors include miscalculating earned leave accrual based on the eligibility threshold, treating casual or sick leave as carry-forwardable, failing to settle unused earned leave on exit, and not maintaining accurate leave registers aligned with payroll data.
Does Karnataka follow central or state-specific leave rules?
For shops and commercial establishments in Karnataka, state-specific leave and holiday provisions apply under the Karnataka Shops and Establishments Act. Central labour laws mainly cover factories or certain industries, so correct classification of the establishment is essential for compliance.
How often should leave policies be updated in Karnataka?
Leave policies should be reviewed at least annually and immediately after any update to Karnataka’s statutory holiday list or labour law amendments. Regular reviews help ensure leave accrual, encashment, and holiday practices remain compliant with local requirements.
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