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How to Set Up a Leave Policy for a Small Company in Pakistan

Zaffre HRM Team · May 30, 2026

A small company's leave policy is usually one of three things: missing, copied from a friend's company, or a 14-page document nobody reads. None of these work. A good leave policy is one page, clearly written, enforceable, and reflects how your company actually wants to operate. Here is how to set one up.

The 8-step framework

1. Start with the statutory minimums

Your leave policy must, at minimum, comply with provincial labour law. See: Pakistan labour law 2026. Typical minimums:

  • Casual leave: 10 days/year
  • Sick leave: 8-16 days/year (province-dependent)
  • Annual/earned leave: 14 days/year (accruable)
  • Maternity: 180/120/90 days (per Maternity & Paternity Leave Act)
  • Paternity: typically 30 days
  • Public holidays: as gazetted

You cannot go below these. You can go above (and many companies do for retention).

2. Define leave types your company will offer

Start with the statutory types above. Then decide on optional types:

  • Marriage leave (5-7 days) — common in Pakistan
  • Bereavement leave (3-5 days) — common
  • Hajj leave (one-time, up to 30 days unpaid or paid)
  • Study leave (case-by-case)
  • Unpaid leave (flexible duration)

3. Set the accrual model per type

Two options: upfront (entire year's leave available January 1) or accrual (1.17 days per month for 14 days/year). Annual leave is usually accrual; casual leave can be either.

4. Define eligibility

Probationers — usually no annual leave during probation, casual + sick yes. Permanent — full eligibility. Contractors — typically no leave (they have project-based arrangements).

5. Define carry-forward + encashment rules

Annual leave — usually carryable up to a cap (often 30 days). Casual + sick — usually lapse at year end. Encashment — annual leave encashable on exit, sometimes annually at the cap. Set the policy clearly.

6. Define approval workflow

Single-day leave — manager approval. Multi-day or sandwich — manager + HR. Long leave (>10 days) or unpaid — manager + HR + senior management. Maternity / paternity — usually pre-arranged with HR.

7. Define notification rules

Casual leave — at least 24 hours' notice (sometimes same-day for emergency). Annual leave — 7 days' notice for short, longer for extended. Sick leave — same-day notification, medical cert for over 2 days. Some companies require 30 days' notice for vacations exceeding 7 days.

8. Document the sandwich-leave + holiday-bridge rules

This is where companies get into disputes. Decide explicitly:

  • Friday + Monday leave with Saturday public holiday — does Saturday count as leave?
  • Eid + adjacent leave — how does it interact with leave balance?
  • Working on a public holiday — does it earn comp-off or premium?

The one-page leave policy template

Your final policy should fit on one page or one screen. Cover: types, quotas, accrual, eligibility, carry-forward, encashment, approval chain, notification rules, sandwich-leave rules. Anything more is usually not read.

The one-page policy in software

Once written, configure it in your HR software. Every rule should be enforced automatically by the system:

  • Leave types match policy
  • Quotas applied automatically
  • Eligibility checks built in
  • Approval chains routed per type
  • Encashment calculated correctly
  • Sandwich-leave handling configured

Policy that lives only on paper and not in the system gets selectively forgotten. Policy enforced by software stays consistent.

Common leave-policy mistakes

  • Copying from another company without adapting
  • Going below statutory minimums (illegal)
  • Not defining sandwich-leave rules — every Eid becomes a dispute
  • No clear encashment policy — year-end conflict
  • Policy on paper only, not enforced in system
  • Different rules for "favourites" — sets a precedent that destroys trust

The Zaffre HRM fit

Zaffre HRM ships with Pakistani-statutory leave types pre-configured, fully configurable rules, sandwich-leave handling, automated balance + carry-forward + encashment calculation. Book a demo to see leave policy enforcement live.