Hi Gnash,
Earned leave has to be granted to the employees @ 1 day for every 20 days of work. Employees should be given an option to avail / carry forward / encash this type of leave.
In addition to Earned Leave, employer should grant 1 day per month as Casual or Sick Leave. It is better carry forward of such leave is discouraged as it should be availed within the same year. Sick leave should only be availed in case of sickness / injury / accident etc.. BUt causl leave can be availed for any reason but few companies restrict the no of casual leaves taken at one go to max 3.
All the above leaves are paid leaves. if an employee exceeds his leave balance at any point of the year, employer has the option to make it Loss of Pay and deduct his wages for the LOP days.
However, all these needed to be made familiar to the employee at the time of joining through a policy or appointment letter.
Hope this clarifies.
Regards
draksh