In general, and as per a legal point of view, if casual leave is taken on Saturday and Monday, it is treated as 2 days of C/L, excluding Sunday. This rule is applicable for any other closed holiday like Independence Day, etc. The same way, it is applicable for Sick Leave as well. The reason behind the sick leave concept is to safeguard the interest on humanitarian grounds because due to sickness, medical expenses may incur for the employee. Moreover, he/she may have to take more than the available sick leave entitlement, which may lead to Loss of Pay (LOP) as well. In this case, they will receive the salary for the days in between Sundays and other closed holidays at least. However, it depends on the company and its generosity.
The reason behind the casual leave calculation is also to safeguard the interest of the employee because this leave is taken suddenly and is not a pre-planned one. Moreover, in any company, the casual leave in a year cannot be more than 12 days, and if you start deducting Sundays and other holidays that fall in between, it will be exhausted quickly. This is not the case with Privilege leave because the number of privilege leave days can be much more, and employees are entitled to carry forward the same to future years, accumulating up to 24 days or even more, depending on the company policy. In such a case, even after deducting Sundays and other holidays in between, the employee won't face significant losses.
Please note that Sick Leave and Casual Leave cannot be combined. However, Sick Leave and Privilege Leave can be combined.
Regarding the query about salary deduction for Sunday when an employee takes off on Saturday and Monday in a small company setup where Saturday is a working day and one leave is offered per month, the deduction of Sunday's leave should be considered based on the company's leave policy. While leave policies vary across companies, in your small firm's case, it's advisable to check your specific company policy to determine the applicable leave deductions.
S. Kumarasubramanian