diff --git a/app/controllers/api/v1/accounts/leaves_controller.rb b/app/controllers/api/v1/accounts/leaves_controller.rb
new file mode 100644
index 000000000..51cf4653e
--- /dev/null
+++ b/app/controllers/api/v1/accounts/leaves_controller.rb
@@ -0,0 +1,139 @@
+# frozen_string_literal: true
+
+class Api::V1::Accounts::LeavesController < Api::V1::Accounts::BaseController
+  before_action :fetch_leave, only: [:show, :update, :destroy, :approve, :reject]
+  before_action :check_authorization
+  before_action :authorize_leave, only: [:show, :update, :destroy]
+  before_action :authorize_approval, only: [:approve, :reject]
+
+  def index
+    @leaves = leave_service.list(filter_params)
+    render json: { leaves: serialize_leaves(@leaves) }
+  end
+
+  def show
+    render json: { leave: serialize_leave(@leave) }
+  end
+
+  def create
+    account_user = find_or_authorize_account_user
+    service = Leaves::LeaveService.new(
+      account: Current.account,
+      account_user: account_user,
+      current_user: Current.user
+    )
+    
+    result = service.create(leave_params)
+    
+    if result[:success]
+      render json: { leave: serialize_leave(result[:leave]) }, status: :created
+    else
+      render json: { errors: result[:errors] }, status: :unprocessable_entity
+    end
+  end
+
+  def update
+    result = leave_service.update(@leave, leave_params)
+    
+    if result[:success]
+      render json: { leave: serialize_leave(result[:leave]) }
+    else
+      render json: { errors: result[:errors] }, status: :unprocessable_entity
+    end
+  end
+
+  def destroy
+    if @leave.destroy
+      head :ok
+    else
+      render json: { errors: @leave.errors.full_messages }, status: :unprocessable_entity
+    end
+  end
+
+  def approve
+    service = Leaves::LeaveApprovalService.new(leave: @leave, approver: Current.user)
+    result = service.approve(params[:comments])
+    
+    if result[:success]
+      render json: { leave: serialize_leave(result[:leave]) }
+    else
+      render json: { errors: result[:errors] }, status: :unprocessable_entity
+    end
+  end
+
+  def reject
+    service = Leaves::LeaveApprovalService.new(leave: @leave, approver: Current.user)
+    result = service.reject(params[:reason])
+    
+    if result[:success]
+      render json: { leave: serialize_leave(result[:leave]) }
+    else
+      render json: { errors: result[:errors] }, status: :unprocessable_entity
+    end
+  end
+
+  private
+
+  def fetch_leave
+    @leave = Current.account.leaves.find(params[:id])
+  end
+
+  def authorize_leave
+    authorize @leave
+  end
+
+  def authorize_approval
+    authorize @leave, :approve?
+  end
+
+  def find_or_authorize_account_user
+    if params[:user_id].present? && Current.account_user.administrator?
+      user = Current.account.users.find(params[:user_id])
+      Current.account.account_users.find_by!(user: user)
+    else
+      Current.account.account_users.find_by!(user: Current.user)
+    end
+  end
+
+  def leave_service
+    @leave_service ||= Leaves::LeaveService.new(
+      account: Current.account,
+      account_user: @leave.account_user,
+      current_user: Current.user
+    )
+  end
+
+  def leave_params
+    params.require(:leave).permit(:start_date, :end_date, :leave_type, :reason)
+  end
+
+  def filter_params
+    params.permit(:status, :leave_type, :start_date, :end_date, :user_id)
+  end
+
+  def serialize_leave(leave)
+    {
+      id: leave.id,
+      start_date: leave.start_date,
+      end_date: leave.end_date,
+      leave_type: leave.leave_type,
+      status: leave.status,
+      reason: leave.reason,
+      days_count: leave.days_count,
+      approved_by: leave.approved_by&.name,
+      approved_at: leave.approved_at,
+      user: {
+        id: leave.user.id,
+        name: leave.user.name,
+        email: leave.user.email,
+        avatar_url: leave.user.avatar_url
+      },
+      created_at: leave.created_at,
+      updated_at: leave.updated_at
+    }
+  end
+
+  def serialize_leaves(leaves)
+    leaves.map { |leave| serialize_leave(leave) }
+  end
+end
\ No newline at end of file
diff --git a/app/jobs/reassign_conversations_job.rb b/app/jobs/reassign_conversations_job.rb
new file mode 100644
index 000000000..dee4da9a3
--- /dev/null
+++ b/app/jobs/reassign_conversations_job.rb
@@ -0,0 +1,48 @@
+# frozen_string_literal: true
+
+class ReassignConversationsJob < ApplicationJob
+  queue_as :low
+
+  def perform(account_user)
+    return unless account_user
+
+    user = account_user.user
+    account = account_user.account
+    
+    # Find all open conversations assigned to this user
+    conversations = account.conversations
+                          .open
+                          .where(assignee: user)
+
+    Rails.logger.info "Reassigning #{conversations.count} conversations for user #{user.name} (#{user.id}) on leave"
+
+    conversations.find_each do |conversation|
+      reassign_conversation(conversation)
+    end
+  end
+
+  private
+
+  def reassign_conversation(conversation)
+    inbox = conversation.inbox
+    
+    # Use Assignment V2 if enabled
+    if inbox.assignment_v2_enabled?
+      assignment_service = AssignmentV2::AssignmentService.new(inbox: inbox)
+      
+      # Mark conversation as unassigned first
+      conversation.update!(assignee: nil)
+      
+      # Let the assignment service handle it
+      assignment_service.perform_for_conversation(conversation)
+    else
+      # Fallback to auto assignment
+      AutoAssignmentService.new(
+        conversation: conversation,
+        allowed_agent_ids: inbox.assignable_agents.map(&:id) - [conversation.assignee_id]
+      ).perform
+    end
+  rescue StandardError => e
+    Rails.logger.error "Failed to reassign conversation #{conversation.id}: #{e.message}"
+  end
+end
\ No newline at end of file
diff --git a/app/models/account.rb b/app/models/account.rb
index 96c076ff0..e1271cf7f 100644
--- a/app/models/account.rb
+++ b/app/models/account.rb
@@ -98,6 +98,7 @@ class Account < ApplicationRecord
   has_many :webhooks, dependent: :destroy_async
   has_many :whatsapp_channels, dependent: :destroy_async, class_name: '::Channel::Whatsapp'
   has_many :working_hours, dependent: :destroy_async
+  has_many :leaves, dependent: :destroy_async
   
   # Assignment V2 associations
   has_many :assignment_policies, dependent: :destroy_async
diff --git a/app/models/account_user.rb b/app/models/account_user.rb
index 060e5b38d..e85b7b1e4 100644
--- a/app/models/account_user.rb
+++ b/app/models/account_user.rb
@@ -30,6 +30,8 @@ class AccountUser < ApplicationRecord
   belongs_to :inviter, class_name: 'User', optional: true
   belongs_to :agent_capacity_policy, class_name: 'Enterprise::AgentCapacityPolicy', optional: true
 
+  has_many :leaves, dependent: :destroy
+
   enum role: { agent: 0, administrator: 1 }
   enum availability: { online: 0, offline: 1, busy: 2 }
 
diff --git a/app/models/inbox.rb b/app/models/inbox.rb
index 2b12572bb..b52257467 100644
--- a/app/models/inbox.rb
+++ b/app/models/inbox.rb
@@ -254,6 +254,11 @@ class Inbox < ApplicationRecord
       scope = filter_by_rate_limits(scope)
     end
 
+    # Exclude agents who are on leave
+    if options[:exclude_on_leave] != false
+      scope = filter_agents_on_leave(scope)
+    end
+
     scope
   end
 
@@ -319,6 +324,21 @@ class Inbox < ApplicationRecord
     end
   end
 
+  def filter_agents_on_leave(inbox_members_scope)
+    # Get account users on active leave
+    account_user_ids_on_leave = account.account_users
+                                       .joins(:leaves)
+                                       .where(leaves: { status: 'approved' })
+                                       .where('leaves.start_date <= ? AND leaves.end_date >= ?', Date.current, Date.current)
+                                       .pluck(:id)
+    
+    return inbox_members_scope if account_user_ids_on_leave.empty?
+    
+    # Exclude inbox members whose account_users are on leave
+    user_ids_on_leave = account.account_users.where(id: account_user_ids_on_leave).pluck(:user_id)
+    inbox_members_scope.where.not(user_id: user_ids_on_leave)
+  end
+
   def default_name_for_blank_name
     email? ? display_name_from_email : ''
   end
diff --git a/app/models/leave.rb b/app/models/leave.rb
new file mode 100644
index 000000000..cf1ca136c
--- /dev/null
+++ b/app/models/leave.rb
@@ -0,0 +1,111 @@
+# frozen_string_literal: true
+
+# == Schema Information
+#
+# Table name: leaves
+#
+#  id              :bigint           not null, primary key
+#  approved_at     :datetime
+#  end_date        :date             not null
+#  leave_type      :integer          default("vacation"), not null
+#  reason          :text
+#  start_date      :date             not null
+#  status          :integer          default("pending"), not null
+#  created_at      :datetime         not null
+#  updated_at      :datetime         not null
+#  account_id      :bigint           not null
+#  account_user_id :bigint           not null
+#  approved_by_id  :bigint
+#
+# Indexes
+#
+#  index_leaves_on_account_and_status        (account_id,status)
+#  index_leaves_on_account_id                (account_id)
+#  index_leaves_on_account_user_and_dates    (account_user_id,start_date,end_date)
+#  index_leaves_on_account_user_id           (account_user_id)
+#  index_leaves_on_approved_by_id            (approved_by_id)
+#  index_leaves_on_end_date                  (end_date)
+#  index_leaves_on_start_date                (start_date)
+#  index_leaves_on_status                    (status)
+#
+# Foreign Keys
+#
+#  fk_rails_...  (account_id => accounts.id)
+#  fk_rails_...  (account_user_id => account_users.id)
+#  fk_rails_...  (approved_by_id => users.id)
+#
+
+class Leave < ApplicationRecord
+  belongs_to :account
+  belongs_to :account_user
+  belongs_to :approved_by, class_name: 'User', optional: true
+
+  has_one :user, through: :account_user
+
+  enum leave_type: {
+    vacation: 0,
+    sick: 1,
+    personal: 2,
+    maternity: 3,
+    paternity: 4,
+    bereavement: 5,
+    unpaid: 6
+  }
+
+  enum status: {
+    pending: 0,
+    approved: 1,
+    rejected: 2,
+    cancelled: 3
+  }
+
+  validates :start_date, presence: true
+  validates :end_date, presence: true
+  validates :leave_type, presence: true
+  validates :status, presence: true
+  validate :end_date_after_start_date
+  validate :no_overlapping_leaves, if: :approved?
+
+  scope :active, -> { approved.where('start_date <= ? AND end_date >= ?', Date.current, Date.current) }
+  scope :upcoming, -> { approved.where('start_date > ?', Date.current) }
+  scope :past, -> { where('end_date < ?', Date.current) }
+  scope :by_date_range, ->(start_date, end_date) { where('start_date <= ? AND end_date >= ?', end_date, start_date) }
+
+  before_update :set_approved_at, if: -> { status_changed? && approved? }
+
+  def active?
+    approved? && start_date <= Date.current && end_date >= Date.current
+  end
+
+  def days_count
+    return 0 unless start_date && end_date
+    (end_date - start_date).to_i + 1
+  end
+
+  def overlaps_with?(other_leave)
+    return false if other_leave == self
+    start_date <= other_leave.end_date && end_date >= other_leave.start_date
+  end
+
+  private
+
+  def end_date_after_start_date
+    return unless start_date && end_date
+    errors.add(:end_date, 'must be after or equal to start date') if end_date < start_date
+  end
+
+  def no_overlapping_leaves
+    overlapping_leaves = account_user.leaves
+                                     .approved
+                                     .where.not(id: id)
+                                     .by_date_range(start_date, end_date)
+    
+    if overlapping_leaves.exists?
+      errors.add(:base, 'Leave dates overlap with an existing approved leave')
+    end
+  end
+
+  def set_approved_at
+    self.approved_at = Time.current
+  end
+end
\ No newline at end of file
diff --git a/app/policies/leave_policy.rb b/app/policies/leave_policy.rb
new file mode 100644
index 000000000..7678ec1db
--- /dev/null
+++ b/app/policies/leave_policy.rb
@@ -0,0 +1,58 @@
+# frozen_string_literal: true
+
+class LeavePolicy < ApplicationPolicy
+  def index?
+    true
+  end
+
+  def show?
+    # Users can view their own leaves or admins can view all
+    record.account_user.user_id == user.id || @account_user.administrator?
+  end
+
+  def create?
+    # Users can create their own leave requests
+    record.account_user.user_id == user.id
+  end
+
+  def update?
+    # Users can update their own pending/rejected leaves
+    # Admins can update any leave
+    if @account_user.administrator?
+      true
+    else
+      record.account_user.user_id == user.id && record.pending?
+    end
+  end
+
+  def destroy?
+    # Users can delete their own pending leaves
+    # Admins can delete any non-approved leave
+    if @account_user.administrator?
+      !record.approved?
+    else
+      record.account_user.user_id == user.id && record.pending?
+    end
+  end
+
+  def approve?
+    # Only admins can approve/reject leaves
+    @account_user.administrator? && record.pending?
+  end
+
+  def reject?
+    approve?
+  end
+
+  class Scope < ApplicationPolicy::Scope
+    def resolve
+      if @account_user.administrator?
+        # Admins can see all leaves in the account
+        scope.where(account: account)
+      else
+        # Regular users can only see their own leaves
+        scope.joins(:account_user).where(account: account, account_users: { user_id: user.id })
+      end
+    end
+  end
+end
\ No newline at end of file
diff --git a/app/services/leaves/leave_approval_service.rb b/app/services/leaves/leave_approval_service.rb
new file mode 100644
index 000000000..daf9e3ceb
--- /dev/null
+++ b/app/services/leaves/leave_approval_service.rb
@@ -0,0 +1,105 @@
+# frozen_string_literal: true
+
+class Leaves::LeaveApprovalService
+  pattr_initialize [:leave!, :approver!]
+
+  def approve(comments = nil)
+    return error_response('Leave is not pending') unless leave.pending?
+    return error_response('You are not authorized to approve this leave') unless can_approve?
+
+    ActiveRecord::Base.transaction do
+      leave.update!(
+        status: 'approved',
+        approved_by: approver,
+        approved_at: Time.current
+      )
+
+      create_approval_note(comments) if comments.present?
+      notify_approval
+      reassign_conversations_if_needed
+    end
+
+    { success: true, leave: leave }
+  rescue ActiveRecord::RecordInvalid => e
+    error_response(e.record.errors.full_messages.join(', '))
+  rescue StandardError => e
+    Rails.logger.error "LeaveApprovalService error: #{e.message}"
+    error_response('An error occurred while approving the leave')
+  end
+
+  def reject(reason)
+    return error_response('Leave is not pending') unless leave.pending?
+    return error_response('You are not authorized to reject this leave') unless can_approve?
+    return error_response('Rejection reason is required') if reason.blank?
+
+    ActiveRecord::Base.transaction do
+      leave.update!(
+        status: 'rejected',
+        approved_by: approver,
+        approved_at: Time.current
+      )
+
+      create_rejection_note(reason)
+      notify_rejection
+    end
+
+    { success: true, leave: leave }
+  rescue ActiveRecord::RecordInvalid => e
+    error_response(e.record.errors.full_messages.join(', '))
+  rescue StandardError => e
+    Rails.logger.error "LeaveApprovalService error: #{e.message}"
+    error_response('An error occurred while rejecting the leave')
+  end
+
+  private
+
+  def can_approve?
+    account_user = leave.account.account_users.find_by(user: approver)
+    account_user&.administrator?
+  end
+
+  def error_response(message)
+    { success: false, errors: [message] }
+  end
+
+  def create_approval_note(comments)
+    # This would create a note/activity log if such system exists
+    # For now, we'll just log it
+    Rails.logger.info "Leave #{leave.id} approved by #{approver.name} with comments: #{comments}"
+  end
+
+  def create_rejection_note(reason)
+    # This would create a note/activity log if such system exists
+    # For now, we'll just log it
+    Rails.logger.info "Leave #{leave.id} rejected by #{approver.name} with reason: #{reason}"
+  end
+
+  def notify_approval
+    Rails.configuration.dispatcher.dispatch(
+      LEAVE_APPROVED,
+      Time.zone.now,
+      leave: leave,
+      approved_by: approver,
+      account: leave.account,
+      user: leave.user
+    )
+  end
+
+  def notify_rejection
+    Rails.configuration.dispatcher.dispatch(
+      LEAVE_REJECTED,
+      Time.zone.now,
+      leave: leave,
+      rejected_by: approver,
+      account: leave.account,
+      user: leave.user
+    )
+  end
+
+  def reassign_conversations_if_needed
+    # If the leave starts today or is already active, reassign conversations
+    return unless leave.start_date <= Date.current
+
+    ReassignConversationsJob.perform_later(leave.account_user)
+  end
+end
\ No newline at end of file
diff --git a/app/services/leaves/leave_service.rb b/app/services/leaves/leave_service.rb
new file mode 100644
index 000000000..0a1d89d3e
--- /dev/null
+++ b/app/services/leaves/leave_service.rb
@@ -0,0 +1,110 @@
+# frozen_string_literal: true
+
+class Leaves::LeaveService
+  pattr_initialize [:account!, :account_user!, :current_user!]
+
+  def create(params)
+    leave = account_user.leaves.build(filtered_params(params))
+    leave.account = account
+    
+    if leave.save
+      notify_leave_creation(leave)
+      { success: true, leave: leave }
+    else
+      { success: false, errors: leave.errors.full_messages }
+    end
+  end
+
+  def update(leave, params)
+    if leave.update(filtered_params(params))
+      notify_leave_update(leave)
+      { success: true, leave: leave }
+    else
+      { success: false, errors: leave.errors.full_messages }
+    end
+  end
+
+  def cancel(leave)
+    return { success: false, errors: ['Cannot cancel approved leave'] } if leave.approved?
+    
+    if leave.update(status: 'cancelled')
+      notify_leave_cancellation(leave)
+      { success: true, leave: leave }
+    else
+      { success: false, errors: leave.errors.full_messages }
+    end
+  end
+
+  def list(filters = {})
+    scope = policy_scope
+
+    # Apply filters
+    scope = scope.where(status: filters[:status]) if filters[:status].present?
+    scope = scope.where(leave_type: filters[:leave_type]) if filters[:leave_type].present?
+    
+    if filters[:start_date].present? && filters[:end_date].present?
+      scope = scope.by_date_range(filters[:start_date], filters[:end_date])
+    end
+
+    if filters[:user_id].present? && current_user_admin?
+      scope = scope.joins(:account_user).where(account_users: { user_id: filters[:user_id] })
+    end
+
+    scope.includes(:account_user, :user, :approved_by).order(start_date: :desc)
+  end
+
+  private
+
+  def filtered_params(params)
+    allowed_params = [:start_date, :end_date, :leave_type, :reason]
+    allowed_params << :status if current_user_admin?
+    
+    params.slice(*allowed_params)
+  end
+
+  def policy_scope
+    Pundit.policy_scope(user_context, Leave)
+  end
+
+  def user_context
+    {
+      user: current_user,
+      account: account,
+      account_user: account.account_users.find_by(user: current_user)
+    }
+  end
+
+  def current_user_admin?
+    @current_user_admin ||= account.account_users.find_by(user: current_user)&.administrator?
+  end
+
+  def notify_leave_creation(leave)
+    Rails.configuration.dispatcher.dispatch(
+      LEAVE_CREATED,
+      Time.zone.now,
+      leave: leave,
+      account: account,
+      user: leave.user
+    )
+  end
+
+  def notify_leave_update(leave)
+    Rails.configuration.dispatcher.dispatch(
+      LEAVE_UPDATED,
+      Time.zone.now,
+      leave: leave,
+      account: account,
+      user: leave.user
+    )
+  end
+
+  def notify_leave_cancellation(leave)
+    Rails.configuration.dispatcher.dispatch(
+      LEAVE_CANCELLED,
+      Time.zone.now,
+      leave: leave,
+      account: account,
+      user: leave.user
+    )
+  end
+end
\ No newline at end of file
diff --git a/config/initializers/leave_events.rb b/config/initializers/leave_events.rb
new file mode 100644
index 000000000..a869adef0
--- /dev/null
+++ b/config/initializers/leave_events.rb
@@ -0,0 +1,8 @@
+# frozen_string_literal: true
+
+# Leave Management Events
+LEAVE_CREATED = 'leave.created'
+LEAVE_UPDATED = 'leave.updated'
+LEAVE_APPROVED = 'leave.approved'
+LEAVE_REJECTED = 'leave.rejected'
+LEAVE_CANCELLED = 'leave.cancelled'
\ No newline at end of file
diff --git a/config/routes.rb b/config/routes.rb
index c12aa670b..fd368d4f3 100644
--- a/config/routes.rb
+++ b/config/routes.rb
@@ -217,6 +217,13 @@ Rails.application.routes.draw do
             end
           end
 
+          resources :leaves do
+            member do
+              post :approve
+              post :reject
+            end
+          end
+
           namespace :twitter do
             resource :authorization, only: [:create]
           end
diff --git a/db/migrate/20250730000000_create_leaves.rb b/db/migrate/20250730000000_create_leaves.rb
new file mode 100644
index 000000000..c394e3b6f
--- /dev/null
+++ b/db/migrate/20250730000000_create_leaves.rb
@@ -0,0 +1,25 @@
+# frozen_string_literal: true
+
+class CreateLeaves < ActiveRecord::Migration[7.1]
+  def change
+    create_table :leaves do |t|
+      t.references :account, null: false
+      t.references :account_user, null: false
+      t.date :start_date, null: false
+      t.date :end_date, null: false
+      t.integer :leave_type, null: false, default: 0
+      t.integer :status, null: false, default: 0
+      t.text :reason
+      t.references :approved_by
+      t.datetime :approved_at
+      
+      t.timestamps
+    end
+
+    add_index :leaves, :start_date
+    add_index :leaves, :end_date
+    add_index :leaves, :status
+    add_index :leaves, [:account_user_id, :start_date, :end_date], name: 'index_leaves_on_account_user_and_dates'
+    add_index :leaves, [:account_id, :status], name: 'index_leaves_on_account_and_status'
+  end
+end
\ No newline at end of file
diff --git a/spec/controllers/api/v1/accounts/leaves_controller_spec.rb b/spec/controllers/api/v1/accounts/leaves_controller_spec.rb
new file mode 100644
index 000000000..4cf422dd3
--- /dev/null
+++ b/spec/controllers/api/v1/accounts/leaves_controller_spec.rb
@@ -0,0 +1,213 @@
+# frozen_string_literal: true
+
+require 'rails_helper'
+
+RSpec.describe 'Leaves API', type: :request do
+  let(:account) { create(:account) }
+  let(:admin) { create(:user, account: account, role: :administrator) }
+  let(:agent) { create(:user, account: account) }
+  let(:agent_account_user) { account.account_users.find_by(user: agent) }
+  let(:another_agent) { create(:user, account: account) }
+
+  describe 'GET /api/v1/accounts/:account_id/leaves' do
+    context 'when authenticated as an agent' do
+      it 'returns only their own leaves' do
+        create(:leave, account_user: agent_account_user)
+        create(:leave, account_user: account.account_users.find_by(user: another_agent))
+
+        get "/api/v1/accounts/#{account.id}/leaves",
+            headers: agent.create_new_auth_token,
+            as: :json
+
+        expect(response).to have_http_status(:success)
+        json_response = JSON.parse(response.body)
+        expect(json_response['leaves'].size).to eq(1)
+      end
+    end
+
+    context 'when authenticated as an admin' do
+      it 'returns all leaves in the account' do
+        create(:leave, account_user: agent_account_user)
+        create(:leave, account_user: account.account_users.find_by(user: another_agent))
+
+        get "/api/v1/accounts/#{account.id}/leaves",
+            headers: admin.create_new_auth_token,
+            as: :json
+
+        expect(response).to have_http_status(:success)
+        json_response = JSON.parse(response.body)
+        expect(json_response['leaves'].size).to eq(2)
+      end
+    end
+  end
+
+  describe 'POST /api/v1/accounts/:account_id/leaves' do
+    context 'when authenticated as an agent' do
+      it 'creates a leave request for themselves' do
+        leave_params = {
+          leave: {
+            start_date: Date.current + 1.day,
+            end_date: Date.current + 7.days,
+            leave_type: 'vacation',
+            reason: 'Annual vacation'
+          }
+        }
+
+        post "/api/v1/accounts/#{account.id}/leaves",
+             params: leave_params,
+             headers: agent.create_new_auth_token,
+             as: :json
+
+        expect(response).to have_http_status(:created)
+        json_response = JSON.parse(response.body)
+        expect(json_response['leave']['status']).to eq('pending')
+        expect(json_response['leave']['leave_type']).to eq('vacation')
+      end
+
+      it 'validates date order' do
+        leave_params = {
+          leave: {
+            start_date: Date.current + 7.days,
+            end_date: Date.current + 1.day,
+            leave_type: 'vacation',
+            reason: 'Invalid dates'
+          }
+        }
+
+        post "/api/v1/accounts/#{account.id}/leaves",
+             params: leave_params,
+             headers: agent.create_new_auth_token,
+             as: :json
+
+        expect(response).to have_http_status(:unprocessable_entity)
+        json_response = JSON.parse(response.body)
+        expect(json_response['errors']).to include('End date must be after or equal to start date')
+      end
+    end
+  end
+
+  describe 'PUT /api/v1/accounts/:account_id/leaves/:id' do
+    let(:leave) { create(:leave, account_user: agent_account_user) }
+
+    context 'when authenticated as the leave owner' do
+      it 'updates pending leave' do
+        update_params = {
+          leave: {
+            end_date: Date.current + 10.days,
+            reason: 'Extended vacation'
+          }
+        }
+
+        put "/api/v1/accounts/#{account.id}/leaves/#{leave.id}",
+            params: update_params,
+            headers: agent.create_new_auth_token,
+            as: :json
+
+        expect(response).to have_http_status(:success)
+        json_response = JSON.parse(response.body)
+        expect(json_response['leave']['reason']).to eq('Extended vacation')
+      end
+
+      it 'cannot update approved leave' do
+        leave.update!(status: 'approved')
+
+        update_params = {
+          leave: {
+            end_date: Date.current + 10.days
+          }
+        }
+
+        put "/api/v1/accounts/#{account.id}/leaves/#{leave.id}",
+            params: update_params,
+            headers: agent.create_new_auth_token,
+            as: :json
+
+        expect(response).to have_http_status(:forbidden)
+      end
+    end
+  end
+
+  describe 'POST /api/v1/accounts/:account_id/leaves/:id/approve' do
+    let(:leave) { create(:leave, account_user: agent_account_user) }
+
+    context 'when authenticated as an admin' do
+      it 'approves the leave' do
+        post "/api/v1/accounts/#{account.id}/leaves/#{leave.id}/approve",
+             params: { comments: 'Approved for vacation' },
+             headers: admin.create_new_auth_token,
+             as: :json
+
+        expect(response).to have_http_status(:success)
+        json_response = JSON.parse(response.body)
+        expect(json_response['leave']['status']).to eq('approved')
+        expect(json_response['leave']['approved_by']).to eq(admin.name)
+      end
+    end
+
+    context 'when authenticated as a regular agent' do
+      it 'returns forbidden' do
+        post "/api/v1/accounts/#{account.id}/leaves/#{leave.id}/approve",
+             headers: agent.create_new_auth_token,
+             as: :json
+
+        expect(response).to have_http_status(:forbidden)
+      end
+    end
+  end
+
+  describe 'POST /api/v1/accounts/:account_id/leaves/:id/reject' do
+    let(:leave) { create(:leave, account_user: agent_account_user) }
+
+    context 'when authenticated as an admin' do
+      it 'rejects the leave with reason' do
+        post "/api/v1/accounts/#{account.id}/leaves/#{leave.id}/reject",
+             params: { reason: 'Not enough coverage' },
+             headers: admin.create_new_auth_token,
+             as: :json
+
+        expect(response).to have_http_status(:success)
+        json_response = JSON.parse(response.body)
+        expect(json_response['leave']['status']).to eq('rejected')
+      end
+
+      it 'requires rejection reason' do
+        post "/api/v1/accounts/#{account.id}/leaves/#{leave.id}/reject",
+             params: { reason: '' },
+             headers: admin.create_new_auth_token,
+             as: :json
+
+        expect(response).to have_http_status(:unprocessable_entity)
+        json_response = JSON.parse(response.body)
+        expect(json_response['errors']).to include('Rejection reason is required')
+      end
+    end
+  end
+
+  describe 'DELETE /api/v1/accounts/:account_id/leaves/:id' do
+    context 'when deleting own pending leave' do
+      let(:leave) { create(:leave, account_user: agent_account_user) }
+
+      it 'deletes the leave' do
+        delete "/api/v1/accounts/#{account.id}/leaves/#{leave.id}",
+               headers: agent.create_new_auth_token,
+               as: :json
+
+        expect(response).to have_http_status(:ok)
+        expect(Leave.find_by(id: leave.id)).to be_nil
+      end
+    end
+
+    context 'when trying to delete approved leave' do
+      let(:leave) { create(:leave, :approved, account_user: agent_account_user) }
+
+      it 'returns forbidden' do
+        delete "/api/v1/accounts/#{account.id}/leaves/#{leave.id}",
+               headers: agent.create_new_auth_token,
+               as: :json
+
+        expect(response).to have_http_status(:forbidden)
+        expect(Leave.find_by(id: leave.id)).to be_present
+      end
+    end
+  end
+end
\ No newline at end of file
diff --git a/spec/factories/leaves.rb b/spec/factories/leaves.rb
new file mode 100644
index 000000000..b8d1dc85c
--- /dev/null
+++ b/spec/factories/leaves.rb
@@ -0,0 +1,57 @@
+# frozen_string_literal: true
+
+FactoryBot.define do
+  factory :leave do
+    account
+    account_user
+    start_date { Date.current + 1.day }
+    end_date { Date.current + 7.days }
+    leave_type { 'vacation' }
+    status { 'pending' }
+    reason { 'Annual vacation' }
+
+    trait :approved do
+      status { 'approved' }
+      approved_by { create(:user) }
+      approved_at { Time.current }
+    end
+
+    trait :rejected do
+      status { 'rejected' }
+      approved_by { create(:user) }
+      approved_at { Time.current }
+    end
+
+    trait :cancelled do
+      status { 'cancelled' }
+    end
+
+    trait :active do
+      approved
+      start_date { Date.current }
+      end_date { Date.current + 7.days }
+    end
+
+    trait :past do
+      approved
+      start_date { Date.current - 14.days }
+      end_date { Date.current - 7.days }
+    end
+
+    trait :future do
+      approved
+      start_date { Date.current + 7.days }
+      end_date { Date.current + 14.days }
+    end
+
+    trait :sick_leave do
+      leave_type { 'sick' }
+      reason { 'Medical reasons' }
+    end
+
+    trait :personal_leave do
+      leave_type { 'personal' }
+      reason { 'Personal matters' }
+    end
+  end
+end
\ No newline at end of file
diff --git a/spec/models/inbox_leave_integration_spec.rb b/spec/models/inbox_leave_integration_spec.rb
new file mode 100644
index 000000000..c1927e716
--- /dev/null
+++ b/spec/models/inbox_leave_integration_spec.rb
@@ -0,0 +1,108 @@
+# frozen_string_literal: true
+
+require 'rails_helper'
+
+RSpec.describe 'Inbox Leave Integration', type: :model do
+  let(:account) { create(:account) }
+  let(:inbox) { create(:inbox, account: account) }
+  let(:user1) { create(:user) }
+  let(:user2) { create(:user) }
+  let(:user3) { create(:user) }
+  let(:account_user1) { create(:account_user, account: account, user: user1) }
+  let(:account_user2) { create(:account_user, account: account, user: user2) }
+  let(:account_user3) { create(:account_user, account: account, user: user3) }
+
+  before do
+    # Create inbox members
+    create(:inbox_member, inbox: inbox, user: user1)
+    create(:inbox_member, inbox: inbox, user: user2)
+    create(:inbox_member, inbox: inbox, user: user3)
+
+    # Set all users as online
+    OnlineStatusTracker.set_status(account.id, user1.id, 'online')
+    OnlineStatusTracker.set_status(account.id, user2.id, 'online')
+    OnlineStatusTracker.set_status(account.id, user3.id, 'online')
+  end
+
+  describe '#available_agents' do
+    context 'when no one is on leave' do
+      it 'returns all online agents' do
+        available = inbox.available_agents
+        expect(available.map(&:user_id)).to contain_exactly(user1.id, user2.id, user3.id)
+      end
+    end
+
+    context 'when an agent is on approved leave' do
+      before do
+        create(:leave, :active, account_user: account_user1)
+      end
+
+      it 'excludes the agent on leave' do
+        available = inbox.available_agents
+        expect(available.map(&:user_id)).to contain_exactly(user2.id, user3.id)
+        expect(available.map(&:user_id)).not_to include(user1.id)
+      end
+    end
+
+    context 'when multiple agents are on leave' do
+      before do
+        create(:leave, :active, account_user: account_user1)
+        create(:leave, :active, account_user: account_user2)
+      end
+
+      it 'excludes all agents on leave' do
+        available = inbox.available_agents
+        expect(available.map(&:user_id)).to contain_exactly(user3.id)
+      end
+    end
+
+    context 'when an agent has pending leave' do
+      before do
+        create(:leave, account_user: account_user1, status: 'pending')
+      end
+
+      it 'does not exclude agents with pending leave' do
+        available = inbox.available_agents
+        expect(available.map(&:user_id)).to contain_exactly(user1.id, user2.id, user3.id)
+      end
+    end
+
+    context 'when an agent has future approved leave' do
+      before do
+        create(:leave, :future, account_user: account_user1)
+      end
+
+      it 'does not exclude agents with future leave' do
+        available = inbox.available_agents
+        expect(available.map(&:user_id)).to contain_exactly(user1.id, user2.id, user3.id)
+      end
+    end
+
+    context 'when an agent has past leave' do
+      before do
+        create(:leave, :past, account_user: account_user1)
+      end
+
+      it 'does not exclude agents with past leave' do
+        available = inbox.available_agents
+        expect(available.map(&:user_id)).to contain_exactly(user1.id, user2.id, user3.id)
+      end
+    end
+
+    context 'with exclude_on_leave option' do
+      before do
+        create(:leave, :active, account_user: account_user1)
+      end
+
+      it 'excludes agents on leave by default' do
+        available = inbox.available_agents
+        expect(available.map(&:user_id)).not_to include(user1.id)
+      end
+
+      it 'includes agents on leave when exclude_on_leave is false' do
+        available = inbox.available_agents(exclude_on_leave: false)
+        expect(available.map(&:user_id)).to include(user1.id)
+      end
+    end
+  end
+end
\ No newline at end of file
diff --git a/spec/models/leave_spec.rb b/spec/models/leave_spec.rb
new file mode 100644
index 000000000..2617c782f
--- /dev/null
+++ b/spec/models/leave_spec.rb
@@ -0,0 +1,129 @@
+# frozen_string_literal: true
+
+require 'rails_helper'
+
+RSpec.describe Leave, type: :model do
+  describe 'associations' do
+    it { should belong_to(:account) }
+    it { should belong_to(:account_user) }
+    it { should belong_to(:approved_by).class_name('User').optional }
+    it { should have_one(:user).through(:account_user) }
+  end
+
+  describe 'validations' do
+    it { should validate_presence_of(:start_date) }
+    it { should validate_presence_of(:end_date) }
+    it { should validate_presence_of(:leave_type) }
+    it { should validate_presence_of(:status) }
+
+    describe 'end_date_after_start_date' do
+      let(:leave) { build(:leave, start_date: Date.current, end_date: Date.current - 1.day) }
+
+      it 'validates end date is after start date' do
+        expect(leave).not_to be_valid
+        expect(leave.errors[:end_date]).to include('must be after or equal to start date')
+      end
+    end
+
+    describe 'no_overlapping_leaves' do
+      let(:account_user) { create(:account_user) }
+      let!(:existing_leave) { create(:leave, :approved, account_user: account_user, start_date: Date.current, end_date: Date.current + 7.days) }
+      let(:new_leave) { build(:leave, account_user: account_user, start_date: Date.current + 3.days, end_date: Date.current + 10.days, status: 'approved') }
+
+      it 'prevents overlapping approved leaves' do
+        expect(new_leave).not_to be_valid
+        expect(new_leave.errors[:base]).to include('Leave dates overlap with an existing approved leave')
+      end
+
+      it 'allows overlapping pending leaves' do
+        new_leave.status = 'pending'
+        expect(new_leave).to be_valid
+      end
+    end
+  end
+
+  describe 'enums' do
+    it { should define_enum_for(:leave_type).with_values(vacation: 0, sick: 1, personal: 2, maternity: 3, paternity: 4, bereavement: 5, unpaid: 6) }
+    it { should define_enum_for(:status).with_values(pending: 0, approved: 1, rejected: 2, cancelled: 3) }
+  end
+
+  describe 'scopes' do
+    let!(:active_leave) { create(:leave, :active) }
+    let!(:upcoming_leave) { create(:leave, :future) }
+    let!(:past_leave) { create(:leave, :past) }
+    let!(:pending_leave) { create(:leave) }
+
+    describe '.active' do
+      it 'returns leaves that are currently active' do
+        expect(Leave.active).to include(active_leave)
+        expect(Leave.active).not_to include(upcoming_leave, past_leave, pending_leave)
+      end
+    end
+
+    describe '.upcoming' do
+      it 'returns approved leaves starting in the future' do
+        expect(Leave.upcoming).to include(upcoming_leave)
+        expect(Leave.upcoming).not_to include(active_leave, past_leave, pending_leave)
+      end
+    end
+
+    describe '.past' do
+      it 'returns leaves that have ended' do
+        expect(Leave.past).to include(past_leave)
+        expect(Leave.past).not_to include(active_leave, upcoming_leave, pending_leave)
+      end
+    end
+  end
+
+  describe '#active?' do
+    it 'returns true for approved leaves within current date' do
+      leave = build(:leave, :active)
+      expect(leave.active?).to be true
+    end
+
+    it 'returns false for pending leaves' do
+      leave = build(:leave)
+      expect(leave.active?).to be false
+    end
+
+    it 'returns false for future leaves' do
+      leave = build(:leave, :future)
+      expect(leave.active?).to be false
+    end
+  end
+
+  describe '#days_count' do
+    it 'calculates the number of days' do
+      leave = build(:leave, start_date: Date.current, end_date: Date.current + 6.days)
+      expect(leave.days_count).to eq(7)
+    end
+  end
+
+  describe '#overlaps_with?' do
+    let(:leave1) { build(:leave, start_date: Date.current, end_date: Date.current + 7.days) }
+    let(:leave2) { build(:leave, start_date: Date.current + 3.days, end_date: Date.current + 10.days) }
+    let(:leave3) { build(:leave, start_date: Date.current + 8.days, end_date: Date.current + 15.days) }
+
+    it 'returns true for overlapping leaves' do
+      expect(leave1.overlaps_with?(leave2)).to be true
+      expect(leave2.overlaps_with?(leave1)).to be true
+    end
+
+    it 'returns false for non-overlapping leaves' do
+      expect(leave1.overlaps_with?(leave3)).to be false
+      expect(leave3.overlaps_with?(leave1)).to be false
+    end
+  end
+
+  describe 'callbacks' do
+    describe 'set_approved_at' do
+      let(:leave) { create(:leave) }
+
+      it 'sets approved_at when status changes to approved' do
+        expect(leave.approved_at).to be_nil
+        leave.update!(status: 'approved')
+        expect(leave.approved_at).to be_present
+      end
+    end
+  end
+end
\ No newline at end of file