Electricity is a vital growth indicator for any nation’s economic prosperity. With an installed capacity of 392GW (as on 30Nov 2021), Indian power sector is one of the most complex in the world and undergoing significant changes. Being technical intensive, efficient use of human capital has always been top priority for this sector. Employee engagement has emerged as a significant Human Resource practice to increase employee’s contribution to organizational performance and productivity. Covid-19 has also thrown a mammoth challenge for individuals and organizations. Organizational happiness is a new area which is gaining importance by modern researchers. This research paper does a systematic literature review to examine the impact of employee engagement on organizational happiness. The paper begins with definitions and concepts of employee engagement and different concepts defining happiness. Based on the review, this paper identifies some of the close determinants of organizational happiness as job satisfaction (JS), subjective well-being (SWB), perceived organizational support for strength use (POSSU), organizational commitment (OC) and transformational leadership (TL). The relation of each of these determinants with employee engagement is also explored. Within the scope of this study, employee engagement is taken as an independent variable and organizational happiness as dependent variable. With the help of identified concepts, the authors have tried to develop a theoretical framework developing the relation between employee engagement and organizational happiness with age and location as controlling factors. The paper concludes with the discussions to share valuable knowledge for future research prospects in the emerging field of organizational happiness.