Amendment to the Maternity Benefits Act, 1961 and its Implications

By May 24, 2019 December 20th, 2019 No Comments

benefit laws are needed in any legal framework to protect the rights of women
employees and to ensure that women are able to form an effective part of the
workforce. Maternity benefits to women employees in India are mainly governed
by the Maternity Benefits Act, 1961 (the “Act”).
The Indian law makes it mandatory for most establishments to offer 
maternity benefits and other related
benefits to women employees.
Act was amended by the Maternity Benefit (Amendment) Act, 2017 to increase the
benefits to be provided to women covered under it, giving birth, as it were, to
lively debate. Before going into the effect of the amendments, we may take a
quick overview of the Act itself.
Act applies to every establishment being a factory,
mine or plantation including any such establishment belonging to the Government
and to every establishment where the persons are employed for the exhibition of
equestrian, acrobatic and other performances, and,

it is also applicable to every shop or
establishment within the meaning of any law with respect to shops and
establishments in a State, in which 10 (ten) or more persons are employed, or
were employed, on any day of the preceding 12 (twelve) months.
A ‘shop’ or an ‘establishment’ is defined very widely in the
State Acts pertaining to shops and establishments, and normally include
offices, banks, shops, educational institutions, etc.
The coverage of the Act is, therefore, very wide and it is
necessary for any employer to keep in mind the provisions of the Act and their
rights and obligations under it. 
As per the Act, a woman employee is entitled to maternity
benefits provided she has worked for the employer for at least 80 (eighty) days
in the preceding 12 (twelve) months from the date of her expected delivery.
The amendments
The Act was amended vide amendment dated March 27, 2017 which
came into effect from April 01, 2017 (the “Amendment”).
The Act originally provided maternity leave of 12 (twelve) weeks, out of which
up to 6 (six) weeks could be claimed before delivery. However, the Amendment raised
the period of maternity leave for women from 12 (twelve) weeks to 26
(twenty-six) weeks. The Amendment further provided that if any woman has more
than 2 (two) children, the maternity leave will be given for only 12 (twelve)
weeks. The Amendment also extended maternity benefits to commissioning and
adoptive mothers who are entitled to 12 (twelve) weeks of leave from the date
the woman receives the child.
In addition to the abovementioned benefits, the law allows employers to permit women employees to
work from home if the nature of work allows that. Moreover, the Amendment makes
it mandatory for all establishments employing more than 50 (fifty) workers to
establish creche facilities. The women employees are allowed 4 (four) visits to
the creche which also includes the interval for rest. Further, the
are also required to inform every women employee in writing and electronically
about the maternity benefits available to them under the Act upon their joining
the workforce.
The reaction
The Amendment was considered as a progressive step towards
improvement in securing the employment rights of women. However, the Act, as
well-intended as it may be, is a typical case of the law of inadvertent
§    By increasing the period
of paid maternity leave for women employees and putting the entire financial
burden of the paid leave on the employers, the Government failed to consider
that the businesses will shirk from hiring female workers because of the related
§    Additional requirements
like creche facilities requires more capital and operating expenses. While this
is feasible for large corporations, start-ups, micro, small and medium
enterprises (MSMEs) grapple with operating costs.
§    The maternity benefits
further impose cost pressures, risk of litigation, penalties for non-compliance
and threatening viability. This may result in hiring male employees instead thereby
reducing the productivity in women-oriented jobs and defeating the very purpose
of the amendments.
There have in fact been several representations made to the
Labour Ministry on how the extended maternity leave has become a deterrent for
female employees who are asked to quit or retrenched on flimsy grounds before
they go on maternity leave. An editorial dated 26th June 2018 in the
Times of India quoted a study by the leading recruitment agency TeamLease study
which stated that while in the long term, women’s workforce participation rate
may get a fillip, there may be a net job loss of 11-18 lakh women in the Fiscal
Year 2018-19, over and above the average attrition rate of women from the
workforce. The editorial further quoted a finding that that a key employee’s
absence of 26 weeks tends to weigh heavily on businesses that operate with thin
margins, that too amid aggressive competition. Therefore, the 100% employer
funded model in the Act was seen as unviable by some sections of industry.
Therefore, the question arises as to whether there is any way
to provide the maternity benefits to women employees without burdening the
businesses with the entire costs.
The best way to do that could be to fund the costs
either partially or fully through public funds, rather than imposing the entire
responsibility on the employers. The Government could also increase tax rebates
for maternity wages or set up an insurance scheme to pay maternity wages,
sharing the premium with the employees.
In most countries, the cost of maternity leave is shared among the
government, employer, insurance and other social security programmes (for
instance, Singapore—eight weeks employer and eight weeks public funds;
Australia and Canada—100% public funds; France—social insurance scheme;
Brazil—mixed contribution from the employer, employee and government). Such
changes in the Act will encourage the employers to provide employment
opportunities to women without any gender discrimination and thus bring women
into the mainstream of India’s progress. This could also improve the hiring
process and employee retention. 
There were in fact news reports that the Labour Ministry was
working on an incentive scheme wherein seven weeks’ wages would be reimbursed
to employers who employ women workers with a wage ceiling of up to Rs 15,000
and provide the maternity benefit of 26 weeks paid leave, subject to certain
conditions. The ministry has estimated that about Rs 400 crore would be the
financial implication for the Ministry of Labour and Employment to implement
the proposed incentive scheme. There has however been no further word on this.
In conclusion, the Maternity Benefit Act, 1961, as amended,
is a good step done with the aim of ensuring the continued and greater
participation of women in the work force. However, unless the Government takes
all issues into consideration and providing for them suitably as suggested
foregoing, it may be difficult for employers to buy into the noble objectives
of the Act.

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