India: Everything You Need To Know About The Recent Maternity Benefit Amendments

Last Updated: 19 August 2016
Article by   Trilegal

Most Popular Article in India, September 2016

The proposed changes to the Maternity Benefit Act does a lot to bring India on par with international standards. However, some of the changes proposed could significantly increase costs for employers.

The Maternity Benefit (Amendment) Bill, 2016 (the Amendment) was recently passed by the Rajya Sabha to amend certain provisions of the Maternity Benefit Act, 1961 (the MB Act).

With an increasing number of women entering the workforce, there is a renewed focus on whether the benefits provided by existing legislations, such as the MB Act, encourage inclusivity. It has also often been highlighted that the 12 weeks of paid maternity leave provided for under the MB Act falls short of the international standard of 14 weeks as set by the International Labour Organisation.

Given this, there has been a concerted push to amend the MB Act, with several ministries in the government coming up with proposals for change. In this background, the Amendment was passed in the Rajya Sabha to bring about changes to the MB Act.

What are the key changes in the Amendment?

We have highlighted below some of the proposed changes under the Amendment:

  • Increase in the duration of paid maternity leave: From 12 weeks (of which not more than 6 weeks shall precede the expected date of delivery) to 26 weeks (of which not more than 8 weeks shall precede the expected date of delivery). A new provision has also been introduced, providing that a woman with two or more surviving children will receive only 12 weeks of paid maternity leave. Such a provision restricting the benefit available based on the number of children was present in a few States, under the Shops and Establishments Acts. This is now being made a part of the central legislation as well.
  • Surrogacy leave: Paid surrogacy leave of 12 weeks from the date when the child is handed over. This leave can only be availed by a commissioning mother who uses her egg to create an embryo to be implanted in another woman.
  • Adoption Leave: Paid adoption leave of 12 weeks from the date when the child is handed over, provided the child is less than 3 months old.
  • Work from home option: Applicable after the period of maternity leave, on such terms as may be mutually agreed to between the employer and the woman.
  • Crèche facilities: An obligation on employers with 50 or more employees to provide crèche facilities to women. While an earlier draft of the Amendment had proposed the distance from the workplace to the crèche to be one kilometer or less, the Amendment simply states that it will be as prescribed. We would need to wait for a subsequent government notification in this regard. The Amendment also does not make it explicit whether the crèche facility can be provided on a chargeable basis to employees or whether the facility has to be provided free of charge. Further, the Amendment also permits four visits per day to the crèche, which shall also include the interval of rest allowed to the woman employee. This appears to be in addition to the two nursing breaks that the MB Act already permits till the child is of 15 months of age.
  • Obligation to notify: An obligation on employers to inform (in writing and electronically) to every woman newly appointed within the organization about the benefits available under the MB Act.

What provisions remain unchanged?

Several provisions of the MB Act remain unchanged. This includes the eligibility criteria for receiving maternity benefit under the MB Act. A woman who has worked for at least 80 days in the 12 months immediately preceding her expected date of delivery will continue to be eligible. Further, an employer will continue to be prohibited from employing a woman for a period of six weeks immediately following her delivery, miscarriage or a medical termination of pregnancy. In addition, while there were discussions in the Rajya Sabha on the idea of introducing parental leave, it did not result in any changes to the Amendment. Therefore, the statute will continue to deal with only maternity leave.

When does the Amendment come into effect?

The Amendment was passed by the Rajya Sabha, the Upper House of Parliament, on 11 August 2016. It will now have to be passed by the Lok Sabha, the Lower House of Parliament, and then receive Presidential assent. After this, it will come into effect from the date that it is notified in the Official Gazette. The monsoon session of the Parliament concluded on 12 August 2016, and hence it is likely that the proposed amendment will be introduced in the Lok Sabha only in the upcoming winter session (generally held in the months of November and December). There is also a possibility that in the interim, the changes could be introduced by way of an ordinance.

How will the Amendment Impact Industry Practice?

The proposed amendments have received mixed feedback from different sectors and industries. Large organizations have welcomed this move, and in fact, even before the Amendment, some employers have been proactive in extending maternity leave to their employees in excess of what the MB Act provides. This has been particularly true with employers in the IT - BPM sector. The additional benefits offered are not restricted to just a longer duration of maternity leave. Several employers have already recognized leave for adoption, for surrogacy, for expecting fathers, etc. Some have also taken the initiative to create unique policies that include sensitization programs for their workforce, flexible working hours, tie-ups with child care vendors, etc.

However, there has also been pushback from micro, small and medium enterprises given that the increase in the duration of paid maternity leave will result in an increase in cost. Another common concern is the difficulties involved in providing a crèche facility close to the establishment – both in terms of cost and infrastructure. There is a real apprehension that placing such additional financial burdens on employers in this manner could even have the unintended consequence of potentially leading to a decrease in the recruitment of women employees.

In this background, to better understand the motivation for employers, especially in the IT - BPM sector, that chose to provide benefits in excess of their statutory obligations, Trilegal has worked closely with NASSCOM to undertake a comprehensive study on the subject. Over the course of roundtable conferences held across eight Indian cities as well as getting extensive feedback from employers on their internal practices, we came across some interesting data. Employers who provided such benefits reported a higher level of employee retention over a period of time. For them, the beneficial policies were crucial in retaining talent and fostering diversity within the workplace. If you would like to read more about the findings of the joint study we conducted with NASSCOM, you can access a copy of the report titled Maternity Benefits and Facilitating Return to Work here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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