India: Maternity Benefit Amendments: Closer To Reality

Last Updated: 5 April 2017
Article by   Trilegal

The amendments to the 55-year old Maternity Benefit Act have recently received Presidential assent, paving the way for the provision of enhanced benefits to women employees.

The Maternity Benefit (Amendment) Bill, 2017 (Amendment) was passed by both Houses of Parliament, and has received presidential assent on 27 March 2017. The Amendment will come into force on the date appointed by the Central Government, by notification in the official gazette.

1. Changes introduced by the Amendment

The Amendment introduces the following changes:

  1. Increase in duration of paid maternity leave: Duration of paid maternity leave for a woman having less than two surviving children has been increased from 12 weeks (with not more than 6 weeks preceding the expected date of delivery) to 26 weeks (with not more than 8 weeks preceding the expected date of delivery);
  2. Introduction of surrogacy leave and adoption leave: Paid adoption leave (if the adopted child is less than three months old) and paid surrogacy leave of 12 weeks from the date when the child is handed over, has been introduced;
  3. Work from home: The Amendment also introduces the option to work from home after exhausting the period of maternity leave, on such terms as the employer and the woman may mutually agree;
  4. Crèche facility: The Amendment makes it mandatory for each establishment with 50 or more employees to have a crèche facility;
  5. Obligation to notify employees: Employers are also required to inform women of benefits available under the Maternity Benefit Act, 1961 (MB Act). This needs to be done in writing and electronically, at the time of the woman's initial appointment.

Other provisions of the MB Act, including the eligibility criteria for maternity benefit, remain unchanged. Under the MB Act, a woman is eligible to receive maternity benefit if she has worked for at least 80 days in the 12 months immediately preceding her expected date of delivery. Further, the prohibition on employing a woman for six weeks following delivery, miscarriage or medical termination of pregnancy, continues to apply. Unfortunately, no change has been made to include statutory paternity leave, even though there were discussions in the Rajya Sabha to introduce child care leave for fathers.

2. Concerns

There has been a lot of discussion about the impact of the Amendment, and there are divergent views on whether the Amendment will be beneficial in the long run. In most countries with extensive child care benefits, the government shoulders at least some part of the financial responsibility. In India, however, except for the fraction of employees covered under the Employee State Insurance Act (ESI Act) (i.e. employees earning not more than INR 21,000 per month), maternity benefits have to be financed by the employer. Therefore, there is an apprehension that the requirement of providing increased benefits under the Amendment could have a negative impact on diversity ratios at the workplace.

Additionally, from an implementation perspective, there are a few issues to be considered:

  1. Who would be eligible for the increased maternity leave: Currently, it is not clear whether women who are in the midst of their 12 week maternity leave (under the un-amended law), will be entitled to extend their leave to 26 weeks. In the absence of any clarity on this aspect, one may look at the clarifications issued by the Employees State Insurance Corporation (ESIC) for guidance since the ESI Act was also recently amended from 20 January 2017 to provide benefits similar to the Amendment. The ESIC clarification specifies that the increased maternity leave can only be availed if the actual or expected date of delivery was on or after 20 January 2017. Since the subject matter of the benefit is the same under both the acts, it is possible that a similar approach could be adopted in connection with the Amendment to the MB Act as well. We will however need to wait and watch if the government takes a more beneficial view and extends the Amendment's benefit to women who are in the midst of their statutory maternity leave, even if childbirth is prior to the notified date.
  2. Who will be eligible for adoption and surrogacy leave: Similar questions would arise for adoption and surrogacy leave. Would an adopting/commissioning mother be eligible to avail adoption/surrogacy leave if the child is handed over to her before the Amendment is notified, but if the 12 week leave entitlement period has not run out since the notification? Clarifications from the government on this aspect would also be helpful.
  3. Ambiguity regarding provision of crèche facilities: The Amendment does not expressly clarify if the crèche facilities must be provided free of cost. Most organizations that have set up crèche's voluntarily, presently pass on the cost to the employee (sometimes at subsidized rates). Since most of these companies operate in densely populated urban areas, the cost of extending such facilities can be significant.

    Statutes such as the Factories Act, 1948, and the Contract Labour (Regulation and Abolition) Act, 1970 already contain provisions around crèche facilities. Although not expressly stated, crèche facilities are usually provided free of cost under these legislations. In the absence of any clarification on this point under the MB Act, organizations (at least the smaller ones) may be unwilling to bear the cost of usage of crèche facilities, especially in urban centres where expenses are higher.

    As per the Amendment, the government is required to prescribe the distance of the crèche from the establishment. However, apart from the distance (and the cost factor discussed above), the government should also endeavour to provide other clarifications, such as the age till which a child can be kept in the crèche (the Factories Act, 1948 prescribes an age limit of 6 years), specific requirements around construction, facilities and staff of the crèche, etc. Standardization on these aspects would also help address liability issues to some extent, which could be a significant cause of worry for several establishments setting up crèche facilities for their employees.
  4. Are visits to the crèche in addition to the nursing breaks: The Amendment specifies that a woman should be allowed four visits to the crèche each day, which includes the interval for rest allowed to her. However, no duration has been specified for each break. A separate provision under the MB Act (Section 11) already permits women to take two nursing breaks (in addition to their interval for rest) till the child is 15 months old. A plain reading therefore suggests that a woman may be entitled to 6 breaks a day, which may cause operational strain to the organization.

3. Conclusion

There are several concerns around implementation of the changes introduced that need to be addressed before the Amendment comes into force. Based on our discussions with the Ministry of Labour and Employment, we understand that the Amendment may be notified in a staggered manner, with the crèche provisions being notified at a later date. It is hoped that before the Amendment comes into force, the government will address concerns and provide additional clarity to ensure trouble free implementation.

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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