Introduction Proposed changes Comment

Introduction

The primary legislation in India regulating the provision of maternity benefits for female employees is:

  • the Maternity Benefit Act, 1961; and
  • the Employees' State Insurance Act, 1948.

The benefits provided under the Employees' State Insurance Act are available to female employees whose monthly wages are less than $315. The benefits under the Maternity Benefit Act are available to all female employees who are not covered under the Employees' State Insurance Act and have worked for a continuous period of 80 days.

The leave benefits provided under the Maternity Benefit Act include:

  • 12 weeks' maternity leave;
  • six weeks' leave in case of miscarriage or medical termination of pregnancy;
  • two weeks' leave in case of tubectomy; and
  • one month's leave in case of illness during pregnancy.

Amendments to the Maternity Benefit Act have long been a topic of debate in India, with the objective of empowering working women. The first recommendation for enhancing maternity leave was made in the 44th session of the Indian Labour Conference held in February 2012.

Proposed changes

The Maternity Benefit (Amendment) Bill 2016 was tabled before the upper house of Parliament and passed on August 11 2016. The key changes proposed in the bill are:

  • the enhancement of maternity leave from 12 to 26 weeks;
  • the introduction of 12 weeks' maternity leave for adopting and commissioning mothers;
  • the provision of crèche facilities in establishments engaging 50 or more employees;
  • four permitted visits per day to the crèche; and
  • remote working provisions (depending on the nature of the work).

Given that India has a bicameral parliamentary system, all bills must be passed by both the houses of Parliament (ie, the upper and lower house). On March 9 2017 the lower house passed the Maternity Benefit (Amendment) Bill 2016 and, once it receives presidential assent, it will be published in the Official Gazette and enforced as a law. The government has already amended the provisions relating to maternity leave under the Employees' State Insurance Act with effect from January 20 2017. Consequently, establishments in both the manufacturing and service sectors that fall under the purview of the Employees' State Insurance Act must increase maternity leave from 12 to 26 weeks and provide maternity leave to adopting and commissioning mothers who are eligible for benefits under the act.

Comment

The amendments proposed by the bill are undoubtedly a positive step towards promoting diversity and increased participation of women in the workforce in the manufacturing and service industries. As the proposed changes aim to provide a supportive work environment for nursing mothers, it will reduce the risk of female employees choosing to discontinue work after childbirth. The costs involved in replacing these resources are much higher than the costs of retaining them; therefore, it benefits employers to retain their female employees.

The provision of crèche facilities and remote working policies will further encourage female employees to resume work after maternity leave. However, given the varied nature of jobs in every industry, the bill does not make it mandatory for an employer to provide the option to work remotely in every case; it will depend on the nature of the work and the mutual understanding between employer and employee. Employers will be given flexibility in terms of formulating policies around remote working.

Once the bill has been enacted, the rules for implementing the amendments will follow. They are expected to clarify various aspects, such as crèche facilities and location, and guidelines on partnering with external service providers. It is also anticipated that enactment of the bill will provide clarity on the applicability of the amendments to those who are on maternity leave and a timeline for implementation.

Several corporations in India ? especially multinationals ? have proactively implemented the proposed changes in their maternity benefit policies and have even gone further to provide innovative benefits such as nursing rooms, cab facilities for female employees, on-call doctors, in-house daycare services, parenting workshops and counselling sessions for new mothers.

Once the bill receives the president's assent, it is likely to be enacted with immediate effect. Organisations which have not yet amended their maternity policies and are waiting for enactment of the bill will need to prepare for the new changes and modify their policies accordingly. Employers may need to make provisions for the additional institutional cost of providing 26 weeks' maternity leave. It may also help to identify in advance crèche facilities for establishments with 50 or more employees. However, given that the enhanced maternity benefits have already been incorporated in the Employees' State Insurance Act, organisations with establishments falling under the purview of the act are already required to provide these enhanced benefits.

For further information on this topic please contact Pooja Ramchandani or Kriti Kaushik at Shardul Amarchand Mangaldas & Co by telephone (+91 11 4159 0700) or email (pooja.ramchandani@amsshardul.com or kriti.kaushik@amsshardul.com). The Shardul Amarchand Mangaldas & Co website can be accessed at www.amsshardul.com.

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