Maternity Benefit (Amendment) Act, 2017

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.

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

What are the key changes in the Amendment?

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 kilometre 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.

Employee awareness: The MB Bill makes it mandatory for employers to educate women about the maternity benefits available to them at the time of their appointment.

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.

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.

While many of the other amendments in this Bill appear well-intentioned, they raise practical questions. Case in point: no statutory recognition to workers whose services are not regularized. To this extent, it would be pertinent to discuss the Municipal Corporation of Delhi case that was decided by the Supreme Court over a decade and a half ago. In this landmark judgement, by taking cognizance of the constitutional principles on gender, the Apex Court had upheld the right of female construction workers whose services were not regularized, to maternity benefits. The amendment gives this a miss.

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:

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.

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.

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.

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.

Conclusion

There are several concerns around implementation of the changes introduced that need to be addressed before the Amendment comes into force. 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.