Clarification regarding Maternity Leave Incentive Scheme

In a section of media, there have been some reports about Maternity Leave Incentive Scheme. In this regard, the Ministry of Labour & Employment has clarified the following:

Background- (i) The Maternity Benefit Act, 1961 applies to establishments employing 10 or more than 10 persons in Factories, Mines, Plantation, Shops & Establishments and other entities. The main purpose of this Act is to regulate the employment of women in certain establishments for certain period before and after childbirth and to provide maternity benefit and certain other benefits. The Act was amended through the Maternity Benefit (Amendment) Act, 2017 which, inter alia, has increased the paid maternity leave to women employees from 12 weeks to 26 weeks.

While the implementation of the provision is good in Public Sector, there are reports that it is not good in Private Sector and in contract jobs. There is also a wide perception that private entities are not encouraging women employees because if they are employed, they may have to provide maternity benefit to them, particularly 26 weeks of paid holiday. In addition, the Ministry of Labour & Employment is also getting complaints from various quarters that when the employers come to know that their women employee is in the family way or applies for maternity leave, the contracts are terminated on some flimsy grounds. There have been several representations before 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.

Therefore, the Ministry of Labour & Employment is working on an incentive scheme wherein 7 weeks’ wages would be reimbursed to employers who employ women workers with wage ceiling upto Rs. 15000/- and provide the maternity benefit of 26 weeks paid leave, subject to certain conditions. It is estimated that approximately an amount of Rs. 400 crores would be the financial implication for Government of India, Ministry of Labour & Employment for implementing the proposed incentive scheme.

Major Impact: The proposed Scheme, if approved and implemented shall ensure the women in this country an equal access to employment and other approved benefits along with adequate safety and secure environment. Also, the women shall continue to bear the major share of household work as well as childcare. The workplaces will be more and more responsive to the family needs of the working women.

Current Stage of the Proposal:

There are some media reports that this Scheme has been approved/notified. However, it is clarified that Ministry of Labour & Employment is in the process of obtaining necessary budgetary grant and approvals of Competent Authorities. The reports that it will be funded from Labour Welfare Cess, is also incorrect, as no such cess exists under this Ministry.