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Here’s why the Indian government is amending Maternity Benefits Act

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The government is now working on amending the Maternity Benefits Act 2017 to alleviate employers’ financial cost of 26 weeks paid maternity leave.
Arora, Rhea
Publication Date: 
6 Jul 2019


After the NDA’s Maternity Benefits Act 2017 backfired and lead to discrimination against women in the workplace, the government is now working on amendments to the legislation. The Centre is finding ways to not only cover more women under the scheme but also alleviate employers’ financial cost of 26 weeks paid maternity leave.

The Centre is brainstorming how to reimburse companies and employers for the extra 14 weeks of maternity leave it previously granted Indians working in the country. Reports say that the employer or child’s fathers might have to shoulder part of the cost.

“Efforts are on to see how we can improve no the earlier provisions to make the amended Maternity Benefit Act benefit both the employers and employees. We are looking at all the options including putting some liability on the employers of the fathers,” said an official to the Economic Times.

To allow more women to avail of the maternity benefits, the government also wants to remove the Rs 15,000 salary cap criteria for eligibility.

To implement these changes, the government will need to formally amend the Act.

Maternity Benefits Act 2017 exposes women to discrimination

India was initially governed by the Maternity Benefits Act 1961 that allowed women to take 12 weeks paid maternity leave. Companies or organisations with at least 10 employees were mandated by law to provide their women employees with this paid leave.

In March 2017, the government passed the Maternity Benefits (Amendment) Act that updated the previous colonial-era act.

According to the 2017 law, women were now allowed to take up to 26 weeks paid leave if they were having their first or second child. If they were pregnant with a third child, they were entitled to the original 12 week period.

Women who were eligible for 26 weeks paid leave could use the “work from home” provision after that time was up. The 2017 Act also mandated workplaces with at least 50 employees to have a créche facility or nursery where women could visit.

Even women who were adopting children were allowed 12 weeks paid leave from the date of adoption and those who miscarried were allowed six weeks paid leave.

Women would be eligible for these maternity benefits if they had worked for at least 80 days continuously in the past 12 months and earned up to Rs 15,000 in wages.

However well intentioned this law was, it backfired because employers began discriminating against women because they did not want to pay full wages for the 26 week paid leave. In the present day, women also face stigma and hostility in the workplace during pregnancy and were still vulnerable after the act.

Studies showed that female participation in the labour force would drop across 10 major sectors like IT and finance and banking. Some reports said that up to 12 million Indian women could lose their jobs because of the 2017 act.

There was also a lack of clarity on how long a woman could use the créche facility and how it would be funded and staffed. The government also did not detail how it was planning to enforce this act in the informal sector. Moreover, the criteria for eligibility was also limited and left out many women who earned more than the cap or worked in smaller companies.

To remedy this, the government promised to reimburse employers for the seven of the total 14 weeks leave if the women employees earned up to Rs 15,000.

The cost of reimbursement to the government is around Rs 400 crore, says the Economic Times. The Centre is using money from the Rs 30,000 crore labour welfare cess fund to refund employers.

However, this is considered a temporary bandaid and the government needs a holistic, sustainable solution for the long term.

Zomato, Novartis offer paternity leave

Many developed countries offer a mixed maternity benefit policy where the financial cost of paid leave is shared by the government, employer, and employee through public insurance schemes and tax rebates.

Another useful recommendation is including paternity leave rather than extending maternity leave.

On July 1, Novartis, a pharmaceutical company, announced 26 weeks paid gender-neutral parental leave. This means that Novartis is allowing its male employees to take 26 weeks paid paternity leave.

Before Novartis, Zomato made history as the first Indian company to offer 26 paid parental leave to both mothers and fathers. Even adoptive parents and same-sex parents at Zomato will be entitled to leave.

Zomato founder Deepinder Goyal added that new parents will also be given a bonus of $1000 or currently around Rs 64,000 per child

Goyal said, “People produce their best work when their personal and professional goals meaningfully intersect and align… We firmly believe that young parents should be able to make a choice of how to care for their children… We’ll never have truly gender-neutral organisations unless we have gender-neutral communities & gender-neutral nations.”

Entered Date: 
10 Jul 2019
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