LexCognito

Date: 22 November 2018

Maternity leaves in India - Government is looking at a win-win situation

Amid media speculation over exact status of the Maternity Leave Incentive Scheme, the Government of India has issued a clarification on 16 November 2018 suggesting that it is considering a proposal to share the burden of employers who are giving the extended paid maternity leaves of 26 weeks to the eligible female employees under the Maternity Benefit Act, 1961 ("Act"). However, the press release has also clarified that the Ministry of Labour & Employment is still in the process of obtaining the required approvals and budgetary grant for the scheme and the same has not been approved as yet.

The Act is a central legislation which extends to whole of India and seeks to regulate the employment of women for certain periods before and after childbirth and to provide for maternity and other benefits. The Act is applicable on establishments employing 10 or more employees. The Act earlier provided for 12 weeks of paid maternity leaves to the eligible female employees by their employers, which was extended to 26 weeks in the year 2017 by way of an amendment to the Act. Ever since the amendment has come into force, it has been felt that the extended period of paid maternity leaves has become a deterrent factor for the employers to hire or employ the female employees. The employers also fear that female employees may not join back after the maternity leave. In certain cases, the employment has been terminated on flimsy grounds. This has reduced the employment opportunities for women in the country.

In order to address this problem, 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.15,000/- and provide the maternity benefit of 26 weeks paid leaves, subject to certain conditions.

It is expected that the government will soon notify and implement this scheme. Once approved and implemented, it will be a win-win situation for both employers as well as female employees. On one side, the employers will get relief in the form of reduced financial burden and on the other side, the women will get an equal access to employment in the country.

It is important to note that the Act is not applicable on the shops and establishments employing less than 10 employees. However, such employers are required to give the maternity benefits as may be prescribed in the respective State-specific Shops and Establishment Act. At this stage, it appears that such employers may not be eligible to avail the benefit of the proposed scheme.

Chambers of Rajan & Indraneel is a premier full service law firm headquartered at New Delhi, India. The Firm represents amalgamation of vast experiences and practices of two eminent lawyers. Indranil Ghosh is highly reputed as a disputes lawyer. He was a senior partner and head of litigation practice in one of the oldest Indian law firm Fox Mandal for several decades before setting up his own practice. Rajan D Gupta is a rank holder Chartered Accountant turned Corporate Lawyer. He is also a licensed Insolvency Resolution Professional. He has been associated with internationally renowned big law firms in past and has held senior level positions in firms like PwC, Fox Mandal, Khaitan & Co. and SRGR Law, etc. before starting the Firm.

We have a team of experienced Lawyers, Chartered Accountants, Company Secretaries and Insolvency Resolution Professionals with access to network of high quality experienced lawyers in all major commercial cities of India.

The Firm offers a wide range of expert legal services in the areas of corporate and commercial laws and specializes in representing major foreign and domestic corporations with diverse business interests in India. The Firm is professionally equipped to handle large sized and complex corporate transactions like Mergers & Acquisitions, Corporate Restructuring, Joint Ventures, Inbound & Outbound Investments, Private Equity and Venture Capital Investment Transactions, Real Estate Transactions, Infrastructure Projects, Project Finance, Power Projects, Non-Conventional Energy Projects, Highways & Road Projects and Corporate Taxation as well as GST, etc. The Firm also offers proven capabilities in litigation and dispute resolution practice areas, especially in handling international and domestic arbitrations as well as litigation in Supreme Court, various High Courts of India and various judicial and quasi-judicial tribunals/forums including at National Client Law Tribunal, Appellate Tribunals, Tax Tribunals, Competition Commission, Electricity Tribunal, Telecom Disputes Tribunal, Designated Authorities and other adjudicatory bodies.

We have set up a Japan Business Desk (JBD) in order to serve our Japanese clients in a better way. The endeavour of the JBD is to act as a bridge between our professionals and clients from Japan so as to ensure that there are no barriers as to linguistic and cultural differences. This will indeed facilitate Japanese corporates doing business in India.

Contact our Japan Business Desk

This newsletter contains general information available in public domain at the time of its preparation. It is intended as a general news update and is not intended to be comprehensive nor to provide specific business, financial, investment, legal, tax or other professional advice or opinion or services. This newsletter is not a substitute for such professional advice or services, and it should not be acted on or relied upon or used as a basis for any decision or action that may affect you or your business. Before making any decision or taking any action that may affect you or your business, you should consult a qualified professional adviser and refer to the source pronouncement/documents on which this business alert is based. It is also expressly clarified that this newsletter is neither a solicitation nor an invitation of any sort whatsoever or a source of advertising from our firm or any of its partners or lawyers or other professionals to create any adviser-client relationship. Whilst every effort has been made to ensure the accuracy of the information contained in this news alert, this cannot be guaranteed, and neither our firm nor any related person/entity shall have any liability to any person or entity that relies on the information contained in this publication. Any such reliance is solely at the user's risk.

This issue of LexCognito, which in Latin means 'awareness about law', seeks to provide you an insight into significant legal and regulatory developments that have taken place very recently in India.