Paid maternity leave: FinMin raises questions over labour ministry's move

After complaints that the new law may impact employment of women, the govt has framed a scheme to provide monetary incentive to companies

The finance ministry has raised questions over the labour ministry’s move to seek Rs 4 billion annually towards providing subsidies to companies for passing on maternity benefits to workers.

“The finance ministry has asked the labour ministry about the need to frame such a scheme. The move to increase the maternity benefit leave was approved by the Parliament for welfare of women employees and its impact on the industry needs to be examined carefully,” said a senior government official, requesting anonymity.

The labour ministry has sent the contours of an incentive scheme for companies that provide 26 weeks’ maternity benefit to their women workers, in line with the Maternity Benefit (Amendment) Act, 2017.

In March 2017, Parliament passed a law to increase the paid maternity leave to women from 12 weeks to 26 weeks, aimed to benefit 1.8 million workers in the organised sector. The law applies to all establishments employing 10 or more people, and the entitlement applies only up to the first two children.

But after receiving complaints from a section of the industry that the new law may impact employment of women, the government has framed a scheme to provide monetary incentive to companies.

In September this year, Labour and Employment Minister Santosh Kumar Gangwar said that “women employment is not increasing” because of the new law which took India to the third position in terms of the number of weeks for maternity leave, following Canada and Norway, where it is 50 weeks and 44 weeks, respectively.

In the proposed scheme sent to the finance ministry for approval, the labour ministry has said the incentive scheme will be applicable to women employees who are members of the Employees’ Provident Fund Organisation (EPFO) and earning less than Rs 15,000 a month. Also, the workers should have been working in an organisation for at least a year and should not be covered under the schemes run by Employees’ State Insurance Corporation (ESIC).

The scheme is proposed to be administered by EPFO, according to the labour ministry’s proposal.

In an official statement issued last month, the labour ministry said that the new law is not proving to be good in private sector, especially contractual 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,” the ministry had stated, adding that it received several representations on how the extended maternity leave has become a deterrent for female employees “who are asked to quit or retrenched on flimsy grounds.”

At the heart of the matter

• In 2017, India increased the paid maternity leave to women from 12 weeks to 26 weeks
• A section of the industry said the law may hurt women’s employment
• The govt then came up with a scheme to reimburse firms for the increased leave