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An estimated 5-minute read

What is Relevant to Know about the Maternity Benefits Act and the Employees’ State Insurance Act

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Second in our series of Employment Law blogs on the Maternity Benefit Act. The earlier piece was published here.

The Maternity Benefit Act, 1961 (MB Act) was amended by the Maternity Benefit (Amendment) Act, 2016 (MB Amendment Act) which became effective on April 1st, 2017 (except for the provision that required a crèche facility to be provided by the employer, which came into effect on July 1st, 2017). Questions have now been raised about whether the provisions of the MB Amendment Act apply to employees covered under the Employees’ State Insurance Act, 1948 (ESI Act).

The purpose of this note is to provide an insight into the applicability of the MB Act and the ESI Act and benefits available therein, especially provided under the MB Amendment Act, to a woman employee, etc.

Applicability

  1. Establishments: The ESI Act is applicable to all factories (including factories belonging to the Government) and any other establishment(s) to which an appropriate government may, after giving one month’s notice by notification, extend the provisions of the Act. Several States have extended the ESI Act to establishments[1] employing 20 or more persons while States such as Delhi and Karnataka have extended the applicability to establishments employing 10 or more persons. On the other hand, the MB Act is applicable to: (i) every establishment being a factory, mine or plantation (including such establishment belonging to Government); (ii) every establishment wherein persons are employed for the exhibition of equestrian, acrobatic and other performances; and (iii) every shop or establishment in which ten or more persons are employed, or were employed on any day of the preceding twelve months. It is important to note that Section 2(2) of the MB Act states that, except as provided in Sections 5A[2] and 5B[3], the MB Act would not apply to factory or other establishments to which the ESI Act applies.
  2. Employees: The maternity benefits under the ESI Act are available to insured employees (women), earning wages up to 21,000 Rupees and who have contributed for a period of at least 70 days in the immediately preceding two consecutive contribution periods[4]. The MB Act applies to every woman, whether employed directly or through any agency, and there is no wage threshold .

Key Maternity Benefits under the MB Act and ESI Act

 MB ActESI Act
Leave26 weeks26 weeks
RemunerationAverage daily wages for the period of actual absence, which is the average of the wages payable to the woman for the days on which she has worked during the period of three months immediately preceding the date from which she absents herself on account of maternity or Rupees 10, whichever is higher.

Average daily wages obtained by dividing the total wages paid during the contribution period by the number of days for which these wages were paid, rounded to the next higher rupee or 25 Rupees, whichever is higher.

 

Additional Benefits

(i)                 Medical Bonus – 3,500 Rupees if no pre-natal confinement and post-natal care is provided for by the employer free of charge;

(ii)               Nursing Breaks; Crèche Facilities; and

(iii)             Four visits a day to the crèche, including the interval for rest.

Confinement[5] Expense – 5,000 Rupees to insured woman, provided that the confinement occurs at a place where necessary medical facilities under the ESI Scheme are not available, subject to a maximum of two confinements.

 

Agreement or contract of Service to override in certain circumstancesSection 27 of the MB Act provides that where under any award, agreement, contract of service or otherwise, a woman is entitled to benefits in respect of any matter which are more favourable to her than those which she would be entitled under the MB Act, the woman shall continue to be entitled to the more favourable benefits than those provided by the MB Act.

Option to Choose Coverage under the MB Act and not the ESI Act

Section 61 of ESI Act provides that when a person is entitled to any of the benefits provided by the ESI Act, then such a person is not entitled to receive any similar benefits admissible under the provisions of any other enactment. Therefore, it becomes clear that a woman employee does not have the right/option to choose to be covered under the MB Act, when the ESI Act is applicable to her.

Right to Claim Additional Benefits under MB Act or MB Amendment Act

In view of the above, legally, the employers are not mandated to extend the additional benefits (specified under the MB Act and/or MB Amendment Act) to women employees who are covered under the ESI Act and eligible to avail the benefits under the ESI Act. However, an employer, at its own volition, has the option to provide certain benefits as provided by the MB Act such as crèche facility and nursing breaks, etc.

[1] Shops, hotels, restaurants, cinemas including preview theatres, road-motor transport undertakings and newspaper establishments, etc. (Please refer to each State specific list).

[2] Continuance of payment of maternity benefit in certain cases – Every woman entitled to the payment of maternity benefit under this Act shall, notwithstanding the application of the Employees’ State Insurance Act, 1948 (34 of 1948), to the factory or other establishment in which she is employed, continue to be so entitled until she becomes qualified to claim maternity benefit under section 50 of that Act.

[3] Payment of maternity benefit in certain cases.-

Every woman-

(a) who is employed in a factory or other establishment to which the provisions of the Employees’ State Insurance Act, 1948 (34 of 1948), apply;

(b) whose wages (excluding remuneration for over-time work) for a month exceed the amount specified in sub-clause (b) of clause (9) of section 2 of that Act; and

(c) who fulfils the conditions specified in sub-section (2) of section 5, shall be entitled to the payment of maternity benefit under this Act.

[4] Contribution periods provided under the ESI Act are 1st April to 30th September and 1st October to 31st March and the corresponding benefit periods are 1st January to 30th June and 1st July to 31st December, respectively.

[5] “Confinement means labour resulting in the issue of a living child or labour after twenty-six weeks of pregnancy resulting in the issue of a child whether alive or dead. [Section 2(3), ESI Act]

* The author was assisted by Suryansh Gupta, Intern

Author: Manishi Pathak
©Cyril Amarchand Mangaldas

Cyril Amarchand Mangaldas was founded in May 2015 to continue the legacy of the 97-year old Amarchand & Mangaldas & Suresh A. Shroff & Co., whose pre-eminence, experience and reputation of almost a century has been unparalleled in the Indian legal fraternity. With a long and illustrious history that began in 1917, the Firm is the largest full-service law firm in India, with over 600 lawyers, including 91 partners, and offices in Mumbai, New Delhi, Bengaluru, Hyderabad, Ahmedabad and Chennai. Several of our professionals are cited as leading practitioners by global publications like Chambers and Partners, International Financial Law Review, Asia Legal 500 and Euromoney.

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