Analysis of Maternity Benefit Act and Payment of Gratuity Act

The Maternity Benefit Act, 1961

The act is a form of beneficial legislation which seeks to provide all possible benefits to working women so that they are not forced to give up their career after child birth. In pursuance of this aim, various changes have been incorporated in the act that are in line with the contemporary developments across the globe. The provision for ‘work from home’ ensures that the employee does not have to choose between her child and her work and can achieve her professional targets while simultaneously catering to the needs of her child.

The provision which extends the ambit of the act to adoptive and commissioning mothers is a major breakthrough that has been achieved by the legislators. This not only promotes the tendency to adopt orphaned children but also lessens the insecurities of those single mothers who are juggling to maintain their work-life balance and playing dual roles at home. Further, the women who obtain a child via surrogacy have also got an opportunity to bond with the child just like other biological mothers. The statutory obligations imposed on the employer ensure that all the requirements are fulfilled and the objects of the act are met. However, the flip side of the coin reveals some disturbing findings.

According to the reports of a staffing company TeamLease Services’ latest report which released in June, 2018, the newly introduced maternity benefits are likely to have an adverse impact on the numbers of the female workforce in India. The report estimates a net job loss of 11-18 lakh women for 2018-19. The reason behind this inconceivable outcome is this; the employers find it more cost efficient to hire male employees than comply with all the statutory requirements. Perceiving things from their point of view, hiring female employees is the ‘worst trade deal in the history of trade deals’. They have to be careful while assigning tasks to female employees which may have an impact on their pregnancy. This usually means re-allotting the task to someone else. While it may not seem to be a big deal in white collar jobs, it is very significant in the blue collar jobs. In labor intensive occupations, there is a little to do for pregnant women. Thus, to the employer, they are a liability. Therefore, he seeks to terminate their services in order to cut down the input costs. Since the statute prevents him from doing so, he decides not to appoint any female employee. So, in effect, the provisions of the Maternity Benefit Act are causing a downfall in the female employment rate. Further, the increase in the leave period is being seen as enforcement of the traditional gender roles. While women are entitled to a leave of 26 weeks, no similar provisions for ‘paternity leave’ exist in India as of now. Thus, it is being said that there is an ulterior motive behind this ‘benefit’; a motive of upholding and enforcing the traditional role of a female as a mother, wife and homemaker. While the provision for opening up a crèche at workplaces is a positive initiative, the requirement of having minimum fifty employees for it seems unreasonable.

Payment Of Gratuity Act, 1972

An example of social welfare legislation, this act aims at providing financial stability to those employees who are no more a part of the organization because of retirement or termination of services. The act provides for payment of gratuity to those employees who have been in the employment of the organization for a period of five years or more.

The objective behind categorizing employees into two groups: those who have served the organization for a duration of at least five years and those who haven’t is to reward the employees who have rendered their continuous services loyally to the organization. This provision has far reaching consequences in the contemporary era where organization, both government and private, are looking for such employers who remain faithful to them and continue to benefit the organization with their skills and hard work. When an employee joins an organization as a newbie, there are many things he is unaware of. There are also some skills which he learns over the course of his employment in the organization. The company may send employees to attend conferences and workshops with the hope that such training and new ideas will be used by it for the promotion of the object of the company. Thus, an organization invests heavily in its human resource. Thus, it will prove to be counter intuitive if such employees, tailored to perfection over the years by intense toil and sweat leave the parent organization for another. Hence, to prevent brain-drain, the act provides the requirement of fulfillment of five years of service to become entitled to a lump sum amount to be paid as gratuity.

Another provision of the act states that in case the number of employees falls below ten, the act would still apply to the establishment as it did before. This provision might have been introduced fearing the exercise of arbitrary powers by the employer. It is very likely that an employer may start terminating the services of his employees on flimsy grounds with the concrete aim of dropping the number of the employees below ten so as to successfully evade the law. This problem has been addressed very well by the act.

Overall analysis

Though both the legislations have been successful to an extent, there is a common ground which both of them are missing out- the application of these provisions to the unorganized sector.

The acts provide for the areas to which these acts will extend. A brief look at the list of those establishments will bring to light the fact that these acts do not cover within their ambit, the employees of the unorganized sector. Linking this to the fact that the majority of workforce in our country is employed in the unorganized sector, we realize that these acts are nowhere near the aims that they seek to achieve.

Conclusion

In conclusion, it will be appropriate to say that the legislations, though made for ensuring social security, is unable to do so effectively due to its non-applicability in the unorganized sector. To ensure its complete application, efforts must be made to regularize the unorganized sector so that the goals set by the parliament can be achieved.

With respect to the Maternity Benefit Act, 1961; in its current form, it cannot be expected to increase the participation of women on the professional front. As has already been analyzed, employers choose not to employ women so as to save the cost incurred by them because of the Act. Therefore, it is suggested that the scheme of law should be rethought. Instead of creating demanding legal obligations (backed by a threat of sanction) on the employers, it would be better and far more effective if the establishments are given incentives to increase the female work force.

With respect to the Payment of Gratuity Act, 1972; it is the conviction of the author that if the purpose is to retain the employees, then the current scheme of things as laid down by the act is not sufficient. In the contemporary world, employees seek recognition appreciation in form of promotions, friendly work environment, paid holidays, etc. Thus, money consideration by way of gratuity won’t be a very attractive idea. Hence, there is a need to reconsider the provisions of the Maternity Benefit Act, 1961 and the Payment of Gratuity Act, 1972 in light of the modern development.