Maternity Benefits: Should PF and ESI Be Deducted from Salary During Leave?

Dear All,

When you make payment for maternity benefits, should the PF contribution and ESI contribution be deducted from the gross salary of the employee for 84 days? In my opinion, this is not permissible under the provisions of the act, but to solidify this opinion, I would like to take note of the opinions of all of you. Kindly advise.

Regards, AS

Dear Avinash,

As per my knowledge, if the female employee is under ESI, she will not get any maternity benefit from the organization, but from the ESIC. In that case, you cannot deduct her PF & ESI contributions. But if she is not covered under ESI, you need to pay her salary for the maternity leave period (84 days). In that case, you have to deduct her PF, PTax (standard deduction) from her gross salary.

Regards,
PSB

Dear AS,

In my opinion, ESI and PF will be deducted during maternity leave.

Regards,
R.N. Khola

(Labour Law and Legal Consultants)
09810405361

Dear AS,

Purabi has replied to your query logically. If she will get maternity benefits under the Maternity Benefit Act, then she is not a member of ESI. So, ESI will not be deducted, only PF will be deducted. If she is covered under ESI, no payment will be made by the employer, so there will not be any deduction of PF and ESI.

Thanks,
J.S. Malik

But the Maternity Benefit Act states that deductions of any form, even those related to the fund, are not permissible. How can PF and ESI deductions be made? I have raised this issue here on CiteHR because I had a discussion with my payroll manager about this. He mentioned that for deductions and according to the acts, it should not be deducted.
Please go through the act and comment on this.

Please read "deduction in any form" as "Deduction in any form, save as otherwise provided by law".

Deductions in Maternity benefit can happen in two ways.

1. All legal deductions are made immediately - if the company is on monthly IT deduction then IT, PF.
2. Certain deductions can be deferred until the employee joins - like IT probably, loans, recovery of advances paid.

The idea is to provide enough money for complexities related to maternity but not to violate the contributions that are legally required. Any contributions that are legally stipulated must be made unless specifically excluded.

Dear All,

Opinions are not law, hence please talk only about the legal aspects. Specifically, whether PF deductions should be made or not.

With regards,
Rajesh Sarao
9816615455

1) Salary By Company - There is no need to deduct PF & ESI for the same. If you have any Maternity Benefit policy, then the salary will be paid by the insurance company, so there is no question of deductions for any statutory deductions at all.

2) Salary by ESI - As it is paid by ESI and not by the Company, there is no question of any deductions. Only the employer has to pay Maternity Bonus (One time). As this is not a monthly payment, there is no question of ESI, and as this is not considered basic wages, there is no question of PF at all.

In case of any queries, please call Prashant at 9850401160.

Hi all,

Please refer to Taxmann's STATUTORY MANUAL WITH STATUTORY RULES 2006, page 1204. It clearly states that a woman who is not covered under ESIC is entitled to payment, which includes basic salary, dearness allowance, HRA, and incentive bonus, i.e., regular monthly salary. However, it does not include the following:

1) Any bonus other than incentive bonus
2) Overtime earnings and any deduction or payment on account of fines
3) Any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the woman under any law for the time being in force
4) Any gratuity payable on the termination of service.

I hope this clears the doubt.

Regards,
Geeta