Small Business Dilemma: Are We Required to Offer Maternity Leave and Insurance?

Another query regarding maternity leave: Is there a minimum number of employees required for the organization to provide maternity leave to its employees? We currently have 12 employees and are an 8-month-old establishment. Also, is it mandatory for the organization to provide medical insurance? We are a studio registered under the Shops and Establishments Act.

Thank you for your inquiry.

Applicability of the Maternity Benefit Act, 1961

1. The Maternity Benefit Act, 1961 is applicable to "every shop and establishment" in which ten or more persons are employed or were employed (Section 2 of the said Act).

Eligibility for Maternity Benefits

2. A woman employee is entitled to maternity benefits if she "has actually worked in an establishment for a period not less than eighty days in the twelve months immediately preceding the date of her expected delivery" (Section 5(2) of the said Act).

Coverage Under the Employees' State Insurance (ESI) Act, 1948

3. Please also check whether the establishment in which you are working is covered under the Employees' State Insurance (ESI) Act, 1948. If so, maternity benefits are also provided under the said ESI Act, 1948.

If you are asking about the MB Act, the applicability is for establishments employing 10 or more persons or such number as amended by state governments. It is not applicable to establishments covered under the ESI Act, subject to sections 5A and 5B of the MB Act.

Understanding Health Insurance Obligations for Smaller Units

1. Sir, I understand that for smaller units falling under the Shops & Commercial Establishment Acts, there appears to be no statutory liability to provide health insurance to employees. You can confirm this from the Shop & Commercial Establishment Act of the appropriate government in the jurisdiction where your organization is located.

2. However, for establishments covered under the ESI Act, there is a provision for medical facilities in the said scheme, which is to be provided by ESIC.

3. In cases of accidents falling under the Employees' Compensation Act, 1923, I believe the employer is required to provide medical aid to the employee who suffered an accident in the course and scope of employment.