Maternity Benefits for Consultants on Annual Contracts: Are There Any Regulations?

Are there any regulations for the Maternity Benefits Act for women employed as consultants on an annually renewable contract?

Yes, it is nothing but Fixed Term Contract employment only. As such, the provisions of the Maternity Benefit Act, 1961 would certainly be applicable to such women employees like any other regular employee of the establishment.

I would like to add that if the terms of employment provide for office timing, hours of work, leaves, holidays, etc., at par with other employees, then you would be an employee by all means. You will be eligible for maternity benefits as per the law.

It will depend on the terms of the appointment. If, as a consultant, one is engaged on a retainership basis and is required to visit the place of work on an "as required" basis, the eligibility is questionable. Under these circumstances, it is required to be examined whether she is "employed" by the organization and how the condition of 80 days' work will be reckoned.

But the above aspect apart, from the face of the query, I share the same view as expressed by the learned colleagues that she is eligible for the MB under the Act.

Regards, Vinayak Nagarkar HR and Employee Relations Consultant

Dear Snigdha Mandal,

Please go through the attached circular of the Ministry of Labour & Employment / Government of India dated 12th April 2017, where clarifications are given regarding the entitlement of Maternity Benefits for women employees.

Regards,
Suresh

The attachment provided by Mr. Suresh does not support the idea that a consultant is eligible for maternity benefits. What is crucial is the terms of the appointment. If she has been categorized as an independent consultant who does not adhere to HR rules and procedures regarding office hours, leave, holidays, etc., then it should be considered a genuine consulting contract where she is not entitled to any benefits under labor laws, including the Maternity Benefits Act.

I agree that the clarification issued by MoL is not a law. The MBA does not say anything about a consultant. In fact, it cannot have stipulations because a consultant is an independent person who is an expert advising the organization.

The nature of the work

The most important aspect that has been overlooked in all responses is the nature of the work. If the scope of work is more like that of an employee rather than a consultant, she will certainly be entitled to benefits. In such a case, an agreement terming her as a consultant would be a bogus and sham agreement.

Regards, P. K. Jadia

After going through all the above observations, I would like to rejoin the discussion. Ordinarily, the word "consultant" refers to a person who gives opinions on a given issue, which might be quite unusual or complicated, and suggests appropriate alternatives based on their own experience and expertise. Thus, the process of consultation creates an ad hoc relationship between the consultant and the person who seeks consultation. As it is, therefore, there exists no employment relationship between the two. When the relationship is regularly retained for any stretch of period, the consultant is paid their charges, i.e., retainer fee on an annual or monthly basis with the conditions of availability of their services as and when required and keeping the information shared with them confidential. Thus, such an ad hoc arrangement creates only a contract for service and not a contract of service between the parties.

Impact of Designations in I.T. Industries

However, in due course, particularly with the advent of large-scale I.T. industries, catchy and novel terms of designations of regular employees such as consultant, associate, executive, etc., came to be coined and widely used with the apparent intention of eliminating hierarchical distinctions. At times, in matters of special employment benefits like gratuity, bonus, maternity benefits, such fancy designations tend to create confusion like the one raised in the post.

A consultant on annual retainership will only be entitled to maternity benefits if she is held to be an "employee." Since she might have been raising her bills for retainership and you might have been paying her fee after deducting TDS like other professionals.

The element of control and supervision over her work by the employer is crucial for deciding whether she is an employee. In my opinion, if this element is absent, then she may not be covered under the Act of 1963.

Whatever the designation or nomenclature, only the nature of work prevails. Designating someone as a consultant when the nature of work is akin to that of an employee is nothing but fooling oneself. Such consultants are eligible for all employee benefits.

P.K. Jadia
Labour Law Consultant, Silvassa, UT of DNH and DD
9687625260