Maternity Leave Pay: Should It Be Based on Basic Salary or Full CTC? Seeking Clarity!

Dear all,

Maternity Leave Benefits

This is regarding Maternity Leave Benefits. During Maternity Leave, the salary processed will be calculated based on the Basic Salary or the Cost to Company (CTC). As per the act, it is calculated on a daily wage basis. Kindly clarify whether we should pay based on the Basic Salary or the CTC.

Awaiting your response.

Understanding CTC and Average Daily Wage

CTC is an all-inclusive term that includes many items which an employee doesn't receive as salary, such as gratuity.

Explanation of Average Daily Wage

The average daily wage is explained in the Act as follows:

Explanation: For the purpose of this sub-section, the average daily wage means the average of the woman's wages payable to her for the days on which she has worked during the period of three calendar months immediately preceding the date from which she absents herself on account of maternity, or one rupee a day, whichever is higher.

So, it is not limited to the basic pay but includes allowances that would have been payable had she been working on the days of maternity leave.

Payment of PF & ESIC Contributions During Maternity Benefits

Do we need to pay PF & ESIC contributions while making maternity benefits payments for 6 months?

If the employee is ESIC-covered, then maternity benefits plus medical support are all handled by ESIC, subject to the enforcement of the Maternity Act and ESIC simultaneously.