How Can Small Startups Afford 6-Month Maternity Leave? Seeking Advice and Shared Experiences

We are a startup company. One of our employees is pregnant. We heard about the rule regarding 6 months of paid leave (maternity leave), and as we are a very small company, we are not sure how we will be able to pay her salary for 6 months. Is anyone else in the same situation? I apologize for posting this in the forum. We want to support her, but we are facing financial constraints.

In the USA, maternity leave is supported by short-term disability insurance, but here I am unsure how we will be able to support her.

Thank you.

In case the employee has completed at least an 80-day employment period in the last 12 months, she is eligible for maternity leave under the Maternity Benefits (Amendments) Act, 2017, to apply for the benefits. This being the statutory position, there is no permissible way to sidestep it.

Dear Ashish,

As you are well aware, laws are promulgated to maintain order and discipline in society. Society can be segregated into social groups or communities. Thus, the industrial community is a distinct social group comprising employers and employees. Separate laws are required to regulate their relations as well as conditions of employment, including social security for the employees. Hence, labor laws cover various aspects of employment for hire or reward and the necessity of their total compliance by all employers, whether small or large.

The Maternity Benefit Act, 1961

The Maternity Benefit Act, 1961, is beneficial legislation for women employees in recognition of their motherhood. The Act already considers the size of establishments and grants a statutory concession by prescribing a threshold regarding the total number of employees employed in certain types of establishments for the Act to apply. If your establishment does not fall within the concession due to obvious reasons, whether it is a start-up or not becomes immaterial when compliance is necessary. When a woman's expected delivery date falls after she has rendered a minimum service of 80 days in your establishment, she becomes entitled to all maternity benefits under the Act. Therefore, the entitlement is a result of her past service in your organization.

The practical difficulty you have expressed must simply be overlooked, as statutory maternity benefits are an essential part of the cost of employment for the establishment when the services of women are required and hired.

Dear Ashish Gupta,

India is a part and parcel of the capitalistic world. Capitalism thrives on profit. However, in addition to making a profit, businesses are expected to bear some social responsibility as well. Governments around the world enact legislation to provide social security to workers. Businesses bear the cost of social security either fully or partially.

The Maternity Benefit Act in India

The government of India has enacted the Maternity Benefit Act to provide social security to women employees. Whether on account of maternity benefit or otherwise, business owners, while making a business plan for their business, are expected to visualize all the costs arising out of social security. If some business owner fails to make adequate provisions for these costs, then it is the individual business owner's fault.

Challenges with Labor Laws

For many business owners, the labor laws are eyesores. Businesspersons should never grow their business with the imaginary pain of the eyesore. Otherwise, they develop a tendency to give short shrift to the labor laws. Their fixation on finding loopholes in the labor laws does more harm than good as it casts a shadow on the objective of the business itself.

Additional Note: A specific reply to the poster's query has been given already by the learned members. My reply is on a broad level, and to understand the meaning of my post, the members require not just seniority but a learned mind as well. If some senior does not understand, then the member need not start casting comebacks!

Thanks,

Dinesh Divekar

Maternity Benefits and Legal Compliance

Maternity benefits must be extended to her if the Maternity Benefit Act is applicable to your establishment. This is a legal provision that needs to be complied with as per the statute.

Eligibility for ESIC Maternity Benefits

If the employee is a member of ESIC, then maternity benefits can be availed from the ESIC department, subject to a contribution of 70 days in the preceding two contribution periods.

Applicability of ESIC and Maternity Benefit Act

For the ESIC and Maternity Benefit Act to be applicable, a minimum of 10 employees need to be employed.

Thanks

Dear Ashis, there is nothing specifically prescribed in the act for a startup or a new company. Your employee is eligible for the benefits envisaged for pregnant employees if your company falls under the canopy of the act.

How to manage salary payment for maternity leave

How would you be able to pay her salary for 6 months as a small company is the question? You should pay her as if she is on duty. Although you may think this is a valid question, it is not justified under the law. You cannot ignore the rights of the employee under the act, which are not only valid but also justified.

You have to act according to the law, which can help the organization on the legal front. You need to discuss how best you can support her to find a solution.

Compliance with Social Benefit Legislation

There are no exceptions to compliance with any social benefit legislation. The Maternity Benefit Act is designed for the significant benefit of women and their economic and social uplift. Therefore, you must comply with the provisions of the Act and extend maternity benefits to her.