Maternity Leave Dilemma: Can We Pay Only Half or Basic Salary in a Small Karnataka Company?

Hi, I'm working as an HR professional in a private limited company with 40 employees in Karnataka. We are in the process of implementing a maternity leave policy this year.

Maternity Leave Payment

Do we need to pay a 6-month salary to the employee during her maternity leave? If so, can we pay only 50% of the salary or just the basic salary as shown on the payslip? Please confirm.

Dear Deepak, First, the Maternity Benefit Act, 1961, being a Central Labor Legislation, is applicable to all States in the Union of India alike.

Definition of 'wages' under the Maternity Benefit Act, 1961

Second, please go through the definition of the term 'wages' under section 3(n) read with section 5(1) of the MB Act, 1961. In short, you have to pay the entire wages, including all allowances drawn by the employee prior to her entering on 26 weeks leave due to maternity.

Advance payment of maternity salary

Third and most importantly, the salary for the period of maternity shall be paid in advance by the employer on receipt of notice from the employee. Please refer to section 6 of the MB Act, 1961.

Recognizing Human Resources

When your function is to recognize Human Resources, you should not think otherwise. An entrepreneur may consider paying 50% of the salary or even terminating pregnant employees, but you should not. If you are to follow the law, follow it, but never dilute it according to situations.

Salary Reduction for Employees

For normal employees, the employer can reduce the salary of employees. He will need the consent of the employees concerned for the same. Alternatively, he may terminate the employees following the normal procedure (including holding departmental inquiries, etc.). Another possibility is to retrench employees, for which he needs to follow the regulations under the Industrial Dispute Act (basically, the newest employees are to be retrenched first).

Mutual Agreement on Wage Reduction

Reducing the wages to a new level by mutual agreement is better. Most employees will agree as the alternative is to lose jobs. Of course, it cannot be lower than minimum wages.

Protection for Pregnant Women

However, pregnant women are protected under the Maternity Benefit Act, and their salary cannot be reduced, even if they agree. Financial capabilities, etc., are not relevant in the face of the statute.