Understanding Gratuity Act and Maternity Leave Laws: Compliance and Penalties

Hello Human Resource professionals,

Greetings!!

I would like to understand Gratuity and Maternity Leave laws and their workarounds if anyone can help me with that.

Questions:

1. If a Pvt. Ltd. company has not applied for the Gratuity Act since incorporation and wants to apply, what would be the payment, penalty, and registration process?
2. Can maternity leaves be agreed upon mutually as LWP?

1. The company need not apply for coverage of any Act like the Payment of Gratuity Act or the Maternity Benefits Act. If your company has 10 employees, then obviously, your establishment comes under these Acts.

Failure to pay gratuity to any 'eligible' employee will attract penalties as prescribed under these Acts.

An employee is eligible to be paid gratuity at the time of leaving the company after rendering a service of not less than five years. The amount of gratuity is equal to 15 days' salary for every completed year of service.

Similarly, a woman employee who has worked for at least 80 days during a period of 12 months immediately preceding the date of delivery is to be given maternity leave WITH PAY for 26 weeks. If she already has two children, this leave shall be reduced to 12 weeks. In addition to this, a medical bonus of Rs 3500 is required to be given to her provided the employer is not giving any pre and postnatal assistance to her.

2. No, you cannot have an agreement that is against the law. The law states that you should give 26 weeks of leave with salary to a woman employee, and you cannot contract it out with LOP/LWP.