Dear all,
She took 4 months of maternity leave and received 3 months' salary from the ESIC office. We have not calculated the bonus for the aforementioned 4 months. She is receiving a bonus for the remaining 8 months of salary. Now, she is inquiring about the eligibility for the bonus for the 4 months of maternity leave as well. Please provide an answer on whether she is eligible or not. If yes, kindly refer to the relevant act.
Regards,
Ramesh
Manager - HR & SEC
From India, Coimbatore
She took 4 months of maternity leave and received 3 months' salary from the ESIC office. We have not calculated the bonus for the aforementioned 4 months. She is receiving a bonus for the remaining 8 months of salary. Now, she is inquiring about the eligibility for the bonus for the 4 months of maternity leave as well. Please provide an answer on whether she is eligible or not. If yes, kindly refer to the relevant act.
Regards,
Ramesh
Manager - HR & SEC
From India, Coimbatore
Dear Mr. Ramesh, As per the Payment of Bonus Act 1965, Section 14 (d), if she is on maternity leave with salary or wage, she will be eligible for bonus on those those days also.
From India, Madras
From India, Madras
Dear Ramesh,
I respectfully differ with the view of vigsysjesu. If an employee is a contributor to the ESI Scheme, then during maternity leave, she gets maternity benefit from the ESIC, and no salary or wages are payable to her by the employer. Therefore, she is not covered under section 14(d) of the Payment of Bonus Act, 1965. Please also read the provisions of section 10, according to which the bonus is payable on the "salary or wage earned by the employee." In this case, she does not earn any salary or wages.
Best wishes,
jpratap
From India, Chandigarh
I respectfully differ with the view of vigsysjesu. If an employee is a contributor to the ESI Scheme, then during maternity leave, she gets maternity benefit from the ESIC, and no salary or wages are payable to her by the employer. Therefore, she is not covered under section 14(d) of the Payment of Bonus Act, 1965. Please also read the provisions of section 10, according to which the bonus is payable on the "salary or wage earned by the employee." In this case, she does not earn any salary or wages.
Best wishes,
jpratap
From India, Chandigarh
Dear Mr. Jpratap,
The aim of the establishment of ESI is for the social security of an employee. Even if the employee is covered under ESIC, the principal employer is the company. ESIC will not provide a bonus for that period. Therefore, it is the duty of the employer to include the maternity days (paid and eligible days) wages for the calculation of Bonus.
From India, Madras
The aim of the establishment of ESI is for the social security of an employee. Even if the employee is covered under ESIC, the principal employer is the company. ESIC will not provide a bonus for that period. Therefore, it is the duty of the employer to include the maternity days (paid and eligible days) wages for the calculation of Bonus.
From India, Madras
Dear Vigsysjesu,
A statement of objects and reasons is always there on a statute book. But in case of a difference of opinion regarding any provision of law, what is the touchstone? Either it is the Act itself or an interpretation given by a High Court or Supreme Court. You say that it is the duty of an employer to pay a bonus. Who imposes this duty on the employer? It is an Act or the Rules which impose obligations on an employer. An employer may pay anything to an employee even if he has no obligation to pay the same under any law. I have not challenged his right to pay but I have merely brought the legal position to the notice of the members of this forum in this regard.
Best wishes,
jpratap
From India, Chandigarh
A statement of objects and reasons is always there on a statute book. But in case of a difference of opinion regarding any provision of law, what is the touchstone? Either it is the Act itself or an interpretation given by a High Court or Supreme Court. You say that it is the duty of an employer to pay a bonus. Who imposes this duty on the employer? It is an Act or the Rules which impose obligations on an employer. An employer may pay anything to an employee even if he has no obligation to pay the same under any law. I have not challenged his right to pay but I have merely brought the legal position to the notice of the members of this forum in this regard.
Best wishes,
jpratap
From India, Chandigarh
Dear Vigsysjesu,
You are absolutely right. Bonus is calculated on the basis of actual wages earned/paid during the financial year. If an employee has been on Maternity Leave under ESI and has been paid Maternity benefit by the ESI and wages for the said period have NOT been paid by the employer, then Bonus is NOT payable for such period. Trust this is clear.
Best Wishes & Happy, Safe & Pollution-free Diwali,
Vasant Nair
From India, Mumbai
You are absolutely right. Bonus is calculated on the basis of actual wages earned/paid during the financial year. If an employee has been on Maternity Leave under ESI and has been paid Maternity benefit by the ESI and wages for the said period have NOT been paid by the employer, then Bonus is NOT payable for such period. Trust this is clear.
Best Wishes & Happy, Safe & Pollution-free Diwali,
Vasant Nair
From India, Mumbai
Dear Mr. Nair, The views expressed by you are not the views of Mr. Vigsysjesy but are mine. He holds contrary views. Kindly see his post of yesterday. jpratap
From India, Chandigarh
From India, Chandigarh
I agree with your view. Being on Maternity leave; unlike a leave of absence without pay; does not make the beneficiary ineligible for statutory bonus. Warm regards.
From India, Delhi
From India, Delhi
Dear all,
1. Section 14(d) makes it simply clear that maternity leave with salary or wage is to be computed as working days.
2. Section 13 of the Act states that proportionate deduction can be made from bonus payable for the days not actually worked. Since maternity leave period is included in the days worked, it cannot be treated as days not worked.
3. Sections 10 and 11 state that bonus is payable as a percentage of salary/wages earned by the employee.
4. Section 2(21) defines salary/wages as all remuneration payable to the employee as per terms of employment. Section 5 of the Maternity Benefit Act 1961 stipulates that the employer shall be liable for the payment of maternity benefit. Maternity benefit is definitely a term of employment and hence would be a part of wages.
5. In case ESI pays maternity benefit, that will not exclude the employer from the liability for payment of Bonus. ESI is a social security scheme, whereby an agency is created to fulfill the need for providing services needed by the employed workmen as provided therein. Hence, the maternity benefit provided by the ESI is to be reckoned for bonus purposes.
Hope this clarifies the whole issue.
Regards,
KK
From India, Bhopal
1. Section 14(d) makes it simply clear that maternity leave with salary or wage is to be computed as working days.
2. Section 13 of the Act states that proportionate deduction can be made from bonus payable for the days not actually worked. Since maternity leave period is included in the days worked, it cannot be treated as days not worked.
3. Sections 10 and 11 state that bonus is payable as a percentage of salary/wages earned by the employee.
4. Section 2(21) defines salary/wages as all remuneration payable to the employee as per terms of employment. Section 5 of the Maternity Benefit Act 1961 stipulates that the employer shall be liable for the payment of maternity benefit. Maternity benefit is definitely a term of employment and hence would be a part of wages.
5. In case ESI pays maternity benefit, that will not exclude the employer from the liability for payment of Bonus. ESI is a social security scheme, whereby an agency is created to fulfill the need for providing services needed by the employed workmen as provided therein. Hence, the maternity benefit provided by the ESI is to be reckoned for bonus purposes.
Hope this clarifies the whole issue.
Regards,
KK
From India, Bhopal
Being on maternity leave, it is the responsibility of the employer to pay during that period. However, since the employer has opted to be covered under ESI, their liability is being met through ESI on behalf of the employer.
Therefore, the employer has to treat the employee on paid maternity leave and also treat it as if the employer has paid during the leave. Bonuses are payable on the salary or wages as if they were earned at the normal rate, had the employee not proceeded on maternity leave.
From India, Chandigarh
Therefore, the employer has to treat the employee on paid maternity leave and also treat it as if the employer has paid during the leave. Bonuses are payable on the salary or wages as if they were earned at the normal rate, had the employee not proceeded on maternity leave.
From India, Chandigarh
Subject: Re: Bonus for Maternity Leave
Dear [Recipient],
When a maternity employee is covered under the ESI Act, 1948, she is not covered under the Bonus Act. She only receives benefits under ESIC. Therefore, she is not eligible to receive a bonus.
Junior Officer - HR & Admin.
IVRCL Infrastructure & Projects Ltd.
From India, Calcutta
Dear [Recipient],
When a maternity employee is covered under the ESI Act, 1948, she is not covered under the Bonus Act. She only receives benefits under ESIC. Therefore, she is not eligible to receive a bonus.
Junior Officer - HR & Admin.
IVRCL Infrastructure & Projects Ltd.
From India, Calcutta
Dear Laxminarayana,
Employees are not covered under ESI; it is the establishment that is covered under the ESI. By being covered under ESI, the provisions of the Payment of Bonus Act are not diluted. Employees continue to be in the employment of the establishment. The payment of salary is made by the ESIC on behalf of the employer as per the scheme of the ESI Act. If there were no ESI, the employer would have borne the salary even if it is paid by ESI during the leave period.
Therefore, bonus is payable.
From India, Chandigarh
Employees are not covered under ESI; it is the establishment that is covered under the ESI. By being covered under ESI, the provisions of the Payment of Bonus Act are not diluted. Employees continue to be in the employment of the establishment. The payment of salary is made by the ESIC on behalf of the employer as per the scheme of the ESI Act. If there were no ESI, the employer would have borne the salary even if it is paid by ESI during the leave period.
Therefore, bonus is payable.
From India, Chandigarh
Dear Ramesh,
The following matters arise in this case according to me.
EMPLOYEE COVERED UNDER ESIC
The employee has availed Maternity Benefit from ESIC for 3 months, whereas she was absent for a period of 4 months.
ESIC pays twice the standard benefit rate for Maternity benefit. In this case, the payment has been made for 3 months.
While on Maternity leave, the employee continues to be on your rolls but earns wages through ESIC for which the employer makes a contribution. Hence, ESIC pays the employee on behalf of the employer.
EMPLOYEE COVERED UNDER MATERNITY BENEFIT ACT
What happens if the employee draws a wage above the ESI ceiling?
She is covered under the Maternity Benefit Act.
The employer pays wages as per the Maternity Benefit Act and computes a bonus for the wages so paid.
But if the employee avails leave more than her entitlement, then the leave availed by her in excess of her entitlement is treated as LOP. In such a case, the employee will receive a bonus only for the period she is entitled to leave and wages.
Comparing these two situations (covered under ESI and covered under Maternity benefit), we can infer that in the case referred by you, the employee will be eligible for a bonus proportionate to the wages paid by ESI (she does not earn wages from the employer during the period). For the period she does not earn wages (4 months - 3 months paid by ESI = 1 month), she will not earn a bonus.
Eventually, she will be entitled to a bonus for the 8 months she served and 3 months she received benefits from ESI and will not be entitled for 1 month wherein she was not paid any amount by ESI.
From India, Madras
The following matters arise in this case according to me.
EMPLOYEE COVERED UNDER ESIC
The employee has availed Maternity Benefit from ESIC for 3 months, whereas she was absent for a period of 4 months.
ESIC pays twice the standard benefit rate for Maternity benefit. In this case, the payment has been made for 3 months.
While on Maternity leave, the employee continues to be on your rolls but earns wages through ESIC for which the employer makes a contribution. Hence, ESIC pays the employee on behalf of the employer.
EMPLOYEE COVERED UNDER MATERNITY BENEFIT ACT
What happens if the employee draws a wage above the ESI ceiling?
She is covered under the Maternity Benefit Act.
The employer pays wages as per the Maternity Benefit Act and computes a bonus for the wages so paid.
But if the employee avails leave more than her entitlement, then the leave availed by her in excess of her entitlement is treated as LOP. In such a case, the employee will receive a bonus only for the period she is entitled to leave and wages.
Comparing these two situations (covered under ESI and covered under Maternity benefit), we can infer that in the case referred by you, the employee will be eligible for a bonus proportionate to the wages paid by ESI (she does not earn wages from the employer during the period). For the period she does not earn wages (4 months - 3 months paid by ESI = 1 month), she will not earn a bonus.
Eventually, she will be entitled to a bonus for the 8 months she served and 3 months she received benefits from ESI and will not be entitled for 1 month wherein she was not paid any amount by ESI.
From India, Madras
There are several members whose answer is in the affirmative and several others whose answer is in the negative. But the question still remains unanswered: "whether the 'maternity benefit' paid to an employee under the ESI scheme can be treated as 'wages' under the Payment of Bonus Act, 1965? My views are still the same that the 'maternity benefit' does not fall within the meaning of 'wages' as per the definition of 'salary or wages' given under the Payment of Bonus Act, 1965. Since the bonus is to be paid on the earned 'wage' of an employee, therefore, I am of the firm opinion that the employer is not bound to pay a bonus to an employee who gets 'maternity benefit' under the ESI Scheme.
For the payment of the bonus, you have to calculate his 'wages' earned during each month. Those who are really serving as Manager (P&A) know how to calculate the wage for which the bonus is to be paid. However, I feel that the employees who get 'maternity benefit' under the Payment Maternity Benefit Act, 1960 would certainly be covered under the provisions of the Payment of Bonus Act, 1965.
Best wishes,
jpratap
From India, Chandigarh
For the payment of the bonus, you have to calculate his 'wages' earned during each month. Those who are really serving as Manager (P&A) know how to calculate the wage for which the bonus is to be paid. However, I feel that the employees who get 'maternity benefit' under the Payment Maternity Benefit Act, 1960 would certainly be covered under the provisions of the Payment of Bonus Act, 1965.
Best wishes,
jpratap
From India, Chandigarh
Dear friend,
The mere payment of any benefit does not exclude eligibility for receiving statutory bonus. The fact that this has been taken over by ESIC instead of the company is in itself a big relief for the company. Using this plea to debar or deny the employee bonus, does it appear correct?
Tomorrow, if the company wants, does the mere fact that the salary has been paid by ESIC and not by the company amount to a break in service? One has to examine an issue from various angles and context to arrive at a proper conclusion, a task which is ultimately performed well by our Courts. But do we need a Court ruling or case laws on EVERY issue?
Let us ponder over these questions without prejudice to the interest of the employees.
Warm regards.
From India, Delhi
The mere payment of any benefit does not exclude eligibility for receiving statutory bonus. The fact that this has been taken over by ESIC instead of the company is in itself a big relief for the company. Using this plea to debar or deny the employee bonus, does it appear correct?
Tomorrow, if the company wants, does the mere fact that the salary has been paid by ESIC and not by the company amount to a break in service? One has to examine an issue from various angles and context to arrive at a proper conclusion, a task which is ultimately performed well by our Courts. But do we need a Court ruling or case laws on EVERY issue?
Let us ponder over these questions without prejudice to the interest of the employees.
Warm regards.
From India, Delhi
Dear,
Sec 14 (d) of the Bonus Act is clear.
Computation of the number of working days: For the purposes of section 13, an employee shall be deemed to have worked in an establishment in any accounting year also on the days on which:
(a) he has been laid off under an agreement or as permitted by standing orders under the Industrial Employment (Standing Orders) Act, 1946 (20 of 1946), or under the Industrial Disputes Act, 1947 (14 of 1947), or under any other law applicable to the establishment;
(b) he has been on leave with salary or wage;
(c) he has been absent due to temporary disablement caused by an accident arising out of and in the course of his employment; and
(d) the employee has been on maternity leave with salary or wage during the accounting year.
It is to be seen that the entitlement to women is in tune with the United Nations' Convention on the Elimination of all forms of Discrimination Against Women (CEDAW), 1979.
Also, Articles 14 and 15 of the Constitution guarantee equality. Article 15(3) enables the State to make special provisions for women. The Maternity Benefit Act & Bonus Act provision Sec 14 (d) make provisions that are in furtherance of two objectives - affirmative action (Sections 4, 5, and 27) and non-discrimination (Sections 12, 21, and 23). Their universality is undeniable, which HR Managers need to note.
The thumb rule in interpreting beneficial legislation is to interpret it in favor of the employee, and if the employees are women, then give them the benefit without any doubt.
With Regards,
Advocates & Notaries & Legal Consultants [HR]
E-mail: rajanassociates@eth.net
Mobile: 9025792684.
From India, Bangalore
Sec 14 (d) of the Bonus Act is clear.
Computation of the number of working days: For the purposes of section 13, an employee shall be deemed to have worked in an establishment in any accounting year also on the days on which:
(a) he has been laid off under an agreement or as permitted by standing orders under the Industrial Employment (Standing Orders) Act, 1946 (20 of 1946), or under the Industrial Disputes Act, 1947 (14 of 1947), or under any other law applicable to the establishment;
(b) he has been on leave with salary or wage;
(c) he has been absent due to temporary disablement caused by an accident arising out of and in the course of his employment; and
(d) the employee has been on maternity leave with salary or wage during the accounting year.
It is to be seen that the entitlement to women is in tune with the United Nations' Convention on the Elimination of all forms of Discrimination Against Women (CEDAW), 1979.
Also, Articles 14 and 15 of the Constitution guarantee equality. Article 15(3) enables the State to make special provisions for women. The Maternity Benefit Act & Bonus Act provision Sec 14 (d) make provisions that are in furtherance of two objectives - affirmative action (Sections 4, 5, and 27) and non-discrimination (Sections 12, 21, and 23). Their universality is undeniable, which HR Managers need to note.
The thumb rule in interpreting beneficial legislation is to interpret it in favor of the employee, and if the employees are women, then give them the benefit without any doubt.
With Regards,
Advocates & Notaries & Legal Consultants [HR]
E-mail: rajanassociates@eth.net
Mobile: 9025792684.
From India, Bangalore
Dear All,
While processing the Maternity Benefit under the ESI Act, the ESI Corporation will require Form 28-A, where it will be explicitly stated that the woman in question did not receive wages from her employer during her maternity leave period and is entitled to 84 days of Maternity benefits from the Corporation. Based on this declaration, the Corporation will proceed with the payment. It is evident from the above information that she did not work or receive any wages during her maternity leave. Therefore, since she did not receive any wages from her employer, the issue of payment of Bonus during the maternity benefit period provided by the Corporation does not arise. Consequently, Bonus is not applicable to the ESI MATERNITY BENEFIT AMOUNT received by the female worker.
Regards,
Sanagapalli
From India, Hyderabad
While processing the Maternity Benefit under the ESI Act, the ESI Corporation will require Form 28-A, where it will be explicitly stated that the woman in question did not receive wages from her employer during her maternity leave period and is entitled to 84 days of Maternity benefits from the Corporation. Based on this declaration, the Corporation will proceed with the payment. It is evident from the above information that she did not work or receive any wages during her maternity leave. Therefore, since she did not receive any wages from her employer, the issue of payment of Bonus during the maternity benefit period provided by the Corporation does not arise. Consequently, Bonus is not applicable to the ESI MATERNITY BENEFIT AMOUNT received by the female worker.
Regards,
Sanagapalli
From India, Hyderabad
I fully agree with the above. The Personnel department always calculates the wages drawn by an employee during the year on which the percentage of bonus is payable. Hence, I also conclude that neither the Act allows maternity benefit during the period when ESI pays the same. However, the situation is different when the employee does not receive such a benefit even though she is covered under the ESI Act. This situation is explained in Section 5A & 5B of the Maternity Benefit Act, 1961 which reads as follows:
5A. Continuance of payment of maternity benefit in certain cases
Every woman entitled to the payment of maternity benefit under this Act shall, notwithstanding the application of the Employees' State Insurance Act 1948 (34 of 1948) to the factory or other establishment in which she is employed, continue to be entitled until she becomes qualified to claim maternity benefit under section 50 of that Act.
5B. Payment of maternity benefit in certain cases
Every woman -
(a) who is employed in a factory or other establishment to which the provisions of the Employee's State Insurance Act 1948 (34 of 1948) apply;
(b) whose wages (excluding remuneration for overtime work) for a month exceed the amount specified in sub-clause (b) of clause (9) of section 2 of that Act; and
(c) who fulfills the conditions specified in subsection (2) of section 5 shall be entitled to the payment of maternity benefit under this Act.
From India, Chandigarh
5A. Continuance of payment of maternity benefit in certain cases
Every woman entitled to the payment of maternity benefit under this Act shall, notwithstanding the application of the Employees' State Insurance Act 1948 (34 of 1948) to the factory or other establishment in which she is employed, continue to be entitled until she becomes qualified to claim maternity benefit under section 50 of that Act.
5B. Payment of maternity benefit in certain cases
Every woman -
(a) who is employed in a factory or other establishment to which the provisions of the Employee's State Insurance Act 1948 (34 of 1948) apply;
(b) whose wages (excluding remuneration for overtime work) for a month exceed the amount specified in sub-clause (b) of clause (9) of section 2 of that Act; and
(c) who fulfills the conditions specified in subsection (2) of section 5 shall be entitled to the payment of maternity benefit under this Act.
From India, Chandigarh
Dear Sir/Madam,
My wife is working in a private company in Gurgaon. She is pregnant, and her expected date of delivery is 24th October 2014. The company where she is employed has more than 10 employees and should fall under the requirement to provide maternity benefits to her according to Indian laws. However, the company is denying to provide any maternity benefits to her. My wife joined the company on 5th August 2013. Her in-hand salary is Rs. 36,000 per month.
I would like to know whether private companies can make their own rules and laws and choose not to provide maternity benefits at their own discretion. If not, please suggest a way forward to get maternity benefits.
Looking forward to your reply.
Thank you
From India, Gurgaon
My wife is working in a private company in Gurgaon. She is pregnant, and her expected date of delivery is 24th October 2014. The company where she is employed has more than 10 employees and should fall under the requirement to provide maternity benefits to her according to Indian laws. However, the company is denying to provide any maternity benefits to her. My wife joined the company on 5th August 2013. Her in-hand salary is Rs. 36,000 per month.
I would like to know whether private companies can make their own rules and laws and choose not to provide maternity benefits at their own discretion. If not, please suggest a way forward to get maternity benefits.
Looking forward to your reply.
Thank you
From India, Gurgaon
It appears from the views of some of the members that a private company can indeed dispense with justice. They will contravene any welfare act and deny any benefits to the employees. Some HR professionals are adept at such things and saving money for their employers. What if they deny your wife any maternity leave benefits? How many people would go to court to fight for justice? This is what some rogue HR professionals know and serve their masters accordingly. Quite unfortunate though.
Warm regards.
From India, Delhi
Warm regards.
From India, Delhi
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(Fact Checked)-The user reply is correct. Employees on maternity leave with salary or wage are eligible for bonus under the Payment of Bonus Act 1965, Section 14 (d). (1 Acknowledge point)