Understanding India’s Maternity Law & Implications On SMEs

BankBazaar.com has been a pioneer of sorts with it generous Maternity Benefit offers. Read on to know what the BankBazaar CPO Rati Shetty has to say.

Understanding India’s Maternity Law & Implications On SMEs

There’s been a lot of discussions lately around the Maternity Benefit Amendment Act. I’m quite happy to say that BankBazaar.com has been a pioneer of sorts in this area. We had a comprehensive maternity policy, considered among the best in the country or even globally, well before the new maternity law came into effect. Aside from a 26-week maternity break, women can also opt to take a 6-month sabbatical after their maternity leave. Expectant mothers get extra breaks and specific attention is given to ergonomics with the provision of comfortable options like footstools and back supports at the workplace under our BB Cares initiative.

Why we decided to bring in this policy has a simple answer: Our employees are our biggest and most valuable assets. This is our way of showing our appreciation and confidence in them for the amazing skill and value they bring to the table.

Additional Reading: Maternity & Health Insurance: What You Need to Know

The Maternity Benefit Amendment Act, which came into effect in April last year, has been widely hailed as a great step forward for working women in India and drawing them closer to workplace equality. Among other things, the Act:

  • Increases paid maternity leave from 12 weeks to 26 weeks
  • Makes it mandatory for firms with more than 50 employees to provide day-care facilities for working mothers among their workforce
  • And then came the bad news. Two separate surveys conducted to measure the impact of the Act on Small and Medium Enterprises (SMEs) and start-ups, threw up some worrisome results. A survey by TeamLease Services found:
  • A little more than 25% of respondents admitted to preferring hiring male candidates
  • Two-fifth of the rest of the respondents said they will factor in the additional cost of paid maternity leave while hiring women

What this means is that 66% indicated that the law negatively impacts the hiring of women candidates in some manner. Just 22% of respondents felt it would not impact their hiring in any way. Meanwhile, 35% admitted that they see the law having an adverse impact on both profitability and costs.

A survey by LocalCircles revealed equally troubling results. 11% of the 2900+ respondents said they’d hired only male employees in the last year since the law came into effect, while 43% admitted they’d hired “mostly male” and a few women employees in that same time.

The argument most bootstrapped companies put forward is that they can’t afford to pay for an employee who isn’t contributing, and they believe the new maternity law ignores the limited resources of a small business.

Additional Reading: The New Maternity Bill: A Major Boost To Indian Working Women

The law is a great move for women and would be made better with provision for governmental support for small businesses, much like the Startup India initiative. As long as you plan ahead and it is well managed, maternity leave shouldn’t pose a problem for any firm. I understand the financial constraints of a bootstrapped company. It would be good for the government to provide some kind of financial support or share some of the cost for such companies. However, it’s important for businesses too to not simply associate an employee with a cost. Rather, look at the overall value and skill that the employee brings to the company. Often, the merits will far outweigh the cost factor. The value of an employee is not limited to just their pay cheque. It’s also the extra worth that the person brings to the company; non-quantifiable skills such as teamwork, team building, leadership, communication, creativity, critical thinking, problem-solving, interpersonal skills, creating a great working environment, etc.

Some of the other challenges outlined by SMEs include the allocation of responsibilities when resources and budgets are tight, the hiring of temp staff, expectations on other staff to take on additional responsibilities and cover for their pregnant colleagues and tackling employee resentment at being handed additional tasks when a colleague goes on maternity leave. How have we made it work to our advantage at BankBazaar.com?

We are very vigilant about maintaining a streamlined workforce and avoid the pitfalls of over-hiring. This keeps resource utilization optimal. Next, we pay close attention to training, knowledge sharing and knowledge transfer between employees, ensuring that the learning never stops. This has the double benefit of offering employees a chance to pick up new skills and explore new opportunities within the company and also, step in seamlessly when resources are tight. There are backups in place at all times.

As part of company culture, promotions are based completely on merit and not on tenure. Therefore, in order to move up, an individual should have shown a demonstrated ability to handle tasks and responsibilities for a level higher than their current position. So, being handed additional tasks isn’t viewed with resentment or seen as a negative thing. It’s an acknowledgement of a job more than well done and reiterates our faith in their fantastic abilities and potential.

Additional Reading: How To Plan Financially For Maternity Leave

Another question I am asked quite frequently is how often do employees who go on maternity leave return only to quit immediately, and how do we handle such situations?

This is not a typical occurrence. Under our maternity policy, women can also opt to take a 6-month sabbatical after their maternity leave. We don’t expect a returning employee to hit the ground running on day one. There would have been significant changes for them and for our business too while they were away. We understand the challenges that the transition period back to work brings and do allow women to work from home or opt for flexible work timings in order to make this transition phase comfortable and less stressful for them.

Roles in smaller firms are often far more diverse, with one person having multiple skills and niche knowledge, which often makes bringing in the right temporary replacement difficult. So if such an employee is being paid maternity, it is far more worthwhile than paying more monetarily for a new hire.

Govt. mulling financial support to employers:

The landmark Maternity Benefit (Amendment) Act, 2017 that came into effect from April 1, 2017, and extended the leave period from 12 weeks to 26 weeks can be viewed as a move to encourage women to continue being a part of the workforce despite their new roles as mothers and primary caregivers. However, this ruling gave rise to instances of employers asking female employees who claimed maternity benefits to leave in order to reduce costs like maternity leave reimbursements and creation of post-maternity support infrastructure. A lot of employers also fear female employees availing such benefits and not returning to join the workforce. To put these fears to rest, the govt. is considering easing the financial burden on employers by reimbursing the salaries paid by them for seven of the additional 14 weeks of maternity leave. This support will be extended to employers who are employing women in the Rs. 15,000 salary bracket and have been EPFO subscribers for 12 months. This is expected to cost the govt. Rs. 400 crore annually and the pilot will be launched first in Maharashtra and Delhi.

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The article was first published on LinkedIn.

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About Rati Shetty - Founder & CPO, BankBazaar.com

Sugar and spice and everything nice, Rati certainly imbibed some rich qualities from Toblerone in Brazil and Milka in the US while managing the launch and go-to market operations of many of Kraft Food's brands in export markets across the world while working for Kraft in the US and Taiwan. She continues to spread the goodness, raising the bar high for awesome customer experience on BankBazaar.com with astounding outside-the-box ideas for creating beautiful new products, features and applications and ensuring that the end results are perfect, dummy proof and can only lead to one thing: pure customer delight.

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