Leaves Laws in India

Employment

Leaves Laws in India

Different organizations have a different kind of leave policies for their Employees such as of Annual Leave, Maternity and Paternity Leaves, and Sick Leaves. Indian law grants rights to the employees around various kind of leaves and most of the organizations have a descriptive leave policy and leave calculation system. The section on laws relates to paid and unpaid leaves in India and the underlying legislations and fundamentals of those laws. For instance, the difference between the applicability of Maternity Benefits under the Employees’ State Insurance Act, 1948 and Maternity Benefits under the Maternity Benefit Act, 1961 and much more.

Leaves Laws in India FAQ's

Employees are entitled to number of leaves of different nature in the manner as follow;

  1. Annual Leave

A worker who works for 240 days or more in a factory during a calendar year is allowed an annual leave with wages during the subsequent calendar year at the rate of one day for every 20 days of work performed during the previous calendar year.

If a worker does not, in any one calendar year, take all of the leave accumulated, the unused leave is added to the leave accumulated in the succeeding calendar year; however, annual leave may be accumulated only up to a maximum of 30 days in the case of an adult worker and forty in case of a child. Annual leave pay is based on the average amount of the worker’s daily wage immediately preceding the leave. This includes basic wage and dearness allowance and the cash equivalent of the advantage accruing through the concessional sale to the worker of food grains and other articles, but not bonus or overtime.

In case of shops and commercial establishments, every state has its own Shops and Establishments Act, and the details may differ from one state to another. However, Shops and Establishments Acts generally provide that the total number of leaves similar to what is provided in the Factories Act. Shops and Establishments Acts are applicable to employees other than covered under Factories Act.

  1. Pregnancy, Childbirth, and Family Leave

Maternity benefits for female workers are provided under two laws, as follows:

  • Employees’ State Insurance Act, 1948; and
  • Maternity Benefit Act, 1961.

a. Maternity Benefits under the Employees’ State Insurance Act, 1948

The Employees’ State Insurance Act, 1948 (ESI Act) provides maternity benefits to insured female workers in the form of periodic cash payments for confinement, miscarriage, or sickness arising out of pregnancy, confinement, premature birth of a child, or miscarriage.

             i    Coverage

In general, the ESI Act applies to the following:

  • non-seasonal factories (but not including mine or a railway running shed) employing 10 or more persons, and
  • Under Section 1(5) of the ESI Act, most of the state governments and union territories have extended the ESI Act to shops, hotels, restaurants, cinemas including preview theatres, road-motor transport undertakings, newspaper establishments, establishments engaged in insurance business, non-banking financial companies, port trust, airport authorities and warehousing establishments employing 10* or more persons. Further under Section 1(5) of the ESI Act, it has also been extended to private medical institutions, educational institutions and to contract and casual employees of municipal corporation/municipal bodies employing 10* or more persons in certain states/union territories.

*Note: The threshold for Coverage of establishments is still 20 employees in Maharashtra and Chandigarh.

The existing wage limit for coverage under the ESI Act is 21,000 rupees per month (Rs. 25,000/- per month in the case of persons with disability).

             ii.   Benefits

Maternity benefits are payable to insured female workers in the following cases:

  • for confinement, a period of 12 weeks (84 days), with no more than six weeks preceding the expected date of confinement;
  • for miscarriage, a period of six weeks (42 days) from the date of miscarriage;
  • for sickness or complications arising out of pregnancy, confinement, or premature birth, an additional period not exceeding one month;
  • in the event of the death of an insured woman during confinement, a benefit payable to her nominee or to legal representative in case of no nominee.

To be eligible for maternity benefits, an insured woman must have made contributions for at least 70 days in the two preceding contribution periods, i.e., one year.

Maternity benefits payable under the ESI Act are equal to 100 percent of average daily wages.

             iii.    Funding

Contributions under the ESI Act are made by the employer as well as the employee. Rates of contribution are revised from time to time. Currently, the employer’s contribution rate is 3.25percent of the total wages paid to the employee, and employee’s contribution rate is 0.75% percent of wages for every wage period. These rates are in effect from July 1, 2019. Employees in receipt of a daily average wage upto Rs.137/- are exempted from payment of contribution. Employers will however contribute their own share in respect of these employees.

b. Maternity Benefits under the Maternity Benefit Act, 1961

The Maternity Benefit Act, 1961, was passed with a view to providing maternity benefits to women not already covered by the ESI Act (discussed immediately above).

Under the Maternity Benefit Act, employers must do the following:

  • pay maternity benefits in the form of paid leave and a medical bonus;
  • allow maternity leave and nursing breaks for female employees;
  • refrain from dismissing or discharging a pregnant employee/new mother/woman who has had a miscarriage during her period of maternity leave;
  • refrain from knowingly employing a woman during the six weeks immediately following the day of delivery or miscarriage (women are prohibited from working in any establishment during this period);
  • refrain from requiring a pregnant employee to do arduous work involving long hours of standing, or any work likely to interfere with her pregnancy or to cause miscarriage or to affect her health adversely, for one month preceding the period of six weeks before the expected date of her delivery;
  • post the abstract (notice) of the provisions of the Act clearly and conspicuously in the local language in establishments where women are employed;
  • prepare and maintain the prescribed registers, records, and muster rolls and submit the prescribed government returns (reports).

             i   Coverage

The Maternity Benefit Act applies to every factory, mine, plantation and to every  shop, or establishment in which 10 or more persons are employed or were employed on any day of the preceding 12 months, except that it does not apply to factories or establishments to which the provisions of the ESI Act apply.

To be entitled to maternity leave, a woman must have actually worked in an establishment for at least 80 days in the 12 months immediately preceding the expected day of her delivery. Only working days (not weekly holidays or paid or unpaid leave days) are taken into account in calculating workdays.

             ii   Benefits

The Maternity Benefit Act provides for payment of a cash maternity benefit (paid leave) for a fixed period of absence, of a medical bonus, for nursing breaks, and other benefits.

Paid maternity leave at full salary must be provided for up to 26 weeks. Of this time, 8 weeks must be taken prior to the date of delivery of the child, and 16 weeks must be taken immediately following that date. The mother-to-be is not supposed to work anywhere else during this time. However, women having 2 or more surviving children shall be paid maternity leave at full salary for upto 12 weeks of which not more than 6 weeks shall precede the date of her expected delivery.

To avail herself of the 8 weeks of leave before expected delivery, a woman must provide notice in writing stating the date of absence from work, together with a certificate of pregnancy. The employer must pay the maternity benefit (i.e., 8 weeks’ worth of wages) for this period in advance to the worker or to any other person she nominates.

To obtain the 16 weeks of leave from the date of delivery, the woman must send another notice to the employer, together with a certificate of delivery after the child is born. The employer must pay the employee or her nominee the maternity benefits (i.e., 16 weeks’ worth of wages) within 48 hours of receiving this notice. Failure to give notice concerning the 16 weeks period does not disqualify a woman from receiving this maternity benefit. In the case of a miscarriage, a woman is entitled to 16 weeks of leave with pay from the day of the miscarriage. In this case, too, she must give notice to the employer, together with a certificate of miscarriage. If a woman has not used the full 8 weeks of leave before the expected date of her delivery, she is entitled to use the balance after delivery, provided that the total leave period does not exceed 26 weeks.

Women who do not have pre-natal confinement and post-natal care provided free of charge by the employer are also entitled to a medical bonus of 3,500 rupees.

             iii.    Funding

Maternity benefits under the Maternity Benefit Act are funded entirely by the employer, with no employee contributions.

c. Paternity Leave

There is no statutory provision in India for paternity leave. The central government (but not state governments) has started to provide 15 days of paternity leave, and some multinational companies have also adopted the practice.

3.   Sick Leave

Workers can make use of sick leave, or wages in lieu of sick leave, under the Factories Act, 1948. Workers insured under the Employees’ State Insurance Act, 1948, can make use of a sickness benefit provided they meet the qualifications and conditions subject to which such benefit may be given. The rates and period of sickness benefits are prescribed by the central government. The Shops and Establishment Acts also provide for sick leave to workers employed in a shop or a commercial establishment, which is generally upto 12 days per calendar year.

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