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Tuesday, August 11, 2015

Labour law recast to add more leave to maternity, gratuity to be made portable

NEW DELHI: The Narendra Modi-led NDA government is looking to enhance maternity  leave for working women from three  months to six months, virtually double bonus payments to employees and make  gratuity portable between jobs. These proposed changes in employment laws could  buttress the Modi government's credentials with the working class while it  attempts to push through more ambitious reforms in labour rules that are blamed  for hampering investment and job creation in the country.

"The changes in the Payment of Bonus Act would raise the salary limit for  getting a bonus from Rs 10,000 per month to Rs 19,000, and are at an advanced  stage with a draft Cabinet note being moved earlier this month for comments from  ministries," said a senior labour ministry official. Separately, the government  is initiating stakeholder consultations to amend the Maternity Benefits Act of  1961 and the Payment of Gratuity Act of 1972, the official added.

Currently, companies are legally required to grant 12 weeks of maternity leave  to employees though several leading employers offer additional time off and  other benefits. For instance, Accenture offers five months off to new mothers while Flipkart offers 24 weeks paid leave.   Citibank also offers a creche  allowance to new mothers, as do some other multinational firms and investment  banks.

"The ministry of women and child development has been pursuing this with us  extensively as it is primarily responsible for women's welfare, so we are  framing a proposal to kick off talks with employers and trade unions on  enhancing the maternity leave to 24 weeks," the official said. One option being  considered is to limit the enhanced maternity leave to two children and an  employee having a third child would be granted 12 weeks off, in line with the  present norm.

Labour law recast to add more leave to maternity, gratuity  to be made portableSimilar tripartite discussions are also being launched on amending the gratuity  law to do away with the requirement that employees serve at least five years in  a single workplace to be eligible for the benefit.

Employee  representatives have been seeking a reduction in the five-year continuous  service clause to qualify for gratuity and the social security committee of the  Indian Labour Conference had endorsed the idea in May 2013.

"While we are examining the possibility of reducing the five-year eligibility  for gratuity benefits, this requirement would be redundant if we allow gratuity  to be transferred from one job to another. So we are looking at both the  options," the official said.

The Payment of Bonus Act of 1965, expected  to be the first of the three laws for which amendments will come up for the  Cabinet's consideration, sets two numerical ceilings for limiting bonus payouts
to workers.

All employees earning up to Rs 10,000 a month are eligible for a minimum bonus  of 8.33% of their annual salary and a maximum of 20%. This ceiling takes into  account any productivity-linked bonus that employers may offer.

The Rs  10,000 salary cut-off is only used for eligibility purposes and actual bonus  payments are linked to a separate 'calculation ceiling'. Bonus payments for  anyone earning more than Rs 3,500 a month are made assuming his or her salary is  Rs 3,500 per month . Both these thresholds were last revised in 2006. After tripartite consultations  with employers and employees yielded no consensus late last year, the government  had referred the Bonus Act amendments to an inter-ministerial group that has now  recommended both thresholds be raised in line with changes in the consumer price
index since 2006.

The new ceilings under the Bonus Act are likely to be  Rs 19,000 per month (salary limit for eligibility) and Rs 6,600 (salary limit  for bonus calculation purposes).

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