Facts and Law: Entitlement to Maternity Benefits Beyond Contractual Tenure
A female employee is appointed under Fixed Term contract with effect from 01.10.2020, for Five years and her contract of appointment expires on 01.10.2025. She applies for maternity leave from 01.07.2025 and the same is sanctioned. In this regard, following issues arise:
- Whether she is entitled for maternity benefit for the balance period i.e., after the term of her appointment ?
As per sub-Section (2) of Section 5 of The Maternity Benefit Act, 1961, female employee is entitled for maternity benefit, if she has actually worked for a period of not less than eighty days in the 12 months immediately preceding the date of her expected delivery and as per sub-section (3) the maximum period of maternity benefit shall be for 26 weeks.
Section 5 stipulates as under:
5. Right to payment of maternity benefit.-(1) Subject to the provisions of this Act, every woman shall be entitled to, and her employer shall be liable for, the payment of maternity benefit at the rate of the average daily wage for the period of her actual absence, that is to say, the period immediately preceding the day of her delivery, the actual day of her delivery and any period immediately following that day.
(2) No woman shall be entitled to maternity benefit unless she has actually worked in an establishment of the employer from whom she claims maternity benefit, for a period of not less than eighty days in the twelve months immediately preceding the date of her expected delivery:
Explanation.–For the purpose of calculating under this sub-section the days on which a woman has actually worked in the establishment, the days for which she has been laid off or was on holidays declared under any law for the time being in force to be holidays with wages during the period of twelve months immediately preceding the date of her expected delivery shall be taken into account.
Section 12 states:
12. Dismissal during absence of pregnancy.-(1) When a woman absents herself from work in accordance with the provisions of this Act, it shall be unlawful for her employer to discharge or dismiss her during or on account of such absence or to give notice of discharge or dismissal on such a day that the notice will expire during such absence, or to vary to her disadvantage any of the conditions of her service.
(2) (a) The discharge or dismissal of a woman at any time during her pregnancy, if the woman but for such discharge or dismissal would have been entitled to maternity benefit or medical bonus referred to in section 8, shall not have the effect of depriving her of the maternity benefit or medical bonus:
A combined reading of provisions of the Maternity Benefit Act, 1961, in the factual context of this case would lead to the conclusion that once the employee has fulfilled the entitlement criteria specified in Section 5(2) of the Act, she would be eligible for full maternity benefits even if such benefits exceed the duration of her contract. Deprivation of benefits on the ground of expiry of period of contract of employment would amount to discharge and is unlawful, as per Section 12 of the Act, since a fiction is created in such a case by treating her to be in employment for the sole purpose of availing maternity benefits under the Act. Therefore, the concerned employee will be deemed to be in employment and eligible for maternity benefits for the balance period i.e., after the expiry of term of employment.
- Whether she will be entitled for gratuity for the period after the term of her appointment since she has not completed 5 years of completed service?
Section 2-A of the Payment of Gratuity Act, defines Continuous service as under:
For the purposes of this Act,- (1) An employee shall be said to be in continuous service for a period if he has, for that period, been in uninterrupted service, including service which may be interrupted on account of sickness, accident, leave, absence from duty without leave (not being absence in respect of which an order treating the absence as break in service has been passed in accordance with the standing orders, rules or regulations governing the employees of the establishment), lay-off, strike or a lock-out or cessation of work not due to any fault of the employee, whether such uninterrupted or interrupted service was rendered before or after the commencement of this Act.
(2) Where an employee (not being an employee employed in a seasonal establishment) is not in continuous service, within the meaning of clause (1), for any period of one year or six months, he shall be deemed to be in continuous service under the employer-
(a) For the said period of one year, if the employee during the period of twelve calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than-
i) One hundred and ninety days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and
ii) One hundred and twenty days, in any other case.
Explanation: For the purpose of clause (2), the number of days on which an employee has actually worked under an employer shall include the days on which –
(iv) in the case of a female, she has been on maternity leave; so, however, that the total period of such maternity leave does not exceed twelve weeks.
Though the contract of employment has expired, she is deemed to be in employment till she is eligible for maternity benefit for the purposes of calculation of gratuity, as per Section 2-A (2) (b) (iv) of Payment of Gratuity Act.
In the case of Alvas Institute of Engineering v. State of Karnataka, in W.P. No. 48825/2016, in the facts wherein the employee had tendered resignation voluntarily and had put in put in service of 4 years and 8 months, held to be not eligible for gratuity taking a view that the interruption is not on account of reasons enumerated under Section 2-A(1) of the Act.
However, in this case the service rendered is for 4 years and 9 months, she will be eligible for gratuity, in view of deemed employment, as stated above.
Further, in the case of Fixed Term employees, it could be noted that further to amendment of Schedule I of the Karnataka Industrial Employment (Standing Orders) Rules, 1961 by notification dated 30.06.2020, inserting ‘Fixed Term Workmen’ in the Model Standing Orders, ‘Fixed Term Workman’ shall be eligible for all statutory benefits such as ESI, PF and Gratuity available to a permanent workman in proportion to the period of service rendered by him/her even if this period of employment does not extend to the qualifying period of employment required under the respective Acts. However, amendment to Certified Standing Orders needs to be carried out for inserting “Fixed Term Workmen”, as per Section 10 of the Industrial Employment (Standing Orders) Act, 1946, as laid down by the Hon’ble High Court of Karnataka, in the case of M.C. Raju v. Executive Director, reported in (1985) 1 LLJ 210.
