Start-ups hiring fewer women to skirt 26-week maternity leave rule

By: |
New Delhi | Updated: March 14, 2019 7:07:23 AM

The annual turnover limit for the start-up status has been raised four times to Rs 100 crore to extend benefits meant for start-ups to a much larger number of companies.

sme, small and medium scale industry, start up sector, start up industryAlthough the government proposed in November 2018 that it would share the cost by paying companies for seven of the 26 weeks of maternity leaves for employees getting up to Rs 15,000 a month, 65% of start-ups and SMEs polled say even the 19 weeks of paid leaves are “too much”.

With as many as 46% of start-ups and SMEs in a survey saying they have mostly hired males in the past 18 months due to a change of norms that mandates paid maternity leaves of 26 weeks from 12 weeks earlier, a community of small businesses last week asked the Centre to exempt them from this stipulation.

In a letter to labour minister Santosh Kumar Gangwar and commerce and industry minister Suresh Prabhu on March 7, LocalCircles — a major social media platform that has conducted the survey after thousands of small businesses participated in the discussion on the issue of maternity benefits — has pitched for exemption to those entities that employ less than 20 employees or have an annual turnover of less than Rs 10 crore. These small start-ups and SMEs are willing to offer 12-week paid leaves as per the earlier rule. The new rules that were supposed to help women ended up hurting their job prospects, they say. LocalCircles said as many as 30,000 small businesses participated in the discussion on its platform.

Although the government proposed in November 2018 that it would share the cost by paying companies for seven of the 26 weeks of maternity leaves for employees getting up to Rs 15,000 a month, 65% of start-ups and SMEs polled say even the 19 weeks of paid leaves are “too much”. About 42% reveal they won’t hire female employees at all despite the government bearing a part of the cost and only 16% feel the Centre’s reimbursement will be “efficient and timely”. As many as 3,606-4,341 start-ups/SMEs participated in the LocalCircles survey on various queries.

Another study by TeamLease last year estimated that there would be a net job loss of 11-18 lakh women in 2018-19 due to the new rules.

“While women are happy that they will get more time to take care of their newly-born babies, early-stage start-ups and small businesses are feeling the heat and pressure of the amendment owing to the extra financial burden on them,” Sachin Taparia, founder and chairman of LocalCircles, said in the letter to Gangwar and Prabhu.

The Maternity Benefit (Amendment) Bill, 2016, was cleared by Parliament in March 2017. It applies to all establishments employing 10 or more people, and the entitlement is applicable only up to the first two children. The paid leave benefit for the third child, however, will be restricted to 12 weeks only. The stipulation of 26 weeks of paid leaves places India at the third position in terms of the number of weeks for paid maternity leave, after Canada and Norway, where it is 50 weeks and 44 weeks, respectively.

Also read: Boeing 737 Max crisis: Govt says keeping eye on fares; 30-35 SpiceJet flights to be cancelled from tomorrow

Last month, the department for promotion of industry and internal trade relaxed rules to recognise all those companies that were in operation for up to 10 years, instead of the current seven years, as start-ups, if they met other eligibility criteria on innovation and turnover. Even the annual turnover limit for the start-up status has been raised four times to Rs 100 crore to extend benefits meant for start-ups to a much larger number of companies. However, only small start-ups are seeking the waiver from extra maternity leaves.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.