Newsletter Jan - Mar 2025

Benefits under the Maternity Benefit Act, 1961 read with Factories Act, 1948

Introduction

The Maternity Benefit Act, 1961 applies to all establishments, including factories, mines, plantations, government-owned establishments, and workplaces where individuals are employed for equestrian, acrobatic, or other performances. Additionally, the Factories Act, 1948 also includes provisions for maternity benefits specifically for factory employees.

Maternity Benefit

Under the Maternity Benefit Act, women are entitled to a maximum of 26 weeks of maternity leave, with up to 8 weeks taken before the expected delivery and the remaining weeks afterward. However, if a woman already has two or more surviving children, the leave period is reduced to 12 weeks, with up to 6 weeks available before delivery.

 

As per Sec. 79 of the Factories Act, maternity leave for any number of days not exceeding twelve weeks have been provided for the computation of Leave with wages. This provision in turn creates an ambiguity where it shall be interpreted that the maximum period of leave with wages for maternity under the factories act is not exceeding 12 weeks in contradiction to 26 weeks under the Maternity Benefit Act.

Crèche Facility

The Maternity Benefit Act mandates that establishments with 50 or more workers must provide a crèche, either separately or as part of shared facilities. The term “workers” has been intentionally used to ensure the provision remains gender neutral. Women employees must be allowed four visits to the crèche per day, including during their designated rest intervals. In contrast, the Factories Act requires every factory employing 30 or more women workers to maintain a crèche. Since the crèche requirements in both acts differ, there is uncertainty regarding which regulation should be followed.

Wages Payable for Maternity Benefit

Wages as per the definition under Sec. 3(n) of the Maternity Benefit Act shall mean all allowances and incentive bonus excluding bonus other than incentive bonus, statutory deductions and over-time earning.

 

As per Section 5 of the Maternity Benefit Act, employers must provide maternity benefits at a rate equivalent to the average daily wage for the duration of the employee’s absence due to maternity. This period covers the time immediately before delivery, the day of delivery and the post-delivery recovery period.

 

The average daily wage is calculated based on the woman’s earnings during the three calendar months immediately preceding her maternity leave. During the maternity leave period, the employer is responsible for paying the full salary, including benefits and allowances.

 

It is clarified that the statutory benefits shall be payable during the period of maternity leave with wages and this shall not be considered as non-contribution period. Definition of Wages shall refer to the payment made to the Woman employee as Salary and this stands in addition to the statutory benefits payable. As per Sec. 2(b) of The Employees Provident Funds and Miscellaneous Provisions Act, 1952, definition of Basic wage includes all emoluments earned by the employee including earnings during leave with wages. In case of Bonus Payments, it is explicitly provided in the Payment of Bonus Act that days on which the Woman employee has been on maternity leave shall also be included for the computation of working days for the payment of bonus.

Work From Home for Women Employees

Under Section 3(5) of the Maternity Benefit (Amendment) Act, 2017, if a woman’s job allows for remote work, her employer has the discretion to permit her to work from home after she has availed her maternity leave. The duration and conditions of this arrangement are to be decided through mutual agreement between the employer and the employee

Maternity Benefit for Commissioning Mother

According to the Maternity Benefit Act, a “commissioning mother” refers to a biological mother who provides her egg for the creation of an embryo, which is then implanted in another woman.

 

As per Section 5(4), a woman who legally adopts a child under three months old or a commissioning mother is entitled to 12 weeks of maternity leave, starting from the date the child is handed over to her.

 

In the case of K. Kalaiselvi v. Chennai Port Trust, the Madras High Court ruled that a commissioning mother should be considered on the same footing as an adoptive mother, affirming her right to maternity benefits.

Conclusion

In light of the facts mentioned above, Maternity benefit shall be provided to the employees as per the applicability. When both Maternity Benefit Act and maternity benefits provided under the Factories Act apply to a factory, there is ambiguity in interpreting the Leave with Wages for Maternity benefit and in providing crèche facilities. In principle, rule that provides greater benefits to women employees shall be followed. It is mentioned that the ambiguity shall be cleared and reference to applicable provisions shall be made providing greater benefits to the employees. 

Recent Amendments/Notifications

1. Policy for Compassionate Appointment in EPFO 2024

The Employees Provident Fund Organisation has issued a Policy for Compassionate Appointment in EPFO, 2024 to make appointments on compassionate grounds to a dependent family member of an employee of EPFO dying in harness or who is retired on medical grounds, thereby leaving his family in penury and without any means of livelihood, to relieve the family of the employee concerned from financial destitution and to help get over the emergency.

2. Implementation of centralised pension payment system

The Employees Provident Fund Organisation, Ministry of Labour and Employment, Government of India has issued a circular with respect to Implementation of Centralised Pension Payment System (CPPS) with effect from January 1st, 2025.

3. De linking Wrong Member ID’s from UAN

The Employees Provident Fund Organisation has issued a circular wherein it has been decided to provide a facility to the members to De-Link wrongly linked Member IDs from their Universal Account Number (UAN), to empower the members to delink any erroneous Member ID in their Universal Account Number (UAN) which had been linked without their knowledge.

4. Gender Sensitization & Sexual Harassment of Women and Transgender Person in the precincts of the Karnataka High Court and District Courts (Prevention, Prohibition and Redressal) Regulations, 2024

The Government of Karnataka has issued a notification regarding Gender Sensitization and Sexual Harassment of Women and Transgender Persons. This applies within the precincts of the Karnataka High Court and District Courts. The regulations are called the “Prevention, Prohibition and Redressal Regulations, 2024.” They will come into force on January 24, 2025.

5. Extension of Timeline for Universal Account Number (UAN) Activation and Aadhaar Seeding in Bank Account

The Employees Provident Fund Organisation has issued a circular wherein the competent authority has granted an extension of timeline for Universal Account Number (UAN) Activation and AADHAAR seeding in Bank Account till May 1st, 2025. Aadhar seeding refers to the process of connecting Aadhar number with various, Government schemes, services and financial accounts.

6. Rates of Variable Dearness Allowance Payable in Scheduled Employments from June 2024

The Government of Assam has issued a notification with respect to variable dearness allowance which shall be payable to the employees / workers as specified in Schedule attached in the document with effect from June 01st, 2024.

 

The minimum wages per day shall be as follows:

Unskilled Workers: Rs 240

Semi Skilled/ Unskilled Supervisory: Rs 280

Skilled/Clerical Workers: Rs 350

Highly skilled workers: Rs 450

7. Adoption of CCS (Implementation of NPS) Rules, 2021, CCS (Pension) Rules, 2021, CCS (Payment of Gratuity under NPS) Rules, 2021 and CCS (Extraordinary Pension) Rules, 2023

The Employees Provident Fund Organisation has issued a circular with respect to adoption of CCS (Implementation NPS) Rules, 2021, CCS (Pension) Rules, 2021, CCS (Payment of Gratuity under NPS) Rules, 2021 and CCS (Extraordinary Pension) Rules, 2023.

 

The rules are made applicable to officers and employees of EPFO

8. Pension Fund Regulatory and Development Authority (Operationalisation of Unified Pension Scheme under National Pension System) Regulations, 2025

Pension Fund Regulatory and Development Authority has issued a notification with respect to Pension Fund Regulatory and Development Authority (Operationalisation of Unified Pension Scheme under National Pension System) Regulations, 2025, which shall come into effect from April 2025.

9. Login Authentication by OTP for Employees' State Insurance Scheme (ESIS) Employees in HIS (Hospital Information System)

The Employees State Insurance Corporation has issued a circular with respect to Login authentication by OTP for Employees’ State Insurance Scheme (ESIS) Employees in HIS, wherein the functionality of Employee login with OTP authentication, is under development. Once the functionality is implemented, ESIS Employees would not be able to login to HIS Application. In view of this, Regional Directors/State Medical Officers are requested to get the mobile numbers of ESIS employees updated in through Nodal Officer of ESIS, under their respective regions/hospitals within 10 days.

10. Steps Taken by Employees Provident Fund Organisation to Streamline Process of Claim Settlement

Steps taken by EPFO to streamline claims is as follows:

  • Claim limit for auto-mode processing increased to ₹1 lakh, covering housing, education, and marriage; 60% of claims processed in auto-mode within three days. Record 2.16 crore auto-claims settled in FY 2024-25 (as of 06.03.2025)
  • Aadhaar-verified UAN holders can correct details independently; 96% of corrections done without EPFO intervention.
  • 31% of claims filed online; 7.14 crore claims submitted in FY 2024-25 (as of 06.03.2025).
  • Aadhaar-verified UANs no longer need employer attestation for transfer claims; only 10%.
  • Cheque-leaf submission requirement relaxed for KYC-compliant UANs.
  • 55,000+ members de-linked erroneous/fraudulent EPF accounts since 18.01.2025.
  • Upfront validations implemented to prevent ineligible claims.
  • Member database being centralized under CITES 2.01 for a simplified claim process.

Judgments

1. IPCL Employee Association (Bhartiya Majdoor Sangh) v. Reliance Industries Ltd.

Date of Order: 04.11.2024;

Case No: Civil application NO. 12557 of 2012

Authority: High Court of Gujarat

Facts of the Case

A dispute arose between the appellant, IPCL Employees Association, and the respondent, Reliance Industries Ltd. regarding the inclusion of the canteen subsidy in the Employees’ Provident Fund (EPF) contributions. As per a settlement under Sections 12(3) and 18(3) of the Industrial Disputes Act, 1947, the canteen subsidy was increased from INR 300 to INR 475 per month. However, the settlement did not clarify whether this subsidy should be considered as part of basic wages or dearness allowance. The matter was subsequently brought before the EPF authorities.

The Regional Provident Fund Commissioner (RPFC), after hearing both parties, ruled that the cash canteen subsidy should be treated as part of the dearness allowance and would therefore attract EPF contributions. The Company challenged this decision by filing a review application, which was rejected. An appeal to the Appellate Tribunal was also dismissed. The Company then approached the Single Judge of the High Court, who set aside all previous orders, ruling in favour of the Company. Aggrieved by this decision, the Association appealed to the Division Bench of the High Court to seek redressal.

Sections Involved

Employees’ Provident Funds and Miscellaneous Provisions Act, 1952:  

  1. Section 2(b): Definition of “basic wages”
  2. Section 6: Contributions and matters which may be provided for in scheme.
Judgment Summary

The Division Bench of High Court analysed the scope of “cash value of any food concession” under Section 6 of the EPF Act by referring to the Bombay High Court’s ruling in Tata Power Company Ltd. v. Regional Provident Fund Commissioner. It observed that for a cash value of a food concession to exist, the provision of subsidized food must be in place. Unlike the Tata Power case, where no food was provided, here, the Company supplied food through canteens at subsidized rates. Therefore, the Court concluded that the cash canteen subsidy fell within the ambit of “cash value of any food concession.”

 

Further, the Court found that the canteen subsidy was revised in accordance with the cost of living and inflation, making it an integral component of dearness allowance. The subsidy was also not universally available, as employees who did not avail of the canteen facility or were on leave did not receive it. Thus, it could not be considered part of “basic wages” under Section 2(b) of the EPF Act but was included in dearness allowance as per the deeming fiction created by the legislature under Explanation 1 to Section 6.

 

The Court noted that the subsidized food rates were fixed in relation to the cash subsidy and vice versa, reinforcing the subsidy’s classification as a “food concession” rather than an independent allowance. It emphasized that beneficent legislation such as the  EPF Act must be interpreted liberally to favour employees. The Single Judge’s ruling was set aside, and the Company was directed to comply with the EPF contributions within three months.

Conclusion

The High Court upheld the RPFC’s decision, affirming that the canteen subsidy qualifies as a “cash value of any food concession” under Explanation 1 to Section 6 of the EPF. Consequently, the appeal was allowed, and the Company was ordered to make the necessary EPF contributions.

2. Dushyant Jhanbhadu v. Hyundai Private Limited

Date of Order: 11.12.2024;

Case No: CIVIL APPEAL NO. 14299 OF 2024

Authority: Supreme Court of India

Facts of the Case

The petitioner, Dushyant Janbhadu, was employed as an Assistant Manager with Hyundai Pvt Ltd. since 2019. During the COVID-19 pandemic, he worked remotely, but in August 2020, the employer directed him to resume office work. When the petitioner refused, the employer initiated disciplinary proceedings, issuing a show-cause notice followed by a charge memo for absenteeism and non-cooperation. Subsequently, the petitioner was terminated on January 21, 2021.

 

During the disciplinary process, the employer withheld the petitioner’s salary, leading him to file a petition under the Payment of Wages Act, 1936, seeking unpaid wages. In response, the employer attempted to refer the dispute to arbitration under the employment agreement, but the authority under the Act dismissed this application, ruling that statutory remedies could not be overridden by arbitration. Additionally, the petitioner challenged his termination under the Industrial Disputes Act, 1947 before the Industrial Tribunal.

 

The employer then appointed an arbitrator unilaterally, but the petitioner contested the arbitrator’s jurisdiction under Section 16 of the Arbitration and Conciliation Act, 1996, leading to the closure of arbitration proceedings. Subsequently, the employer filed a petition under Section 11(6) of the Act before the Madras High Court, which granted the request and appointed an arbitrator. The petitioner appealed this decision to the Supreme Court.

Sections Involved
  1. Payment of Wages Act, 1936

Section 15(2): Claim on unpaid wages; Section 22: Bar of suits

 

  1. Industrial Disputes Act, 1947

Section 2(A): Dismissal of individual workmen deemed to be an industrial dispute

 

  1. Arbitration and Conciliation Act, 1996

Section 16: Competence of arbitral tribunal to rule on its jurisdiction; Section 11(6): Appointment of Arbitrator

Judgment Summary

The Supreme Court ruled in favour of the petitioner, holding that statutory remedies under labour laws take precedence over contractual arbitration clauses. The Court reaffirmed that disputes governed by the Payment of Wages Act and Industrial Dispute Act are non-arbitrable, as these statutes confer exclusive jurisdiction to designated authorities such as the Industrial Tribunal and the Payment of Wages Authority.

 

Relying on the principles in Vidya Drolia v. Durga Trading Corporation, the Court determined that disputes requiring centralized adjudication or concerning statutory rights cannot be arbitrated. It also noted that the petitioner had already initiated legal proceedings under the Payment of Wages Act and the Industrial Disputes Act before the employer sought arbitration, indicating an attempt by the employer to bypass statutory remedies, constituting an abuse of process. The employer’s claim of a breach of non-disclosure obligations was dismissed as an afterthought, as it was not raised during the initial disciplinary proceedings or in the termination order.

Conclusion

The Supreme Court overturned the Madras High Court’s order, ruling that employment-related disputes involving statutory rights cannot be referred to arbitration. The appointment of an arbitrator under Section 11(6) of the Arbitration & Conciliation Act was improper, given the non-arbitrable nature of the dispute.

Judgement Snippets

  • Punishment can be imposed even if misconduct was committed outside the establishment premises. – 2025 LLR 147 Madras High Court
  • Employers must be heard while fixing/revising minimum wages and cannot be excluded. -2025 LLR 159 Karnataka High Court
  • Premises carrying out consultancy services are covered under the ambit of ESI Act. – 2025 LLR 174 Punjab and Haryana High Court
  • Sleeping while on duty is a gross misconduct when the employee holds a responsible position. -2025 LLR 178 Bombay High court
  • Termination cannot be set aside even if the charge sheet was held to be incompetent. -2025 LLR 166 Madhya Pradesh High Court
  • No precondition of depositing any part of the damages imposed under section 14B at the time of filing of appeal. -2025 LLR 208 Karnataka High Court
  • An enquiry under Section 7A initiated by the EPF authorities should be concluded at the earliest. -2025 LLR 234 Chhattisgarh High Court
  • Employee can’t be made to suffer consequences of clerical error made in EPFO system. 2025 LLR 202 Madras High Court.
  • Indian labour law strongly disfavours perpetual daily-wage or contractual engagements in circumstances where the work is permanent in nature. -2025 LLR WEB 404 SUPREME COURT OF INDIA
  • No bar on employer against initiating disciplinary proceedings on the same ground for which advice was earlier rendered. -2025 LLR 237 SUPREME COURT OF INDIA
  • A proforma, not on the letterhead of the management and without signatures, is not an appointment letter. -2025 LLR 246 DELHI HIGH COURT

Questionnaire

1. Under the Factories Act, 1948, what is the maximum number of working hours allowed per week (excluding overtime)?
A. 36 hours
B. 40 hours
C. 44 hours
D. 48 hours

 

2. The Payment of Gratuity Act, 1972 becomes applicable to an establishment when it employs how many or more employees?
A. 5
B. 10
C. 20
D. 50

 

3. Which of the following benefits is NOT provided under the Employees’ State Insurance (ESI) Act, 1948?
A. Maternity benefit
B. Medical benefit
C. Unemployment allowance
D. Pension benefit

 

4. Under the Shops and Establishments Act, which day is generally considered a mandatory weekly holiday?
A. Sunday
B. Any one day of the week as fixed by the employer
C. Saturday
D. Monday

 

5. Under the Payment of Bonus Act, 1965, what is the minimum bonus payable to an eligible employee in a financial year?
A. 5% of salary or wages
B. 8.33% of salary or wages
C. 10% of salary or wages
D. 12% of salary or wages

 

Answers:
1.D
2.B
3.D
4.B
5.B

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