Maternity pay in India: how employers handle it
Reviewed by Mellow Editorial Team, HR & payroll content team
Maternity pay in India is governed primarily by the Maternity Benefit Act, 1961, as amended in 2017. Employers pay the full wage directly to the eligible employee — there is no government reimbursement scheme for most private employers, so the cost sits entirely with the business.
Who is covered and for how long
The Act covers all establishments employing ten or more people. Eligible employees are women who have worked for the employer for at least 80 days in the 12 months preceding the expected date of delivery.
The entitlement periods are:
- 26 weeks of paid leave for the first two children
- 12 weeks for a third child onwards
- 12 weeks for adoptive mothers (child below three months) and commissioning mothers
- 6 weeks in the event of miscarriage or medical termination
The 26-week entitlement means an employee on a first or second pregnancy can take up to eight weeks before the expected delivery date, with the remaining weeks following delivery.
What "full wage" actually means
The Act requires payment at the rate of the average daily wage for the period of absence. Daily wage is calculated as the average of the wages paid over the three calendar months immediately before the period of maternity leave. This includes basic pay and any allowances that form part of wages — it is not limited to basic salary.
Employers often miscalculate this by using only the basic component. The safer approach is to check what is included in "wages" under your employment contract and standing orders, then apply the average across those three months.
The payment mechanics
There is no statutory form to submit to a government portal for private commercial employers. The process is straightforward in principle:
1. The employee submits a written notice of her expected delivery date, ideally at least seven weeks before the intended leave start date.
2. The employer verifies eligibility (80-day service threshold).
3. Wages for the pre-delivery period are paid in advance on written request; the remaining wages are paid within 48 hours of the employer receiving proof of delivery.
4. Payroll continues to run the employee on full pay for the leave duration — no deductions, no leave-without-pay marking.
Under the 2017 amendment, employers with 50 or more employees must also permit work-from-home arrangements after the leave period, where the nature of work allows. This is a condition to be agreed between employer and employee.
Payroll and compliance implications
Because maternity leave is treated as paid employment, your payroll entries for the period remain active. A few specific points:
EPF contributions: The employee's 12% and your 12% employer contribution continue to apply on the wages paid during maternity leave, since the employee is considered to be in employment.
TDS and Form 16: Maternity benefit paid by an employer is taxable as salary income. You continue to deduct TDS as applicable under the income tax slabs, and the amount is included in Form 16 issued at year end. (Maternity benefits paid under the Employees' State Insurance scheme are exempt from tax, but that is the insurer's payment, not the employer's.)
ESI-covered employees: If the employee's wages fall below the ESI wage threshold, she draws maternity benefit from ESIC — not from you directly. You still need to maintain accurate wage records and ensure timely ESI filings so that ESIC can process her claim without delay. Your direct pay obligation is replaced by the ESIC obligation in this case.
Nursing breaks: The Act requires two nursing breaks per day until the child is 15 months old, once the employee returns. These are paid breaks — factor this into attendance and payroll policy.
What employers frequently get wrong
Refusing or delaying leave: Dismissing or reducing pay during maternity leave is a criminal offence under the Act. Courts have consistently upheld this, and penalties include imprisonment.
Under-counting the 80-day threshold: Many employers count only regular working days and miss paid holidays, leave days or layoffs that count toward the threshold. The safer practice is to count all days for which wages were paid or payable.
Ignoring the crèche obligation: Establishments with 50 or more employees must provide a crèche facility within a prescribed distance. This is part of the same Act and is often overlooked in compliance audits.
Treating the third-child leave as discretionary: The 12-week entitlement for a third child is a legal minimum, not a benefit you can withhold.
The Labour Codes that came into force in 2025 consolidate several existing statutes, but the Maternity Benefit Act remains a standalone central law and its obligations are unchanged by the Code framework. Verify the current compliance position with your legal counsel as implementation across states continues to be clarified.
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