Common Creche Facility Under the Code on Social Security

Background

The Maternity Benefit Act, 1961 was amended in 2017 to introduce various new reforms. The requirement to maintain creche facilities if an establishment employed at least 50 employees was brought in as part of the reform initiative. The Amendment Act stipulated that the creche facility was to be maintained within a prescribed distance. However, it failed to provide clarity on multiple aspects such as the age group for which the creche was to be provided, the infrastructure, the manner of financing the facility etc. This led to widespread confusion and challenges when it came to compliance.

The Ministry of Labour and Employment subsequently clarified that the State Governments are ‘appropriate governments’ under the Act. As a consequence, the State Governments were responsible for issuing rules under the Act. This meant that the responsibility to provide clarity on the above-mentioned aspects by issuing rules was on the State Government.

Drawbacks of the State Rules

A few States such as Karnataka and Haryana took the requisite steps to bring about Rules that provided specifics in regards to the creche facilities. While most employers welcomed the move and supported the broader objectives of the initiative, there were significant compliance challenges. The rules did not consider the practical and financial difficulties that come with every establishment individually maintaining a creche.

For example, in Karnataka the rules stipulated that the creche must be located within the premises of an establishment or within 500 meters from the entrance gate of the establishment. This did not align with ground realities especially in big cities because space constraints and infrastructural issues made the 500-meter requirement practically impossible in several cases.

Moreover, the practical situation was that several female employees preferred to use a creche facility closer to their homes. The above coupled with the enormous expense and compliance concerns that came with engaging external service providers hindered the operation of this law.

Creche Facilities Under the Code on Social Security    

Chapter-VI of the Code on Social Security, 2020 relates to maternity benefit and consequently maintenance of creche facility. Section-67 retains the 50-employee threshold, and the draft Rules provide that the facility shall be located either:-

• Within the establishment; or

• At an appropriate distance from the establishment such that it is easily accessible for women employees including a woman employee working from home

The creche is to be maintained for the use of children under the age of six years and must contain adequate accommodation with lighting and ventilation.

Most significantly, Section-67 provides employers with the option of maintaining common creche facilities. Thus, an establishment is now allowed to avail common creche facility of:-

• Central Government
• State Government
• Municipality
• Private entity
• Non-Governmental Organization

• Any other organization or group of establishments who may pool their resources for setting up a common creche

The above resolves a big constraint that employers faced in terms of eliminating the need for individual creche facilities. This shall not only benefit employers, who may now provide common creche facilities thereby reducing the cost per establishment. But it shall also benefit employees as they can use a creche facility that is practically convenient. This will lead to greater compliance with these provisions thus taking us one step closer towards equality in the workplace.

In addition to the above the employer is also required to provide intimation in writing electronically to every woman at the time of her initial employment. This intimation shall provide details on every benefit available to such a woman employee under the Maternity Benefit chapter of the Code. The employer is also required to provide women employees with four visits a day to the creche that are inclusive of her intervals of rest.

Concerns and Potential Changes

The major concern with the introduction of the above provisions is the ambiguity in the draft Rules when it comes to the location of the creche facility. The phrase ‘at an appropriate distance’ is not sufficiently clear and the requirement to make it accessible to women employees working from home could lead to logistical nightmares.  

A major change that may be beneficial for both employers and employees is giving the employer the option to reimburse employees for the actual cost of the creche facility availed of. This can be made subject to a cap per employee to ensure that the costs incurred do not increase exponentially. Additionally, a minimum amount of reimbursement can be introduced to ensure there is parity between employers and employees.

Do you have any questions regarding the scheme of creche facilities under the Code on Social Security? What, according to you, are the changes that can be made to the above?

Drop your thoughts and queries in the comments below.

Disclaimer: This blog is meant for informational purposes and discussion only. It contains only general information about legal matters. The information provided is not legal advice and should not be acted upon without seeking proper legal advice from a practicing attorney. Simpliance makes no representations or warranties in relation to the information on this article.