Crèche Facility By Employers in India: Rules Notified for Bangalore
Karnataka (Bangalore) has become the first Indian state to implement rules for crèche facility to be provided to female employees as per the Maternity Benefit Act, 1961 of India (“Maternity Act”).
Employers in the technology capital of India will now not just be required to provide maternity leave of 26 weeks and related creche facility, but will also be required to comply with several additional requirements in terms of setting up and running a crèche facility.
The Maternity Act was amended by way of the Maternity Benefit (Amendment) Act, 20171 (“Maternity Amendment Act”) to introduce various new requirements including the need to provide a crèche facility (if the establishment has employed at least 50 employees2). Please refer to our legal analysis on this subject here.
While the provisions of the Maternity Amendment Act came into effect on April 1, 2017, the provision relating to crèche facilities came into effect three months later.
Although the Maternity Amendment Act requires establishments employing at least 50 employees to have a crèche facility within the prescribed distance, either separately or along with other common facilities, it failed to provide clarity on intricate aspects pertaining to the crèche facility including (a) the age of children for which such facility needs to be provided; (b) the distance within which the crèche facility needs to be located; (c) the infrastructure of the crèche facility; (d) facilities & amenities that need to be provided; (e) the manner of financing such crèche facilities; (f) appointment of crèche staff etc. In the absence of the requisite guidance, employers have been facing challenges in complying with the crèche facility requirement.
The Indian Ministry of Labour and Employment clarified in November 20173 that the respective state governments are the ‘appropriate governments’ for the purpose of issuance of rules under the Maternity Act, except in the case of mines and circuses. The State Government of Karnataka was the first to release the draft crèche rules in July 2018 (“Draft Rules”), the Karnataka Maternity Benefit (Amendment) Rules 2019 (“Karnataka Crèche Rules”) however came into effect only on August 8, 2019.
In terms of progress in the other Indian states, the State Government of Haryana (Gurgaon) has also released its draft crèche rules on the 9th of July, 2019.
Some of the key compliances under the Karnataka Crèche Rules are as follows:
Although the Karnataka Crèche Rules have succeeded in settling the growing confusion amongst employers, the Karnataka Crèche Rules places onerous obligations upon employers. While employers are in general aligned with the larger objective of the government to provide necessary childcare solutions to employees, the provisions of the Karnataka Crèche Rules makes it difficult for employers to fully comply with the requirements and accordingly could be seen as a lost opportunity for the government to strike a balance between employer and employee interests. Although representations were made to the government in order to tone down the requirements including relaxing of the 500-meter distance requirement and allowing for a reimbursement model, it seems that the government has proceeded with implementing the Draft Rules.
The ground reality in crowded and thriving commercial cities like Bangalore is that there are employers who do not have the ability or infrastructure to set up an in-house crèche facility. Many employers also operate out of Special Economic Zones or leased premises and have long term commercial leases. Owing to multiple reasons including space constraints, employers do not have much choice but to approach external crèche facility providers in order to comply with the law. Several employers have also not been able to locate suitable service providers within the prescribed distance. Even if that is possible, female employees have not been fully utilizing the benefit given the logistical issues including the time taken to travel to the creche and back to office during traffic hours. Female employees have also been preferring to use a creche/day-care facility nearer to their homes.
There has also been adverse feedback on the fees being charged by some service providers, which at times has been more than the employee’s salary itself. The creche facility providers on their part are facing increased costs given the commercials of running a crèche facility such as the cost for setting up the facility, medical checkups, salary/fee for the staff, rent for the leased space, cost of food, refreshments, furniture, electricity, other amenities to be provided and all overheads in relation to such facility etc. Employers are most likely to contractually pass on the obligations imposed by Karnataka Crèche Rules to their external service providers.
Replacing the term ‘women employees’ in the draft rules with the term ‘employee’ and ‘parents’ in the Karnataka Crèche Rules may be construed as the government’s intention to extend the creche facility benefit to both genders, thereby making it even more challenging for some of the large employers. There remains serious doubts on the employers’ ability to comply with the Karnataka Crèche Rules, even if they attempt to do so in good faith.
2 Section 11A (1) of the Maternity Benefit Act, 1961
4 Rule 6 (A) of the Karnataka Maternity Benefit (Amendment) Rules 2019
5 Rule 6 (A) (1 and Rule 6 (A) (2) (vi) of the Karnataka Maternity Benefit (Amendment) Rules 2019
7 Rule 6 (A) (4) of the Karnataka Maternity Benefit (Amendment) Rules 2019
8 Rule 6 (A) (2) of the Karnataka Maternity Benefit (Amendment) Rules 2019