Impact of the Maternity Benefit (Amendment) Act, 2017 on Women’s Workforce Participation in India (2014–2024)

Authored by Parnava Ghosal, Dr Swati Chauhan, Pramisha Ramesh, Chetna Panchal, Mihlalikazi Mgolombane, and Laxmi Narasimha Naga Sarvani Mallampalli

1. Introduction

“In a country where over 90% of working women are in the informal sector, can a law designed for the formal workforce bring real change?” This paradox frames the critical examination of the Maternity Benefit (Amendment) Act, 2017 — a law that extended maternity leave from 12 to 26 weeks and mandated crèche facilities in workplaces with more than 50 employees, in the hope of improving maternal health and women’s labor retention. This article explores the Act’s impact on women’s workforce participation in India between 2014 and 2024, a period marked by policy reform, economic shifts, and a global pandemic. The discussion provides a holistic overview of legislative intent, national labor trends, employer responses, regional disparities, and psychological challenges faced by mothers. Key themes include the mismatch between formal-sector policy and informal-sector reality, the rise in rural women’s workforce participation driven more by economic necessity than legal protection, and the cost burdens faced by employers, especially SMEs. The article is structured around five major sections — beginning with legal and historical background, followed by labor market trends, disparities in implementation, employer and SME reactions, and psychological return-to-work dynamics. These sections together reveal that while the Act is a necessary step toward inclusive labor reform, it remains insufficient in scope and accessibility. The topic holds significance not only for legal and economic scholars but also for policymakers and advocates of gender equity, as it highlights how structural inequality persists despite well-intentioned legislation and underscores the need for broader, more inclusive interventions. It also offers insights into future policy directions for inclusive maternal labor protections.

2. Background and Literature Review

Historically, India’s female labor force participation rate (FLFPR) has been among the lowest globally, stagnating around 23–25% before 2017 despite rapid economic growth and increasing educational attainment among women (World Bank, 2023). This paradox of low participation amidst progress raised significant policy concerns. The Maternity Benefit (Amendment) Act, 2017, was introduced as a corrective measure to arrest declining female workforce engagement and improve post-childbirth employment retention. The law extended paid maternity leave from 12 to 26 weeks and mandated workplace crèche facilities, aligning with global health recommendations. However, its reach was limited: it applied only to establishments with more than ten employees and required 80 days of prior work, excluding over 90% of Indian women engaged in informal sectors such as agriculture, domestic work, and unregistered enterprises (ILO, 2021). Academic and policy literature has highlighted both the progressive intent and the practical shortcomings of the amendment. On one hand, it promotes better maternal and child health outcomes in line with WHO guidelines (Strang & Broeks, 2016); on the other, the financial burden placed entirely on employers has raised concerns about unintended hiring biases against women, particularly in childbearing age groups (Dewan & Bhasin, 2020). Small and medium enterprises (SMEs), which often lack formal HR systems and operate on tight margins, are disproportionately affected. Moreover, weak enforcement mechanisms and low awareness levels in rural areas further limit the Act’s implementation. These structural gaps call for a more inclusive and sustainable policy approach that extends protection beyond the formal sector and supports both employers and employees in balancing economic and caregiving responsibilities.

3. Trends in Women’s Labor Force Participation (2014–2024)

Data from the Periodic Labour Force Survey (PLFS) and the World Bank reveal a complex and uneven trajectory of women’s workforce participation in India over the past decade. In 2017–18, India’s female labor force participation rate (FLFPR) stood at a modest 23.3%, already one of the lowest globally. This stagnated until the onset of the COVID-19 pandemic in 2020, when lockdowns and economic disruptions led to a dramatic decline, pushing FLFPR to a historic low of 16.1% (World Bank, 2021). However, by 2023–24, FLFPR showed a sharp recovery, rising to approximately 42%, driven largely by rural women’s increased economic activity. Despite this promising headline figure, deeper disparities emerge when disaggregated by geography. Rural FLFPR rose from 24.6% in 2017 to a significant 47.6% in 2023–24, while urban FLFPR remained largely stagnant, growing only marginally to 28–30%. This rural surge is attributed less to formal sector employment or maternity-related policies and more to economic necessity, subsistence activities, and government programs such as MGNREGA, livelihood missions, and Self-Help Group (SHG) initiatives. Many rural women engaged in unpaid family labor, piece-rate work, or informal enterprises, which are excluded from most labor protections, including the Maternity Benefit Act. Urban women, in contrast, face persistent structural barriers: lack of affordable and accessible childcare, rigid job structures, high commuting times, and workplace biases continue to suppress their labor market re-entry. A 2023 NITI Aayog study indicated that nearly 40% of urban women who leave work post-childbirth find it difficult to return within the first two years. Employer hesitancy, particularly in SMEs and private firms, further compounds this issue. Sectorally, women’s participation in agriculture has increased significantly—from 57% in 2017–18 to 64.4% in 2023–24—reflecting growing reliance on informal and unpaid labor rather than formal job growth. Conversely, regular salaried employment among mothers remains low. Only about 11% of mothers with infants held formal, salaried positions, and 48% reportedly exited the workforce within four months of returning from maternity leave, underscoring poor retention and inadequate workplace support. This pattern reflects the persistent “motherhood penalty,” where women face slower career growth, wage stagnation, and reduced hiring opportunities post-childbirth. A 2022 study highlighted a 22% drop in interview callbacks for women of childbearing age, particularly in IT and SME sectors. These trends affirm that without universal childcare solutions, flexible work policies, and shared parental leave, India’s female workforce will continue to face high attrition and systemic disadvantage after maternity

4. Regional and Sectoral Disparities

The impact of the Maternity Benefit (Amendment) Act, 2017, varies significantly across regions and sectors in India, revealing deep-rooted structural disparities. Southern states like Tamil Nadu and Kerala have demonstrated relatively stronger implementation of the Act. These states benefit from higher levels of female literacy, greater institutional capacity, and pre-existing maternal welfare schemes. Tamil Nadu, for instance, has complemented the central Act with state-funded maternal assistance programs such as the Dr. Muthulakshmi Reddy Maternity Benefit Scheme, which has improved both awareness and benefit uptake. Effective labor inspection systems and better enforcement mechanisms in these states have further enhanced compliance among employers. In contrast, northern and eastern states like Bihar, Jharkhand, and Uttar Pradesh lag in both awareness and implementation. These regions have higher concentrations of informal employment, weak administrative infrastructure, and limited access to health and welfare programs. Consequently, women working in these areas, particularly in rural settings, are far less likely to receive any maternity-related benefits. Despite the increasing participation of rural women in the labor force post-2020, over 90% remain excluded from the Maternity Benefit Act’s provisions due to their employment in unorganized sectors such as agriculture, domestic work, and cottage industries. The formal-sector bias of the Act results in a significant policy blind spot, denying coverage to the vast majority of India’s working women. Sectoral disparities mirror this trend. The organized sector, which employs less than 10% of India’s female workforce, is the primary domain where the Act holds legal authority. Within this sector, compliance is more feasible due to better resources and administrative structures. However, small and medium enterprises (SMEs)—even those legally covered—struggle to comply due to financial and logistical constraints. Faced with the costs of six months of paid leave and crèche facilities, many SMEs choose to limit female hiring or shift toward male-dominated workforces, inadvertently reinforcing gender exclusion. In the unorganized sector, the Act is virtually non-functional, leaving a vast coverage gap and deepening inequalities between formal and informal employment outcomes. To bridge this divide, a hybrid policy approach has been increasingly advocated. Integrating the Pradhan Mantri Matru Vandana Yojana (PMMVY) with statutory maternity benefits, providing government subsidies to SMEs, and expanding social safety nets can help improve accessibility and equity. Shared cost responsibilities between the state and employers would ease financial burdens and encourage wider compliance. Without such reforms, the Maternity Benefit Act risks benefiting only a narrow, urban, salaried class, leaving behind the majority of Indian women it was designed to protect.

5. Employer Responses and Return-to-Work Challenges

The Maternity Benefit (Amendment) Act, 2017, while progressive in intent, introduced several unintended financial and operational challenges for employers, particularly small and medium enterprises (SMEs), which employ a substantial portion of India’s workforce. SMEs, typically defined as businesses with fewer than 250 employees, form the backbone of the Indian economy, contributing around 30% to the GDP and generating significant employment, especially for women. However, these businesses often function with limited financial buffers, informal processes, and minimal human resources infrastructure, making full compliance with the Act difficult. Under the amended law, employers are obligated to provide six months of fully paid maternity leave to eligible women employees, without any state subsidy or cost-sharing arrangement. For SMEs, this translates into a dual burden: direct costs such as continued salary payments during the leave period, and indirect costs associated with hiring and training temporary replacements, disrupted workflows, and reduced productivity. In many cases, businesses also face legal ambiguity or lack guidance on how to implement crèche facilities, further complicating compliance. In the absence of a government compensation mechanism, many SMEs have turned to workaround strategies. These include outsourcing work temporarily, hiring contract-based staff, reallocating tasks among existing employees, or, more concerningly, avoiding the hiring of women altogether, particularly those in their childbearing years. Surveys and interviews with business owners reveal growing concerns about return-to-work reliability, continuity in projects, and long-term financial sustainability. Some employers have even described the policy as “well-intentioned but impractical,” particularly for enterprises in the manufacturing and services sectors where staffing continuity is critical. Despite these concerns, a few progressive SMEs have adopted flexible work arrangements, part-time return options, or partial wage-sharing models to support female employees. However, such practices remain limited and uneven, largely due to low legal literacy, the absence of dedicated HR personnel, and a lack of incentives to promote inclusive hiring. Compared to countries like the United Kingdom or Canada, where the state shares a substantial portion of maternity benefits, India’s employer-pays-all model creates a structural disincentive for gender-equitable hiring in the private sector. To ensure that maternity protections do not become a barrier to women’s employment, India must rethink its approach—offering financial incentives, tax deductions, or reimbursements for SMEs and creating awareness campaigns on gender-sensitive labor practices. Without addressing these economic realities, the Act risks reinforcing gender gaps in employment rather than closing them.

6. Psychological Aspects and Return-to-Work Realities

Beyond legal and economic dimensions, maternity involves profound psychological and emotional transitions that significantly influence women’s ability to return to work. Pregnancy and the postpartum period bring intense hormonal shifts, physical exhaustion, and identity changes as women adjust to motherhood. These transitions often create psychological vulnerability, particularly in the first six months after childbirth. According to the World Health Organization (WHO), around 10–15% of new mothers in low- and middle-income countries experience postpartum depression, while anxiety disorders affect an additional 8–10%. Studies have linked short maternity leave, lack of workplace support, and pressure to return to work early with higher risks of depression, burnout, and poor job retention. Many mothers report symptoms such as fatigue, breast pain, emotional exhaustion, and reduced concentration when they return to work prematurely (Dagher et al., 2014). In India, nearly 30% of new mothers cite domestic responsibilities and inflexible work conditions as reasons for exiting the workforce within a year of childbirth (India Today, 2025). This loss is not just personal—it affects economic productivity and workplace diversity. Psychological barriers like separation anxiety, body image issues, and guilt for not fulfilling perceived maternal or professional roles further complicate re-entry. Return-to-work outcomes improve significantly when women have access to social support, workplace accommodations, flexible scheduling, and mental health care (Franzoi et al., 2024). India’s six-month maternity leave aligns with WHO’s exclusive breastfeeding guidelines, offering potential benefits for both maternal and infant health, yet implementation gaps persist. A major challenge remains the “maternity penalty”—a form of bias where women face reduced opportunities for promotions, raises, or re-employment after childbirth. Studies report a 22% drop in interview callbacks for women in their childbearing years, especially in sectors like IT and SMEs (Das & Ghosh, 2020). Mental health support is still under-recognized in Indian workplaces, with few employers offering postpartum counseling or reintegration assistance. For maternity policies to truly succeed, organizations must go beyond compliance and foster a culture of empathy, flexibility, and psychological safety. Integrating maternal mental health screening, family-friendly HR policies, and awareness campaigns can help reduce attrition, promote well-being, and create a more equitable work environment. Without addressing these invisible yet impactful psychological barriers, even the most progressive legal reforms risk leaving working mothers behind.

7. Additional Insights

One of the most significant criticisms of the Maternity Benefit (Amendment) Act, 2017 is its employer-centric funding model, which places the entire financial burden of paid maternity leave on private businesses, without any state support or subsidy. This model stands in sharp contrast to international best practices. In countries like Canada, the United Kingdom, and several members of the OECD, maternity leave costs are partially or fully subsidized by the government through social insurance schemes, public funds, or payroll contributions. For example, in Canada, maternity and parental benefits are covered under the Employment Insurance (EI) system, ensuring that employers are not disincentivized from hiring women of reproductive age. Similarly, in the UK, employers can recover 92–103% of statutory maternity pay from the government, depending on their size (OECD, 2022). In India, however, the absence of such cost-sharing mechanisms creates structural disincentives, especially for small and medium enterprises (SMEs), which operate on thin margins and often lack the administrative capacity to manage long leave periods. A 2022 All India Manufacturers’ Organisation (AIMO) survey found that over 35% of SMEs considered avoiding hiring women in childbearing age groups due to financial and operational concerns related to maternity leave. Integrating existing schemes like the Pradhan Mantri Matru Vandana Yojana (PMMVY)—which currently offers conditional cash transfers of ₹5,000 for the first live birth—with the statutory maternity benefit framework could help extend support to women in informal sectors and reduce the exclusive burden on employers. However, PMMVY coverage remains limited; according to NFHS-5 (2019–21), only 28% of eligible women received full maternity benefits, highlighting significant gaps in awareness, access, and implementation. Beyond economic costs, the motherhood penalty continues to disadvantage women professionally. A study by Das & Ghosh (2020) reported a 22% decline in interview callbacks for women in the 25–35 age range, especially in urban service sectors like IT, banking, and education. This bias, both overt and subtle, affects long-term career progression, wage growth, and retention. To overcome these barriers, policy reforms must include government-funded reimbursements, tax incentives for compliant employers, mandatory paternity leave, and investment in subsidized, quality childcare infrastructure. Such measures would not only alleviate the financial burden on businesses but also foster a more gender-equitable labor market by challenging norms that place childcare solely on women.

8. Conclusion and Policy Recommendations

While the Maternity Benefit (Amendment) Act, 2017 marked a vital step in recognizing and legislating for the needs of working mothers, its practical benefits remain largely confined to a small segment of the workforce—women employed in the formal sector. For the vast majority of Indian women engaged in informal employment, the law has had little to no impact. Moreover, although female workforce participation has shown a notable rise since 2020, especially in rural areas where it reached 47.6% by 2023–24, this increase appears more rooted in economic compulsion and the expansion of informal or subsistence-level employment than in the protective effects of maternity legislation. The pandemic, while disruptive, also pushed many women into low-paying or precarious work to support household incomes. These developments underscore the limited scope of the Act and the urgent need for structural reforms that are both inclusive and sustainable.

India must adopt a multi-pronged strategy that addresses systemic barriers across economic, social, and institutional domains to achieve a broader and more meaningful impact. First, cost-sharing frameworks are essential: offering state-funded maternity leave reimbursements or tax incentives, particularly for small and medium enterprises (SMEs), can ease the financial burden and encourage the hiring and retention of women. Second, there is a pressing need to expand affordable and accessible childcare infrastructure, particularly through integrated community-based crèches under the ICDS or in partnership with private and civil society organizations. Third, policy convergence is crucial; maternity benefits should be aligned with schemes like the Pradhan Mantri Matru Vandana Yojana (PMMVY) and relevant labor codes to ensure that women in informal and unorganized sectors are not left behind. Fourth, promoting flexible work arrangements and shared parental responsibilities, including paternity leave, can reduce the motherhood penalty and support women’s smoother re-entry into the workforce. Finally, robust monitoring and enforcement mechanisms must be implemented to track compliance and effectiveness, using data from PLFS, ESIC, or labor inspections.

Ultimately, maternity support must evolve from being a limited legal entitlement to a comprehensive framework that protects, empowers, and uplifts all working women in India, regardless of their sector, geography, or socioeconomic status. Only through such an integrated approach can India bridge the gender gap in workforce participation and foster a more inclusive, equitable labor market.

Contributions:

Introduction: Parnava Ghosal

Background: Parnava Ghosal

Literature Review: All Members

Trends in Women’s Labor Force Participation: Dr Swati Chauhan and Mihlalikazi Mgolombane

Regional and Sectoral Disparities: Laxmi Narasimha Naga Sarvani Mallampalli and Parnava Ghosal

Employer Responses and Return-to-Work Challenges: Chetna Panchal and Mihlalikazi Mgolombane

Psychological Aspects and Return-to-Work Realities: Pramisha Ramesh

Additional Insights: Parnava Ghosal

Conclusion: Parnava Ghosal

References:

Academia.edu. (2024). The impact of work related stress on mental health and influence on parenting practices among working mothers: A review analysis. International Journal of Multidisciplinary Educational Research, 13(3–4).