The Sex Discrimination Act 1975 was amended earlier this year so that it makes no distinction between ordinary maternity leave (OML) and additional maternity leave (AML).
To ensure that employees on maternity leave have rights consistent with those on adoption leave, regulations have been introduced that amend the Maternity and Parental Leave Regulations 1999 and the Paternity and Adoption Leave Regulations 2002.
The important date for employers to note regarding the implementation of the changes is 5 October 2008. For the sake of simplicity, this Q&A refers to the effect the regulations will have on maternity rights. They will have a corresponding effect on adoption rights.
Q Which employees will be affected by the new regulations?
A The amendments will affect:
- In the case of maternity, an employee whose expected week of childbirth begins on or after 5 October 2008
- In the case of adoption, an employee whose child is expected to be placed with him/her for adoption on or after 5 October 2008
- In the case of overseas adoption, an employee whose child enters Great Britain on or after 5 October 2008.
Q What is the key change?
A The key change is that the rights and obligations of employees during AML will be consistent with the rights and obligations of employees on OML. The main practical effect of this is that terms and conditions enjoyed by employees on OML will continue to be available during AML.
Currently, employees on OML benefit from the terms and conditions that would have applied to them had they been at work, with the exception of remuneration, ie wages or salary. With the introduction of the new regulations, these benefits will continue during AML.
Q What happens to benefits such as the private use of company cars and medical insurance after the payment of statutory maternity pay stops after 39 weeks of maternity leave?
A The short answer is, most likely, nothing. By way of background, OML lasts for the first 26 weeks of maternity leave. AML follows immediately after the end of OML and lasts for a further 26 weeks, giving a total entitlement of 52 weeks’ statutory maternity leave.
Statutory maternity pay is payable for up to the first 39 weeks of maternity leave – ie it ceases to be payable for the final 13 weeks of AML. Since such benefits will almost certainly qualify as terms and conditions of employment – which include non-contractual benefits connected with an employee’s employment – and are not remuneration”, they must continue to be provided for the full period of AML and will not be affected by the fact that statutory maternity pay ceases 13 weeks into AML.
Q Do the new regulations affect the accrual of holiday?
A One effect of the new regulations is that employees will now continue to accrue statutory and contractual holiday entitlement during both OML and any period of AML.
Q What does this mean for pension contributions?
A This is a difficult area because of some uncertainty as to whether the term remuneration includes pension contributions. This question is important because remuneration does not continue during maternity leave. The short answer is that pension benefits do continue during OML.
The government has clarified, however, that pension benefits will only continue during any period of AML that is paid, whether the pay is statutory or contractual. Statutory maternity pay is payable for 39 weeks – ie it is payable for all 26 weeks of OML and for the first 13 weeks of AML, which, like OML, lasts for 26 weeks.
During the final 13 weeks of AML, statutory maternity pay is not payable. Therefore, unless an employer pays contractual maternity pay during this final 13-week period, which is rare, the employee will not receive any pay and, therefore, pension benefits do not have to be continued during this period. This area may be subject to challenge by parties arguing that EU law requires employers to continue pension benefits during AML regardless of whether the leave is paid.
Q What should employers do before 5 October 2008?
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A Employers should review all documentation and practices relating to maternity leave to ensure they comply with the new regulations. Employers should also consider the cost implications of the new regulations and review whether this will impact on the provision of any enhanced maternity benefits. For example, will the cost of continuing benefits and pension contributions during AML mean that it is no longer viable, for cost reasons, to provide any enhanced contractual maternity leave pay at the same level or at all?
Philip Davies, associate, Covington & Burling
