Salary increase should be reflected in maternity pay

Alabaster v Woolwich IRLB 643 EAT

• Alabaster’s expected week of confinement (“EWC”) was 11 February 1996. On 1 December 1995 her annual salary was increased by almost £1,200 and she received the benefit of this until commencing maternity leave.

The increase was not incorporated in her earnings-related, higher-rate SMP because it had been calculated with reference to the “relevant period” (the eight weeks preceding the 14 weeks before the EWC) during which the increase had not been effective.

Without the increase, Alabaster received approximately £20 a week less SMP. She brought a tribunal claim, arguing that the SMP regulations failed to implement the ECJ decision in Gillespie whereby no distinction was made between backdated and immediate salary increases.

The result was that a salary increase should have been included in the calculation if it took effect at any time between the beginning of the “relevant period” and the end of the maternity leave. The only exception would be after the expiry of entitlement to higher-rate SMP.

The tribunal agreed. The SMP should have reflected the salary increase even though it took effect after the relevant period. However, Alabaster’s claim was dismissed for being out of time. Leave to appeal was given.

Ex-gratia payment must be set off

Williams v BOC Gases IDS Brief 661 Court of Appeal

Williams suffered from pre-existing back problems when he joined BOC in 1988. When his employment was terminated on medical grounds in 1996, BOC made an ex-gratia payment of almost £12,000 “to be treated as an advance against damages which may be awarded”.

Williams subsequently brought a personal injury claim alleging that BOC’s working practices had aggravated his condition. BOC admitted liability and agreed damages of £3,000. The judge held the payment should not be set off against the damages because it was a “benevolent payment”.

BOC successfully appealed. The Court of Appeal held that a wrongdoer is not required to compensate twice for the same loss. Employers should be encouraged to make ex-gratia payments in advance of potential claims. The damages payable were reduced to nil.

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