This year has seen an expansion of maternity leave and, for most women, of maternity pay.

Matthew Tom, Employment Law Solicitor for Tarlo Lyons, gives a guide to the complex new regime

The Employment Act 2002 implemented a major expansion of employees' maternity rights for all employees whose children were born on or after 6 April 2003. Maternity leave entitlement has been expanded, statutory maternity pay (SMP) has been increased and a new right to paid paternity leave has been introduced. Also a statutory framework has been introduced for employees to request flexible working arrangements where they have responsibility for a child.

The new rules are expected to directly affect around 350,000 new mothers, 450,000 new fathers, plus around 4 million men and women who will potentially benefit from the flexible working procedures.

Summary of changes

• Ordinary maternity leave has been extended from 18 weeks to 26 weeks,
• Notification by the employee is now required before (or during) the 15th week before the expected week of childbirth - previously it was required at least 21 days before the leave was to begin,
• 28 days' notice is now required for changes to leave arrangements (previously 21 days),
• Additional maternity leave is now simply an additional 26 weeks from the end of the 26 weeks of - previously it applied for 29 weeks after the child's birth, regardless of how much of the ordinary maternity leave period had elapsed,
• Previously, in order to qualify for additional maternity leave, an employee needed at least a year's continuous employment at the start of the 11th week before the expected week of childbirth - now she needs only 26 weeks' continuous employment, however this is now measured from the start of the 14th week before the expected week of childbirth,
• Statutory maternity pay (SMP) is now payable for 26 weeks instead of eighteen weeks,
• The level of SMP during the first six weeks of ordinary maternity leave remains at 90% of normal earnings, however the statutory minimum threshold of £77 per week has been removed,
• For the remainder of ordinary maternity leave, the level of SMP has changed from £75 per week to either £100 per week or 90% of average earnings, whichever is the lower,
• Employers can still recover most of the SMP paid by deduction from their National Insurance payments, but now may also apply to offset the SMP in advance against other monies to be paid to the Inland Revenue,
• The old rules provided that the commencement of an employee's maternity leave could be triggered automatically if she was absent with a pregnancy-related illness any time within six weeks of the expected week of childbirth - this has been reduced to four weeks before the expected week.

All of this poses some difficult questions:

1. Are employers allowed to contact employees who are on maternity leave?
There is no restriction on an employer making contact with an employee who is on maternity leave. However, given that the main reason for doing so is to assess staffing needs and the intended date of return to work, the crucial issue is what each party has to tell the other under the new regime.

Previously, an employee entitled to take additional maternity leave was not obliged to specify her return date when notifying the employer of her intention to take maternity leave. The employer was, however, entitled to write to her before the end of the ordinary maternity leave period to enquire about the return date and the employee had to respond within three weeks to be certain of being allowed to return on her desired date. Similarly, the employee had to give three weeks' notice if she wanted to return to work early.

Now it is for the employer to confirm the employee's return date, once it has received proper notification of intention to take maternity leave. The employer should assume that the employee, if eligible to do so, intends to take her full entitlement to additional maternity leave. An employee who then wishes to return early, including at the end of ordinary maternity leave, must give 28 days' notice (not necessarily in writing) of her intended return date.

If the employee does not want to return to work at all, either at the end of ordinary maternity leave or additional maternity leave, no special notice rules apply any longer and she will only have to give her contractual notice of resignation.

2. Is an employee entitled to retain her company car during ordinary maternity leave? What about receiving a car allowance?
The rule is that all entitlements to 'remuneration' are suspended, while the contract of employment continues in full effect, including any contractual entitlement to benefits such as the use of a company car.

Where a car allowance is paid instead of providing a company car, the distinction between remuneration and benefits becomes blurred. The standard entitlement under the contract (i.e. to have the use of a car) nevertheless amounts to a contractual benefit, so the most logical view remains that any cash equivalent should also be regarded in the same way and should be maintained throughout ordinary maternity leave and, if the contract provides for it, also throughout additional maternity leave.

Most employers will make this decision based upon their perceived likelihood of a claim arising if the car benefit is withdrawn.

3. Entitlements during additional maternity leave
Unless the contract states otherwise, the terms of an employee's contract will change when additional maternity leave is taken. Employees taking additional maternity leave are not entitled to contractual benefits as they are with ordinary maternity leave. The employee remains entitled to the maintenance of trust and confidence, to terms relating to notice of termination, redundancy compensation, and disciplinary and grievance procedures.

Statutory holiday entitlement continues to accrue, however contractual rights above the statutory entitlement will only accrue if the contract permits.

Employees are not entitled to pension contributions during additional maternity leave unless the contract states otherwise and additional maternity leave does not automatically count as pensionable service. Although additional maternity leave does not break statutory continuity of employment, the period of additional maternity leave will not count towards rights that are dependent on a period of qualifying service.

The employer may always negotiate additional benefits above the statutory entitlement. It is not necessary for terms to be the same for all employees, although it is advisable, as it could cause problems within the workforce, or even be alleged to be race discrimination, for example, if different benefits are applied.

4. If maternity leave mirrors holiday leave, what happens to holiday pay?
The Working Time Regulations 1998 generally prohibit payment in lieu of accrued holiday not taken in a particular leave year. There is also no right to carry over statutory holiday to the next holiday year, but the employment contract can allow additional contractual holiday to be carried over.

Statutory holiday entitlement (but not additional contractual entitlement) will accrue during maternity leave, however one cannot be on maternity leave and also on holiday at the same time. Therefore if the maternity leave period exactly matches the holiday year, the employee will have no option but to serve 28 days' notice to bring her maternity leave to an end four weeks early, in order to take advantage of the paid holiday she has accrued.

However, where the maternity leave period overlaps the holiday year, the employee should take the paid holiday before the commencement of her maternity leave because a 28-day notice as above would count as a 'return to work' and she would not be able to continue her maternity leave afterwards.

In reality, making a payment in lieu of accrued holiday or allowing the statutory holiday to be carried over is highly unlikely to cause any problems. The Regulations are only enforced by the employee or by the Health and Safety Executive, neither of which is likely in these circumstances.

5. Pregnancy-related illnesses. Refusal of employees to go on leave
Maternity leave automatically begins from the 4th week before the child is due if the employee is absent with a pregnancy-related illness. As doctors are not obliged to state whether an illness is pregnancy-related, there is potential for employees to refuse to go on leave.

Without proper medical evidence that the absence is pregnancy-related, the employee cannot be forced to take leave from the time of the illness. The employer could seek its own medical opinion, provided it has the right to require the employee to submit to an examination in the employment contract.

6. If an employee wants to return to their job part time, is the employer obliged to offer part time work?
From 6 April 2003, employees who are parents of children under six have the right to request flexible working patterns and employers must follow a strict procedure to give such requests serious consideration. In order to qualify for the procedure, the application must be made in order to care for the child, the employee must have 26 weeks of continuous employment and they must not have made a similar application under the right in the last twelve months. If the request is accepted, it forms a permanent change in the employee's terms and conditions.

A refusal to permit a woman to return to work part time may amount to indirect sex discrimination unless the employer can show objective business reasons.