Sex Discrimination on the Grounds of Pregnancy or Maternity Leave - Employment Benefits During Ordinary and Additional Maternity Leave

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20 March 2008

Following on from the High Court's decision in the judicial review Equal Opportunities Commission v Secretary of State for Trade and Industry, that changes made to the Sex Discrimination Act 1975 (the "Act") in 2005 did not comply with the European Equal Treatment Directive or European case law, the Government has made the necessary amendments by means of the Sex Discrimination Act 1975 (Amendment) Regulations 2008.

The following changes come into effect from 6 April 2008:

1. The definition of discrimination on grounds of pregnancy or maternity leave is changed so that it is only necessary for there to be less favourable treatment and to remove the need for a comparator when a woman brings a claim of discrimination on the grounds of pregnancy or maternity leave.
   
   
2. The definition of "harassment" is amended to remove the causal link between harassment and the sex of the person being harassed. The change enables claims to be made by someone who is not subjected to the unwanted conduct himself or herself but the effect of which nonetheless violates his or her dignity or creates an intimidating environment for him or her.
   
   
3. It becomes unlawful for an employer to fail to take reasonably practicable steps to protect employees from harassment by third parties where such harassment is known to have occurred on at least two other occasions.

The fourth change is, from a payroll perspective, the most significant. Section 6A of the Act currently allows a woman to be deprived of her contractual entitlement to remuneration, except for any entitlement to statutory and contractual maternity pay, throughout the entire period of maternity leave (i.e. the first six months of ordinary maternity leave and the second six months of additional maternity leave), without that constituting sex discrimination. However, it also allows her to be deprived of most of her other contractual benefits during the second six months of additional maternity leave, with the exception of certain benefits related to the ongoing employment relationship, such as termination, redundancy, pension rights, and access to disciplinary and grievance procedures.

The differences in what contractual entitlements may be removed during the two distinct periods of maternity leave were found to be discriminatory by the High Court, so the new Regulations limits the extent to which a woman may be deprived of her contractual entitlements during her entire period of maternity leave solely to "any benefit from the terms and conditions of her employment relating to remuneration".

The basic definition of the term "remuneration" is unchanged. It refers to "benefits

1. that consist of the payment of money to an employee by way of wages or salary, and
   
   
2. that are not benefits whose provision is regulated by the employee's contract of employment."

However, three types of "remuneration" are specifically excluded from the definition. A woman continues, therefore, to be entitled to receive, during the full period of her maternity leave:

1. statutory and contractual maternity pay, including any increase-related remuneration, i.e. remuneration that is calculated by reference to increases in remuneration that the woman would have received had she not been on maternity leave ("Alabaster" recalculations)
   
   
2. remuneration (including increase-related remuneration) in respect of times when the woman is not on maternity leave, i.e. contractual payments due to her in respect of the period before her leave started, or
   
   
3. remuneration by way of bonus in respect of times when a woman is on compulsory maternity leave, i.e. the two-week period or, in the case of women working in factories, the four-week period immediately following her baby's birth.

These changes will mean that women on additional maternity leave will have recourse to the same claims of discrimination as those on ordinary maternity leave. This will affect employers that provide non-pay benefits to employees while on ordinary maternity leave, e.g. contractual annual leave above the statutory minimum, company cars, mobile phones, etc., but cease providing them during additional maternity leave. They will also have some impact on those employers who currently discount any period of additional maternity leave taken by employees from calculations of length of service for the purposes of certain contractual benefits, such as service-related holiday entitlements and pensionable service.

The third of the exceptions to the definition of "remuneration", prompted by specific European case law, will enable women to bring claims of discrimination in relation to discretionary bonuses in respect of periods of compulsory maternity leave, such as a failure to pro-rate the payment of discretionary bonuses to include the period of compulsory maternity leave.

Although the Regulations are effective from 6 April 2008, this fourth change applies only where a woman's expected week of childbirth begins on or after 5th October 2008. Corresponding changes will be made in due course to Regulation 17 of the Maternity and Parental Leave etc. Regulations 1999.

...UK Payroll News - Latest

Sources:
The Sex Discrimination Act 1975 (Amendment) Regulations 2008
Explanatory Memorandum to the Sex Discrimination Act 1975 (Amendment) Regulations 2008

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