Employment Benefits During Additional Maternity Leave - Changes planned to align entitlements during Ordinary and Additional leave

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25 October 2007

The Sex Discrimination Act 1975 is the UK's implementation of the European Directive on "equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions". The Equal Treatment Directive was amended in 2002 and the Government subsequently amended the 1975 Act by means of the Employment Equality (Sex Discrimination) Regulations 2005, which came into force on 1 October 2005.

In February 2007, the Equal Opportunities Commission (EOC) sought a judicial review in the High Court of the Government's implementation of the 2002 changes to the Directive. Six issues were raised by the EOC and, in its judgement, the High Court ruled that the 2005 changes did not clearly reflect the amended Directive in the areas at issue and should be amended by the Government.

Among the issues raised by the EOC were two points related to the entitlement of women to contractual pay and benefits during ordinary maternity leave (the first 26 weeks of absence) and additional maternity leave (the second 26 weeks of absence). These entitlements are set out in sections 71 and 73 of the Employment Rights Act 1996 and in Regulations 9 and 17 of the Maternity and Parental Leave etc Regulations 1999. The entitlements that are relevant to this discussion are:

• During ordinary maternity leave, a woman is entitled to the benefit of all of the terms and conditions of employment that would have applied if she had not been absent, other than her remuneration which is defined specifically as "sums payable to an employee by way of wages or salary".
  
  
• During additional maternity leave, a woman is entitled to the benefit of any terms and conditions of her employment relating to
  
  
  • notice of the termination of the employment contract by her employer,
  • compensation in the event of redundancy, or
  • disciplinary or grievance procedures.

The EOC raised two points about these entitlements because the European Directive does not allow a woman to suffer discrimination in employment because she is on maternity leave, other than in certain permitted situations. Are these provisions discriminatory?

According to the UK's implementation of the European Directive, they are not discriminatory. Section 6A of the Sex Discrimination Act 1975, as amended in 2005, states (as relevant) that it is not unlawful if a woman,

• during ordinary maternity leave, does not benefit from terms and conditions of employment relating to remuneration, other than maternity-related remuneration (e.g. SMP), and
  
  
• during additional maternity leave, does not benefit from terms and conditions of employment, other than
  
  
  • maternity-related remuneration
    
    
  • notice of the termination by her employer of her contract of employment,
    
    
  • compensation in the event of redundancy,
    
    
  • disciplinary or grievance procedures.

The exceptions match the entitlements in the employment legislation and, as a result, a woman could not make a claim for discrimination where the exceptions apply.

However, according to the EOC,

1. if a woman were denied a discretionary bonus during maternity leave, she could not complain of discrimination because such a payment falls within the exceptions, but the European Court of Justice, in the case Lewin v Denda, has ruled that it would be discriminatory for an employer not to pay a discretionary bonus.
   
   
2. a distinction is drawn between complaints for discrimination that could be made in respect of benefits not provided during ordinary leave and benefits not provided during additional leave, but such a distinction is not permitted by the decision of the European Court of Justice in the case Land Brandenburg v Sass.

The High Court agreed with all of the issues raised by the EOC, including the two described above, and, as a result, the Government is obliged to change the relevant legislation, including the Maternity and Parental Leave etc Regulations 1999. The changes will include

• clarification of the meaning of "remuneration", and
  
  
• the removal of the distinction between entitlement to non-pay benefits during ordinary maternity leave and during additional maternity leave.

No timetable has yet been announced for the changes and, as European legislation is involved, the Government is not obliged to introduce the changes from the normal April or October commencement dates. However, if the change is made, say, from 6 April 2008, it would affect women who are already on, or about to start, maternity leave, and the prospect of retaining their full benefits package (with the exception of remuneration) for a full year could affect the decisions they make.

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Further information:
Equal Opportunities Commission v Secretary of State for Trade and Industry
Online Services - Notes for Payroll Software Developers

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