Answer by Tracey Guest

Q And A

Bonuses and maternity leave: ask the expert

I have recently returned from maternity leave, having taken the full 12 months plus accrued holidays ie I was off for the whole of 2009. My organisation operates a performance rating system (1-5, 5 is high) and a discretionary bonus scheme. Prior to going on maternity leave I was rated as a 4 performer which meant that I always received a performance bonus. The year I went off on maternity leave I received a lower performance rating (3) but still received a performance bonus. I am being told that my rating will carry forward for the year I was on maternity leave (2009), but I won't receive a performance bonus. I have been in the same department since 2005 and for the years 05,06 and 07 I received a 4 ratings and a performance bonus each year. In the 9 years i have worked for this organisation I have never had a year whereby I have not received a discretionary bonus. I appreciate that the financial climate is tougher, but if I look objectively at my previous performance, the only difference is that I was out of the business for 14 months. I now feel that I have been disadvantaged and discriminated against for going on maternity leave which seems very unfair. I have canvassed opinion of a few colleagues who have been involved in this year's pay review and they believe I have been treated harshly. I was advised informally that the decision should have been made based on the assumption that i would have continued to perform at the same level. I feel angry and upset and I want to clarify what my options might be before I challenge the decision. I feel I've had a few messages as a result of this decision (1) I am not going to be as effective (2) I am no longer a high performer (3) my value/contribution is less than before. I feel let down and disillusioned by the way I have been treated. Should I just accept this as a bad experience and move on, or do I have a case to challenge? The other complication is that I am actually pregnant again and will go off on maternity leave in May.

Unfortunately, the position in UK law regarding an employee's entitlement to a bonus during maternity leave is extremely complex and inconsistent.

The guiding principle is that a bonus that is retroactive pay for work done (such as a performance bonus) may be reduced pro-rata for any time spent on maternity leave during the bonus period. However, the two-week compulsory maternity leave period must be treated as time worked for this purpose.

The law relating to discretionary loyalty bonuses is not straightforward.

The Employment Appeal Tribunal had ruled that discretionary loyalty bonuses must be paid in full, but that decision was later questioned in a subsequent case. Furthermore, changes to the Sex Discrimination Act in 2005 are likely to have reduced the impact of the original Employment Appeal Tribunal ruling.

An employer discriminates against an employee if it treats her less favourably than it would otherwise have done on the ground that she has taken maternity leave. This does suggest that an employee should not suffer any loss of bonus simply because she has exercised her right to maternity leave. However, the Sex Discrimination Act now includes wording which states that no claim can be made where a woman has been deprived of "remuneration" during maternity leave. “Remuneration” is defined as sums payable “by way of wages or salary”. An employee would only be entitled to a bonus if the bonus fell outside this definition, which is unlikely.

It is now likely that the possibility of successfully bringing a claim for sex discrimination over the issue of bonuses during maternity leave is very narrow. It is likely that only the following claims could succeed under the Sex Discrimination Act:-

a) A claim for a pro-rata discretionary bonus (taking account only of the periods of work, plus the two-week compulsory maternity leave period); and

b) A claim for a full bonus where that bonus is neither regulated by the contract, nor "by way of wages or salary". A one-off discretionary bonus might possibly fall into this category.

In summary, therefore, it is unlikely that you will be able to succeed with any claim for sex discrimination if your employer does not pay you a bonus for the period you were off on maternity leave, save that there is an argument that you should receive a pro rata bonus for the two-week compulsory maternity leave period. My advice is to lodge a formal grievance in relation to not receiving a pro rata bonus for the two-week compulsory maternity leave period.

Tracey Guest is head of employment and a partner at Slater Heelis in Manchester. She specialises in employment law and is also a working mum.

Related tags: Maternity leave | Performance-related bonus