In October 2008, new maternity regulations come into effect following a ruling which entitles women to take up to a year off work. But how will they work in practice?
You’ve probably read something about it in the paper, but you may not be clear about when and how maternity pay and benefits are changing as a result of maternity leave being extended to a year.
The new regulations kick in if you are expecting a baby on or after 5th October this year.
They were secured last year after the then Equal Opportunities Commission won its claim in the High Court that the existing right to maternity leave fell short of European Union requirements.
Although the new regulations don’t come into effect until October, employers – and their pregnant workers – are being advised that they may need to discuss the implications well before they go on maternity leave. This could be as early as July.
Women who qualify for maternity pay will be eligible for statutory maternity pay which will cover 39 weeks of the 52 that they are entitled to have off work.
Under the rules governing statutory maternity pay, employers have to pay 90% of a woman’s average weekly earnings for the first six weeks of maternity leave.
After this women are entitled to £117.18 a week in statutory maternity pay. In addition they are entitled to any maternity package offered by their company – many /offer good schemes aimed at retaining experienced female staff, but each scheme has its own foibles.
Many, but not all, for instance, require you to pay back any maternity pay you have been given if you do not return to work after your maternity leave.
Employers do not have to pay any extras such as premium shift rates, call-out and attendance allowances while a woman is on maternity leave.
However, they have to continue paying all benefits, even if they have only been granted on a discretionary basis.
Employees on maternity leave do not have the right to use a company car which is provided purely for business purposes.
If the car is also provided for personal use then it is considered a benefit and, under the new regulations, the employee will have the right to keep it throughout the 52 weeks of their maternity entitlement.
Car allowances are slightly more complicated and employees’ entitlement to them while on maternity leave depends on whether they are seen as a benefit, in which case it must be continued during maternity leave, or part of the employee’s salary, in which case it does not need to be continued.
The history of a company’s treatment of past employees on maternity leave is an important consideration. If the company has normally considered a car allowance a benefit and continued it during maternity leave, it will be difficult to draw back from this position.
As far as pension is concerned, this is only paid while the employee is eligible for paid maternity leave – in the case of SMP this will be 39 weeks.
Employee contributions are calculated on the actual money the employee is receiving. However, in a money-purchase scheme [as opposed to a final salary scheme], employers have to continue to pay in on the basis of the employee’s normal pay.
Insurance, including medical cover, which is paid by an employer is less clear, but experts advise that it should be treated in the same way as pension rights and should be maintained throughout paid maternity leave.
The position regarding holiday pay is also not transparent. With regard to bank holidays, if companies allow for paid bank holidays as part of their contract, they must be paid for women on maternity leave.
However, if they do not, the advice is that they do not have any obligation to pay for them. After October, women will be eligible for their full holiday entitlement in the year even if they are on maternity leave for all or part of it.
Employers may be concerned that if women carry forward holiday leave into another year it will present operational difficulties.
Ways round this include suggesting to women that they take holiday leave immediately before the baby is born or before they come back so they can go back onto a full salary earlier.
Finally, women on maternity leave are not generally entitled to bonuses, unless they relate to a period of time during which they were at work, in which case they must be paid on a proportionate or pro-rata basis to reflect the time the empoyee was working, on compulsory maternity leave [the two to four week period before the birth] or suspended on pregnancy or maternity grounds.