Recent Maternity Case Law

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Emma Burrows, employment law specialist at Trowers & Hamlins Solicitors, takes a look at pregnancy and maternity rights.

Pregnancy and maternity rights are hot topics at the moment. The Equal Opportunities Commission has recently published ‘Pregnancy Discrimination at work: a review’, and this month has seen two important judgments affecting employees off on maternity leave.

These European Court of Justice (ECJ) decisions, whilst helpful from the point of view of clarifying the law in situations where ambiguity has previously existed, raise implementation difficulties. The first case, Alabaster v (1) Woolwich Plc (2) Secretary of State for Social Security, rules on the effect of pay increases on the calculation of Statutory Maternity Pay (SMP). The second, Ms Merino Gómez v Continental Industrias del Caucho SA, considers the issue of entitlement to both maternity and holiday leave.

Calculation of Statutory Maternity Pay
The case of Alabaster was referred to the ECJ by the Court of Appeal. Mrs Alabaster commenced maternity leave in January 1996. Although she received a pay increase with effect from 1 December 1995, this increase was not reflected in the calculation of her SMP because it came after the relevant period for calculating normal earnings (i.e. the period of 8 weeks immediately preceding the 14th week before the expected week of confinement). Mrs Alabaster’s employer and the Secretary of State for Social Security (who was joined as a party to the claim) argued that the entitlement to have a pay increase factored into SMP was limited to cases where the pay increase was backdated to fall within the relevant period.

The Court of Appeal referred two separate questions to
the ECJ:

  • Does the calculation of a woman’s SMP have to take into account a pay rise awarded following the end of the reference period by which SMP is calculated, but before the period of maternity leave ends?
  • Supposing that the woman is entitled to have a pay
    rise taken into consideration in calculating SMP,
    how should the calculation or recalculation of
    SMP take into account the pay rise?

The ECJ reasoned that the benefit paid to a woman
whilst off on maternity leave was equivalent to a
weekly payment, calculated on the basis of the average
pay received by a worker at the time when she was actually working. This pay was paid to her week b week just as it would be to any other worker. Applying the principle of non-discrimination, the ECJ held that the woman (who was still linked to her employer by an employment relationship during maternity leave) had the right, like any other worker, to benefit from a pay rise awarded between the beginning of the period covered by the reference period and the end of her maternity leave.

The ECJ held that to deny such an increase to a woman on maternity leave would discriminate against her since, had she not been pregnant, she would have received the pay rise.

Following the decision in Alabaster, employers need to be aware that any pay rise awarded to an individual after the beginning of the reference period for calculating SMP, but before the end of her maternity leave, must be included for the purposes of calculating SMP.

Unfortunately, the ECJ did not assist in providing guidance for the calculation of SMP affected by a pay rise. It has been left to “competent national authorities” to determine how any pay rise awarded before or during maternity leave must be included in an SMP calculation.

Interestingly, the Court of Appeal also asked the ECJ whether account should be taken of any decrease in a woman’s pay during the period between the end of the reference period for SMP purpose, and the end of her maternity leave. The ECJ held that, as the question was hypothetical it was inadmissible. This will, no doubt, be a matter for future determination.

Maternity and Holiday Leave
The ECJ considered the question of whether a woman on maternity leave is also entitled to take annual leave in the case of Merino.

Ms Merino Gómez was employed as a factory worker. She was on maternity leave between May to August 2001. In a collective agreement between her employer and its workers’ representatives, two general periods were established within which all staff could take leave. One of these periods was when Ms Gómez was off on maternity leave. When she requested holiday following her maternity leave, her employer refused her request.

The Working Time Directive gives all workers the entitlement to at least four weeks’ paid holiday. This minimum period of four weeks’ paid annual leave must not be replaced by an allowance in lieu, except where the employment relationship has terminated.

The ECJ, in view of the Directive, held that it was not possible to derogate from the entitlement of every worker to paid annual leave. It went on to state that the purpose of the entitlement to annual leave is different from that of the entitlement to maternity leave.

The ECJ pointed out that maternity leave is intended to protect a woman’s biological condition during and after pregnancy, and to protect the special relationship between a woman and her child over the period which follows pregnancy and childbirth. It held, therefore, that where the dates of a worker’s maternity leave coincided with those of the entire workforce’s annual leave, the requirements relating to paid annual leave under the Working Time Directive could not be regarded as having been met.

It was concluded that a worker must be able to take her annual leave during a period other than the period of her maternity leave. This included a scenario in which a period of maternity leave happened to coincide with a general period of annual leave which was fixed, by a collective agreement, for the entire workforce.

What the Future Holds
Employers will now have to factor pay increases into their calculations of an employee’s SMP. Although there are currently no guidelines as to how such SMP payments should be calculated, this is sure to be a topic for litigation before too long, so hopefully clarification will be forthcoming. In the meantime, employers would be advised to adjust SMP calculations as soon as a pay increase comes into effect, irrespective of whether it occurs after the SMP reference period. The issue of holiday leave is even less straightforward. Although the decision in Merino has made it clear that maternity leave and holiday leave are separate and distinct entitlements, there are more complicated issues to consider.

The Working Time Regulations 1998 (WTR) currently preclude a worker carrying over annual leave relating to one year into the following year. What happens then to a woman whose maternity leave begins in one annual leave year and stretches to the next? Will she be able to carry over any untaken annual leave into a successive leave year if that is when her maternity leave ends? Under the law as it stands at the moment, this will not be possible, but perhaps, in view of the judgment in Merino, an amendment to the WTR will be forthcoming?

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27th Jul 2004 15:20

We find very few UK companies are using the new intended GVT reliefs to provide Corporate assistance to working mothers. New National Insurance rebates are worth c £1000 per Working Mother and corporates can now use PPP and Corporate supported onsite /offsite Nuserys, Holiday clubs, and Nannie relief to assist with childcare all qualifying for Income tax reliefs reducing the financial buden of childcare by c 50 %

We have a useful Employers and seperate Employees Key Fact Sheet on this if requested

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