Statutory Maternity Pay: Alabaster Ruling

The employee is entitled to claim additional Statutory Maternity Pay (SMP) if a pay rise took place, or would have been awarded, between the start of the relevant period & the end of her statutory maternity leave had she not been absent on statutory maternity leave.

The ruling is not a new one, coming into force in the UK in April 2005, and follows traditional SMP calculation guidelines.

• The relevant period is the eight weeks before the qualifying week
• The qualifying week is fifteen weeks before the expected week of confinement (EWC)
• The EWC is the Sunday on or before the baby’s due date

Therefore, the start of the relevant week is at least 23 weeks before the EWC. The end of the maternity leave period is 52 weeks after the start of the maternity leave (which includes the additional 13 weeks unpaid leave), so the total period that is covered is 75 weeks (17 months). It should also be noted that the increase in salary would have a knock-on effect with the amount of holiday pay the employee would be due at the end of the maternity leave period.

The legislation is particularly relevant to employees who are paid minimum wage due to the annual rise in the NMW. It should also be noted that for some workers where 90% of their average weekly earnings (AWE) is below the standard rate of SMP (currently £172.48) the changes will apply to the full 39 weeks. In addition to this, employers must be aware that if pre-pay rise an employee did not qualify for SMP, but post-pay rise they do, the employer must:

• Assume that she was entitled to maternity allowance (MA)
• Calculate 90% of the AWE
• Deduct this from the standard rate of SMP
• Pay the difference for just 6 weeks

The treatment of bonus payments for those on maternity leave is a complex area and it is advised that legal advice is taken. A general rule of thumb is that women on maternity leave, must receive a bonus that relates to any period before they go on maternity leave (regardless of when it is actually paid) during the two-week compulsory leave period and the period after they return to work.

For more information or advice, please do get in touch with your local Whitings LLP Office.

Disclaimer - All information in this post was correct at time of writing.