The Chartered Institute of Personnel and Development (CIPD) is receiving an increasing number of calls on their employment law advice line due to the recent changes in tax guidance on maternity leave. Employers need to know how to deal with maternity leave, and below are listed some of the more difficult questions:

1. Should contractual benefits be continued during additional adoption leave?

Since adoption leave can be taken by male or female employees, there is no direct discrimination issue, regardless of whether benefits are provided or not. Practically though, most employees who take leave are female, so indirect discrimination could be an issue. The same protection for contractual rights during ordinary maternity leave (OML) applies for ordinary adoption leave. Benefits are now also extended to additional adoption leave since the Paternity and Adoption Leave (Amendment) Regulations 2008. The changes will then affect the parents of children that are placed or expected to be placed for adoption on or after 5 October 2008.

2. What differences are there between maternity and adoption leave?

There is now no service requirement for mothers to qualify for maternity leave, but qualifying for adoption leave requires an employee to have performed 26 weeks’ service by the week in which they are notified of being matched with a child. Statutory adoption pay (SAP) is also different, in that it is a flat rate for 39 weeks compared to the 90% of full pay given in statutory maternity pay for the first 6 weeks. Employers of adopters further have to be notified within 7 days of being told that they have been matched, whereas a woman on maternity leave must notify their employer by the 15th week before the baby is due. SMP and SAP both require 28 day’s notice from employees of when they wish payments to begin. In terms of the beginning of pay and leave, for adoption this can begin at the earliest 14 days before the date of placement and at the latest on the day of placement. In contrast, maternity leave and pay can start 11 weeks before the baby is due at the earliest, and the day after the baby arrives at the latest.

3. How are pensions affected by maternity leave?

Contributions to employers’ pensions must be continued during paid maternity leave according to the Social Security Act 1989, at the same rate as if the employee was at work. If employees are meant to contribute a percentage of their pay to a pension scheme then their contributions should be calculated via the pay they receive during maternity leave.

4. Are employees on leave affected by the increase in statutory holidays?

Working time regulations insist that the statutory minimum holiday entitlement is now 28 days for employees working 5 days a week. Organisations that provide 20 days’ annual leave plus 8 days public holiday, but don’t allow public holidays that fall during maternity leave to be taken later, fall foul of this. With the new regulations, organisations that provide more generous contractual annual leave will need to maintain this throughout additional maternity leave and OML for those mothers with babies due on or after 5 October 2008.

5. Can employees have other jobs while on maternity leave?

Employees are able to have two employers and hence qualify for maternity leave and pay from both. Therefore it is possible for a woman to take maternity leave from one employer earlier while still working for the other. And if an employee on maternity leave starts working for another employer before the birth of her baby, her entitlement to SMP from the original employer won’t be affected either. If the new job does not begin until after the birth of the baby, however, entitlement to SMP from the original employer ends and there will be no entitlement to SMP from the new employer.

6. Can the cost of childcare vouchers be deducted from maternity pay?

Employers should continue to provide vouchers during OML, with no deduction from SMP. It is often wrongly assumed that employees ‘buy’ childcare vouchers with part of their salary under a salary sacrifice scheme. Instead, employers provide vouchers as a non-cash benefit for employees who agree to a contractual variation in pay. Therefore the ‘salary sacrifice’ just happens once.

7. Can employees give up childcare vouchers when beginning leave?

Yes. Employees on maternity leave might not need childcare vouchers, so they can opt out of the benefit if allowed to by their organisation. But unless the employee opts out of the scheme before her 16th week of pregnancy then her SMP will be paid at the lower rate, since it is based on actual earnings during the SMP calculation period. Contractual pay may increase though as a result of opting out.

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