Is an employee on maternity leave entitled to Contractual Bonus Pay?
The short and quick answer to this question is no.
Whilst an employee is on maternity leave, she is entitled to the benefits of her terms and conditions of employment (section 71 Employment Rights Act 1996) other than remuneration (section 71(5) Employment Rights Act 1996).
Statutory Maternity Pay
During maternity leave – the employees’ wage stops, and it is then replaced by Statutory Maternity Pay - SMP.
Under Regulation 9 of the Maternity and Parental Leave etc Regulations 1999 (SI 1999/3312) the definition of renumeration is “…. only sums payable to an employee by way of wages or salary are to be treated as remuneration”.
Whilst an employee is on maternity leave, she is entitled to all the (non-renumeration) benefits of her terms and conditions of employment such as the accrual of annual leave, life insurance, workplace pension, gym membership, private medical insurance (section 71 Employment Rights Act 1996) (section 71(5) Employment Rights Act 1996). However, any paid renumeration is excluded.
It is necessary for the employer to check the contract of employment to see whether “remuneration” is defined. In the absence of this, it is important to note the statutory definition. Any regular payments made to an employee are more likely to be interpreted as “remuneration”.
Examples of renumeration include car allowance and/or contractual performance related pay/company bonus. As such payments make up part of the employees’ original pay, it would be classed as ‘renumeration’ so the employee would not be entitled to it during maternity leave.
However, it is important to note any performance related pay/bonus earnt before the employee goes on maternity leave should be paid. They would still be eligible for this payment as it was earnt before maternity leave. This can be paid before or during maternity leave.
Interestingly discretionary bonus outside of the normal salary, i.e. end of year company bonus, the employee could be entitled to this payment as it falls outside of the definition of renumeration.
With a regular car allowance, this is also perceived as renumeration as it is an addition to the employees’ salary; however further clarity should be obtained through the company’s car allowance policy as well as employee’s contract of employment.
The article is for general information purposes only and should you require any further assistance on the matter please do not hesitate to call our advice-line team on 01455 852028.
