legal updates
Wednesday, 11 Jun 2008
changes to maternity and adoption benefits (again!)
Different rules apply to the benefits an employee gets during the first six weeks of maternity and adoption leave, and then the next twenty, and the next thirteen, and then the last thirteen. Deciding what benefits should or should not be given has caused employers a lot of problems and, to clarify the situation and bring the UK into line with EU requirements, legislation about pay and benefits during maternity and adoption leave will change from October 2008.
Presently, the first 26 weeks of maternity leave is called ordinary maternity leave (OML) and employees are entitled to all of the contractual rights that they would have received if they had not been on leave. This excludes wages (dealt with in similarly complicated legislation elsewhere), but includes pension and holidays as well as any special rights such as company car or mobile phones (unless these are specifically for business use only). During the second 26 weeks, called additional maternity leave (AML), contractual rights to benefits such as pensions, car allowances and healthcare are suspended. Rights to the accrual of statutory holiday entitlement still apply.
The new rules will affect women whose “expected week of childbirth” falls on or after 5 October 2008, and will also apply to individuals placed with a child for adoption on or after that date. Employees will be entitled to their full benefit package (again excluding wages) throughout both OML and AML – but with the exception of pension rights, which will only be paid for the first 39 weeks.
Some specifics are worth noting:
- employees will also be entitled to full contractual holiday entitlement for the holiday year even if on maternity or adoption leave for some or all of it;
- if some element of company car provision is permitted for personal use, employers must treat the car as a benefit and allow the employee to keep it throughout AML as well as OML (employers can only take back a company car for the whole maternity leave period if it is provided purely for business use);
- if car allowances are paid as a benefit, this will continue to apply during AML;
- employees must continue to be covered by existing life assurance and private medical schemes and must continue to benefit from existing gym memberships and childcare vouchers during AML; and
- any discretionary annual/Christmas bonus or loyalty bonus must also be paid during AML.
Employers should prepare themselves now for the changes by reviewing their contracts of employment and staff handbooks and, if necessary, changing the way benefits are made available (including in particular car allowances) so they are treated properly after October.