Does the increase in maternity leave entitlement mean an increase in pension contributions too? Esther Smith, partner at Thomas Eggar, and Martin Brewer, partner at Mills & Reeve, advise.
The question:
As a company, we currently cease any company pension contributions after a woman has been on maternity leave for six months. Now that the maternity leave entitlement has increased to nine months, do we legally have to continue the pension contributions for nine months?
Legal advice:
Esther Smith, partner, Thomas Eggar
Yes, you do! Whilst we still have the distinction between ordinary and additional maternity leave, and therefore a distinction between the continuation of all terms and conditions (except pay) during ordinary leave, and the furtherance of only the mutual trust and confidence during additional leave, the payment of pension contributions during maternity leave are actually linked under the legislation to the payment of statutory maternity pay.
Therefore you should be paying the pension contributions for the SMP period of nine months, rather than just the ordinary leave period of six months, for which the normal terms and conditions (except pay) continue.
Esther Smith is a partner in Thomas Eggar’s Employment Law Unit. For further information, please visit Thomas Eggar.
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Martin Brewer, partner and employment law specialist, Mills & Reeve
The short answer is yes. Any employment-related benefit scheme, which includes occupational pension schemes, is subject to the requirement that the period of paid maternity leave must be treated as if it were a period during which the woman was working normally for her usual remuneration (except that she is not entitled to salary).
Your obligation therefore is to maintain the level of contributions based on the employee’s notional pay during the ordinary maternity leave period.
Martin Brewer can be contacted at martin.brewer@mills-reeve.com. For further information, please visit Mills & Reeve.
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