Chris Syder, Partner and Head of Employment at the London office of Clarkslegal LLP.
The starting point is what does the bonus plan provide? A failure by an employer to pay a bonus, or to pay a sufficient bonus, can, amongst others, give rise to an equal pay claim, or a claim for discrimination on the grounds of sex. An employee who takes ordinary maternity leave (OML) is entitled to benefit from the terms and conditions of employment that would have applied if she had not been absent, but excluding “remuneration”.
The Maternity and Parental Leave Regulations 1999 (MPL Regulations) state that for the purposes of OML, only sums payable to an employee “by way of wages or salary” are to be treated as “remuneration”. There is no guidance as to whether a bonus is included within the definition of “sums payable by way of wages or salary”. The answer often depends on whether the bonus scheme is a contractual or a discretionary scheme.
In Hoyland v Asda Stores Limited [2005] the EAT held that a contractual bonus payment which was paid through Asda’s payroll, was subject to normal deductions and a percentage of which was paid into employees’ pension plans, was to be treated as “wages or salary”. Therefore, Mrs Hoyland had no claim that she had been subjected to a detriment in relation to the pro-rating of her bonus to exclude the period during which she was absent on maternity leave.
Arguably, a discretionary bonus scheme where the payment of any bonus or the amount of any such bonus payment is not guaranteed would fall outside the definition of “remuneration”. Therefore, a tribunal is likely to decide that a woman is entitled to receive a discretionary bonus in respect of the period that she spends on OML.
During additional maternity leave (AML), a woman is only entitled to the benefit of a small number of terms and conditions specified in the MPL Regulations and, as in the case of OML, these do not include “remuneration”.
Unlike OML, “remuneration” is not defined for the purposes of AML so it is likely to include bonuses and therefore it would appear that a woman is not entitled to a bonus (whether contractual or discretionary) for the period spent on AML.
It is worth remembering that not every failure to pay full bonus will amount to sex discrimination. The entitlement depends very much on the wording of the scheme, especially when it comes to considering the impact of other absences.
Chris Syder can be contacted at csyder@clarkslegal.com
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