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What’s the answer? Bonus payments during maternity


Amanda Celliers gets legal guidance this week from Helen Badger, employment law expert at Browne Jacobson and Chris Syder, Partner and Head of Employment at the London office of Clarkslegal LLP on the rules governing bonus payments for those on maternity leave

The question:
”An annual bonus scheme which is made up of a profit share and a performance element is being considered.

”Could those who took maternity leave within the year, receive reduced payments with the calculations taking into account the period that they were not at work? (excluding the two week compulsory maternity leave.)

”Would other absences (e.g. sick leave, sabbaticals etc) have to be taken into account as well?”

Amanda Celliers

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The answers:
Helen Badger, employment law expert, Browne Jacobson

The Maternity and Parental Leave Regulations, provide that a woman on ordinary maternity leave (i.e. the first 26 weeks) is not entitled to the benefit of “terms and conditions about remuneration”.

The term "remuneration” means any sums payable to an employee by way of wages or salary and would include a profit share or performance related bonus scheme. During the period of additional maternity leave (i.e. the remaining 26 weeks) there are very few contractual entitlements that continue to apply. Those that do apply include terms relating to notice, redundancy and disciplinary and grievance rules. They do not include rights to remuneration.

So, whilst a woman who returns from maternity leave must be treated for the purposes of future pay and working conditions as though she had never been away, this does not apply to pay received during the period of the maternity leave. An employer is entitled to reduce the amount of bonus paid to a worker on a pro rata basis, according to the period of the year actually worked. As you suggest, the two week period of compulsory leave must be excluded when calculating the period the woman was not at work.

In relation to other periods of absence, the same would apply. You should bear in mind though that, when considering the situation in relation to employees absent on long term sick leave, you may need to consider whether the full payment of a bonus would amount to a reasonable adjustment under the Disability Discrimination Act 1995.

This is only likely to be the case where there are other adjustments to working conditions which could be made and which would enable the employee to return to work. Where the employer fails to make such adjustments and the employee is thereby prevented from returning, a tribunal could find that the continuation of full pay, including a full bonus would have been a reasonable adjustment.

Provided the employer takes steps to get the employee back to work then they would be entitled to reduce a bonus payment on a pro rata basis, taking into account the period of absence on sick leave.

Helen can be contacted at: [email protected]

More insight on this question.

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