Q:One of our employees is going on maternity leave shortly. She has been with us for two years so she is entitled to take a full year. She has said that she will do so and has asked whether she will be entitled to carry over her holiday entitlement to the end of the maternity leave period. Can she do this and if so, how much holiday will she be entitled to take?

A:Your employee has obviously been with you long enough to qualify for both ORDINARY MATERNITY LEAVE (the first 26 weeks) and ADDITIONAL MATERNITY LEAVE. During her ORDINARY MATERNITY LEAVE, she will continue to accrue her normal contractual entitlement to pay time off including annual leave and bank holidays. During her ADDITIONAL MATERNITY LEAVE, she will only accrue the statutory minimum annual leave entitlement prescribed in the Working Time Regulations (4 weeks).

If her period of maternity leave “straddles” two holiday years, you may be able to agree with her that she takes her leave entitlement for the first holiday year before starting her maternity leave. This would enable her to take some time just before the baby is born and to delay the start of her maternity leave. The balance of the holidays will have to be taken in the holiday year when she returns. This could be used to extend the maternity leave at the other end.

If the whole of the maternity leave period corresponds to your holiday year, it might not actually be possible for your employee to take her holiday in the appropriate year. This is one of the circumstances where you may need to allow the carry over of holiday entitlement into the subsequent year. Alternatively, a practical way of dealing with this, provided it is agreed with your employee, is for her to exercise her return to work early and to immediately take her full holiday entitlement for the year she has been on maternity leave. This way you can avoid having a member of staff with double the holiday entitlement in one year and your employee will get paid for the last part of the holiday leave period.

Although generally speaking employees do not have the right to carry over holiday into the next holiday year, following a recent case, it was decided that employees on maternity leave are entitled to take their accrued holiday entitlement at a time other than during their maternity leave period, particularly if they would otherwise lose it i.e. if the maternity leave period “straddles” 2 years.

QIn 4 weeks’ time an employee is about to go on ordinary maternity leave and in 8 weeks’ time all employees will be awarded an annual 3% pay rise. Will this affect her statutory maternity pay?

AYes. Following a recent judgment in the European Courts of Justice, any pay rise that takes effect between the start of the period used to calculate a woman’s statutory maternity pay (SMP), i.e. her earnings 8 weeks before commencing ordinary maternity leave, and the end of her maternity leave (including additional maternity leave) must be reflected in any SMP award. Therefore the 3% pay rise taking effect during ordinary maternity leave would have to be applied to the average weekly earnings (AWE) of your employee during the relevant period and that her AWE would then be increased by 3%.

The Department for Work and Pensions (DWP) has issued a paper on how it will deal with statutory maternity pay following the recent judgment in the European Courts of Justice. The DWP anticipates that new legislation will come into effect on the 6 April 2005. From that date the employer must look to see what effect an awarded pay rise would have on a woman’s SMP entitlement. Employers must also take account of pay rises awarded but not yet put into payment. The new rules will apply where a woman is awarded a pay increase or would have been awarded such an increase had she not been absent on maternity leave.



William Addis, Solicitor at Clarkson Wright, william.addis@cwj.co.uk, direct telephone number 01689 887834.

Words: 709