Q&A: Rights to Pay Rise during Maternity Leave

Q:  In 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?

A: Yes. 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.