Employers warned to adhere to revamped maternity rules

Employers are being urged to re-examine their maternity policies around payment of pension contributions and provision for childcare vouchers in the run-up to new sex discrimination legislation.

Under the new legislation, due to come into effect on 5 October, employers will be required to make the same non-cash contractual benefits to women on additional maternity leave (AML) as women currently enjoy during ordinary maternity leave.

Andrew Erhardt-Lewis, senior manager consulting at Deloitte, said this could include childcare vouchers provided through a salary sacrifice arrangement whereby the employee has committed to taking less contractual pay for a non-cash benefit.

Although HM Revenue & Customs’ guidance makes it clear that statutory maternity pay (SMP) cannot be sacrificed, it adds that, subject to the terms of the contract, the employee may be able to opt out of receiving a non-cash benefit under the salary sacrifice. However, some benefits experts say an employment tribunal may take a different stance. “Employers have to provide what they contractually said they were going to provide, which is the non-cash benefit even when the employee is only in receipt of SMP, and are therefore unable to sacrifice any salary,” said Erhardt-Lewis.

Employment lawyers are also warning employers to look more closely at their liability to pay pension contributions. Under the Social Security Act 1989, employers are obliged to continue to provide contractual pension benefits for the first 39 weeks of the statutory maternity leave covering ordinary maternity leave and the first 13 weeks of AML.

However, Christopher Hitchins, counsel at Latham & Watkins, said the position thereafter is covered by the sex discrimination legislation. This says that employers do not have to provide cash benefits that fall within remuneration, but the legislation fails to state whether pensions come within this definition. “The statutory question is whether the employer has to pay for it or not during weeks 39 to 52. That is the bit where there is no definitive answer, although the government favours pensions being classed as remuneration.”