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How Does Redundancy Work During Maternity Leave UK?

How Does Redundancy Work During Maternity Leave UK?

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If you’re considering redundancies at your organisation and have some employees who are pregnant, on maternity leave or shared parental leave, you must understand how redundancy affects these employees and how you must act in line with employment law.

Redundancy that takes place during an individual’s maternity leave is subject to the same rules as redundancy for any other employee. This means that by law, an employee on maternity leave must be treated the same as any other employee when redundancies are being considered.

This includes their right to a notice period, a fair selection process to identify which employees are at risk of redundancy, and giving them the option of changing roles or duties before terminating their employment, if this is possible.

It is important to be aware that a woman selected for redundancy while on maternity leave must be offered any suitable alternative vacancy if you have one. She doesn’t need to apply for it.

In all instances, employers must follow a fair and consistent procedure when making decisions about redundancies to prevent claims of unfair dismissal from arising. Read on to understand what you need to consider regarding maternity rights, including those of pregnant employees on maternity leave, when redundancies are being made.

What Employers Need To Know About Redundancy During Maternity Leave

  • It is considered unfair dismissal and pregnancy/maternity discrimination to select a woman for redundancy because she is pregnant or on maternity leave.
  • You will need to give notice of redundancy to all employees, including those on maternity leave. This should be at least the statutory notice, which is one week’s paid notice after one month’s service. After two year’s service, a week’s notice is required for each year that your employee has been employed, up to a maximum of 12 weeks.
  • When making redundancies, staff employment ends at the end of the notice period (whether they are required to work it or not).
  • If your employee is on maternity leave at the time of redundancy, their statutory redundancy pay should be calculated using their normal week’s pay or average week’s pay received before their maternity leave period started. It should not be based on their SMP or contractual maternity pay.
  • You can offer ‘payment in lieu of notice’ if there is a clause in your employment contracts which allows this. If not, you must provide a period of paid notice, and your employee’s contract of employment will end at the end of the notice period.

Statutory Maternity Pay (SMP) And Redundancy
Statutory Maternity Pay (SMP) And Redundancy

If you are making employees redundant, you must ensure that you continue to pay SMP to anyone entitled to it at your organisation.

Statutory maternity pay is due for employees who:

  • have worked for the company for 26 weeks or more by the end of their qualifying week – which is the 15th week before their baby is due.
  • are employed in all or part of their qualifying week. This covers full-time, part-time, annual leave or sick leave.
  • earn an average of £123 (April 2022-April 2023) in the eight weeks or two months leading up to the close of their qualifying week.
  • SMP is not payable if an employee is made redundant and their employment ends before their qualifying week, but they may be entitled to Maternity allowance. 
  • If redundancies are made or employment ends in or after their qualifying week, employees are entitled to SMP for 39 weeks.
  • If employees are already on maternity leave and in receipt of SMP when redundancies are made, SMP payments must continue for the rest of the 39 weeks.
  • You do not need to make additional payments beyond SMP, however, some companies do choose to offer more generous maternity payment terms over and above the statutory requirement.

Redundancy Payments During Maternity Leave

Whether or not you offer additional contractual redundancy payments to your staff, you will be required to provide at least statutory redundancy payment to all employees, regardless if they are on maternity leave or not. This applies to anyone that has worked for your organisation for at least two years and is aged 17 or over.

  • Qualifying staff members will not only receive their redundancy pay, but also the full amount of SMP due after tax and NICs deductions.
  • It is important to remember that any additional contractual redundancy payments are exempt from taxation and National Insurance contributions, and cannot be used to reduce Statutory Maternity Pay.
  • When a settlement agreement contains both contractual redundancy and SMP, the contract must clearly state the total amount of SMP that they are entitled to receive after tax deductions, as well as all relevant information regarding their earned voluntary redundancy.
  • Employees can ask you to include SMP breakdowns if you have not included them.
  • You are permitted to deduct any other contractual payments such as a Notice Pay or Payment for Keeping in Touch days against SMP.

Is Shared Parental Leave The Same As Maternity Leave?

Shared Parental Leave (SPL) and Statutory Maternity Leave (SML) are two different types of leave. SML is available to mothers who have been employed for at least 26 weeks by their expected week of childbirth, and SPL is available to eligible couples when the mother has exhausted her maternity allowance and/or SML.

SPL allows couples to take turns taking up to 50 weeks off work with their baby, allowing the other partner to make up some of this leave entitlement. SPL is usually paid at the same rate as SML, but can also be unpaid if agreed upon by both employers and employees.

Redundancy payments must be made when an employee’s employment ends during their qualifying period for SML or SPL. This includes any part-time, zero-hours or fixed-term contracts that have been running concurrently with a maternity leave plan.

When Is Redundancy Lawful?

When Is Redundancy Lawful

Redundancy is a lawful form of dismissal in the UK, provided employers follow a fair dismissal procedure and use a fair selection process. Even if you have no suitable alternative role for an employee, redundancy can be considered to be both fair and reasonable in certain circumstances including when:

  • There is a genuine business reason for making redundancies i.e the business is closing, moving premises, fewer workers are required for existing work
  • The redundancy process is conducted in a fair and reasonable manner
  • All employees are given the opportunity to be consulted on the proposed redundancies
  • All relevant criteria have been applied when making selection decisions.
  • Employers should also consider whether any alternatives to redundancy exist such as reducing hours, implementing job sharing or offering unpaid leave.

Find Out More About Redundancy including how to handle them lawfully, how to manage them fairly, what your employees are entitled to, and the proactive steps you can take to ensure the process goes as smoothly as possible.

Summary & Next Steps 

Ultimately, if an employee on maternity leave is selected for redundancy it’s important to ensure the process is fair and consistent with all other employees, and you must ensure that you treat them the same as any other employee.

By following a fair dismissal procedure, you can ensure that your organisation remains compliant and minimises any potential claims of discrimination or unfair dismissal against your organisation.

If you would like support with managing and understanding your HR and employer responsibilities on any aspect of redundancy, maternity leave, or how the two work together, please contact us.

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