Where an employee on maternity leave who is receiving statutory maternity pay is being made redundant should her redundancy pay be calculated on her normal rate of pay or her maternity pay?
If an employee on maternity leave has worked for her employer for at least two years she will be entitled to statutory redundancy pay. The effect of reg.22 of the Maternity and Parental Leave etc Regulations 1999 (SI 1999/3312) is that the statutory redundancy pay must be based on the employee's normal weekly pay or average weekly pay prior to the start of her maternity leave. It should not be based on her statutory maternity pay (SMP) or contractual maternity pay. The position is the same if the employee has exhausted her entitlement to SMP; her redundancy pay should be based on her normal weekly pay prior to her maternity leave.
The employer should take the same approach in respect of the calculation of a contractual redundancy payment. If it is calculated on the employee's lower rate of maternity pay, it may constitute an unlawful detriment under the Employment Rights Act 1996 and also pregnancy and maternity discrimination under the Equality Act 2010.