The Employment Appeal Tribunal has held that an employee who was certified sick during her ordinary maternity leave was not entitled to be paid contractual sick pay during that period.
Background. An employee who takes OML benefits from all terms of employment that would have applied if she had not been absent, save for remuneration (section 71(5)(b), Employment Rights Act 1996; regulation 9(1), Maternity and Parental Leave etc. Regulations 1999 (SI 1999/3312)) (1999 Regulations).
For the purposes of OML, only sums payable to an employee “by way of wages or salary” should be treated as remuneration (regulation 9(3), 1999 Regulations) (regulation 9(3)).
An employee is entitled to receive statutory maternity pay (SMP) if, among other things, she has been continuously employed for at least 26 weeks at the end of the 15th week before the expected week of childbirth (EWC), and is still employed during that week. Employees with shorter periods of service may be entitled to State maternity allowance.
It is unlawful to make deductions from workers’ wages except in certain circumstances (section 13, Employment Rights Act) (ERA).
Facts. S took up employment with D. A month later, in May, she informed D that she was pregnant, and applied for her maternity leave to start in August. In June, S became unwell with pregnancy-related complications and was certified sick until the following January.
S’s contract of employment provided for contractual sick pay equivalent to her full pay to be paid for up to six months, less any maternity allowance received, and after that for her to receive half pay. It also stated that:
- Employees were entitled to receive all contractual benefits during the first 26 weeks of maternity leave, apart from remuneration.
- Employees who had already notified D of the start date of their maternity leave and subsequently became sick could start their maternity leave as originally intended. The period before the start of maternity leave would be treated as sick leave and any SMP offset against any company sick pay.
- Employees who were sick while on paid or unpaid maternity leave would continue to have their absence regarded as maternity leave unless they chose to end their maternity leave early.
S received full sick pay from 2 June until the start of her OML on 1 August. After that, in light of her short service, she received maternity allowance, rather than SMP, for the duration of her OML. She asked for her maternity allowance to be made up to full sick pay, but this was refused on the basis that maternity leave was not sick absence.
S complained to an employment tribunal that D had made an unlawful deduction from wages as she was entitled to receive full sick pay during her OML. The tribunal upheld S’s claim. D appealed to the EAT.
Decision. The EAT set aside the tribunal’s decision, upholding D’s arguments that:
- The term “remuneration” in section 71(5) of the ERA, read with regulation 9(3), includes sick pay.
- The reference to maternity allowance in the contract did not grant a right to sick pay during OML.
- On a proper construction of the maternity leave policy, S was not entitled to sick pay while she was on maternity leave.
The EAT noted that it would be strange if contractual sick pay formed part of a worker’s wages for the purposes of the deductions from wages provisions (as the tribunal had found in upholding S’s deduction from wages complaint), but not remuneration within the meaning of the ERA and the 1999 Regulations.
Comment. The lesson to be learned from this decision is that once an employee starts on maternity leave, her contractual sick pay rights cease and her remuneration is covered by SMP. While she is pregnant but before she goes on maternity leave, normal sick pay rules apply. After maternity leave ends, the woman can claim company sick pay again: she does not need to return to work to trigger this, but she needs to have jumped through all of the hoops that the law requires to bring maternity leave to an end (for example, serving eight weeks’ notice of her intention to return). However, in practice it is not quite that straightforward. If a pregnant woman who is also sick (for example, with pregnancy-related complications) wants to maximise her company sick pay, she can delay the start, or bring forward the end, of her maternity leave.
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Case: Department for Work and Pensions v Sutcliffe UKEAT/ 0319/07
