What to expect when you’re expecting a redundancy situation

January 4, 2013

One of the trickiest areas of employment law can be going through a redundancy process where some of the affected employees are pregnant or on maternity leave.  This is a complex area of law, and it can be very difficult to navigate if the employer is to avoid allegations of sex discrimination or unfair dismissal.  This article looks at some of the common myths and misunderstandings which can arise.

Myth : We can’t make a woman redundant if she is pregnant or on maternity leave

It is certainly more complicated to make a pregnant woman or woman who is on maternity leave redundant, but it is possible provided that a genuinely fair process is followed and that the reason for the redundancy is wholly separate from the pregnancy/maternity.  It is possible for there to be a fair dismissal which is not discriminatory.

Myth : A woman returning from Additional Maternity Leave loses the right to return to her old job

If the employee only takes a period of Ordinary Maternity Leave (OML) or returns before the end of OML, she is entitled to return to the same job in which she was employed before her absence, unless a genuine redundancy situation has arisen.  Similarly after a period of Additional Maternity Leave (AML) an employee is usually entitled to return to work on the same terms and conditions as if she had not been absent unless a redundancy situation has arisen, or unless there is some reason (other than redundancy) why it is not reasonably practicable for the employer to permit her to return to the same job.  In that case the duty is to allow the employee to return to a suitable alternative job which is suitable for her and appropriate in the circumstances, and where the terms and conditions must not be less favourable than they would have been had she not been absent.

Employers sometimes assume that an employee who has taken AML does not have the right to return to her old job and only has the right to return to a suitable alternative job.  However, this is not in fact the case.  An employer must show that it is not reasonably practicable to allow her to return to her old job.  Note that there is no longer any small employer exemption for this obligation.

Myth : There is no need to give a woman on maternity leave any special treatment in a redundancy situation

In some circumstances it is necessary to treat women on maternity leave more favourably than their colleagues.  Where an employee on OML or AML is potentially redundant, she is entitled to be offered any suitable available vacancy with the employer, its successor or any associated employer in priority to other potentially redundant employees. This can therefore mean treating her more favourably than another employee who is not on maternity leave but is otherwise similarly qualified, in relation to finding suitable alternative roles.  The offer must be of a new contract taking effect immediately on the ending of her previous contract and be such that:

  • The work is suitable and appropriate for her to do.
  • The capacity, place of employment and other terms and conditions are not substantially less favourable than under the previous contract.

Myth : We can inflate a woman’s redundancy score if she is on maternity leave, to avoid claims

In fact this might create more problems than it solves.  In Eversheds Legal Services Ltd v De Belin the Employment Appeal Tribunal upheld the Tribunal’s decision that a law firm discriminated against a male lawyer on the grounds of his sex when, in going through a redundancy exercise it inflated the scores of a female lawyer who was on maternity leave.  Pregnant women should only be treated more favourably than their male colleagues if this is reasonably necessary to remove the disadvantages caused by their pregnancy.  In this case the employer’s decision to award the female lawyer a notional maximum score whilst giving the male lawyer an actual score was not a proportionate means of removing the disadvantage caused by her maternity absence, and what the employer should have done is to measure both employees’ actual performance during the period before her maternity leave started.  The male lawyer had therefore been discriminated against and unfairly dismissed.

Employers should therefore be careful to assess the possible ways in which the disadvantages of a maternity absence can be mitigated, rather than automatically favouring the female employee above others.

Myth : If a woman on maternity leave is made redundant, she will receive the same payments as her colleagues

Enhanced or contractual redundancy payments should generally be calculated in the same way regardless of whether the payment is being made to an employee who is on maternity leave or not, but there are also additional payments to consider for women on maternity leave who are made redundant.
Women on maternity leave are likely to have accrued annual leave during their maternity leave, and this should be paid out on a redundancy if it has not already been taken or paid.  Employees who are still receiving Statutory Maternity Pay (SMP) would also generally continue to be entitled to receive this for the remainder of the SMP period, even if they are made redundant before the end of that period.  

Careful consideration also needs to be given to the payment of notice monies.  The basic position is that an employer is expected to pay the employee’s normal remuneration during any notice period (though any SMP or other payments received can usually be off-set against pay during the notice period). However, if the notice the employer has to give the employee is at least one week more than the employee is entitled to receive as statutory minimum notice, an employer may only be required to pay SMP during the notice period provided that there is no enhanced entitlement in the employee’s contract of employment.


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