Doesn't "guaranteed bonus" mean exactly that, irrespective of taking maternity leave? Also posted in Pregnancy Topic

[ALittleBitPregnant]

I hope there are some employment lawyers out there who have a spare moment!

I am with a company which has agreed with me, through my contract, a "minimum guaranteed bonus of 20% of your base salary". I took maternity leave for 6 months of this year, and now they are trying to pro rata my bonus to half of what it was last year (the minimum 20%).

The exact wording on my contract says:

"The balance of your remuneration will be a performance related commission bonus of up to 80% of your base salary with a minimum guaranteed bonus of 20% of your base salary."

Now, they don't pro rata my salary or my holiday whilst I'm on mat leave (I got full pay for 6 months mat leave, as per my contract) - I thought mat leave counted as "continuous employment", and thus although I concede I can't be measured for performance on the months I was on mat leave (I couldn't hit my targets as I was looking after the baby!), I thought I would still receive the guaranteed 20% of my salary, as a bonus, as normal.

I found this on the internet through a solicitor's website:

A common question is whether an employer can reduce a bonus payment because an employee is, or has been, absent on maternity leave for part of the bonus year. It is important to look at what the bonus is based on, such as attendance, rewarding loyalty or performance.

Where a bonus is contractual and dependent on the performance of the company as a whole or individual performance over a specified period, an employer may pro rata the bonus payment to reflect a maternity absence
as long as the two week compulsory maternity leave period is not treated as absence.

However, where the bonus is discretionary or a contractual retention bonus or award for service, it may be sex discrimination if an employer pays a lower amount due to maternity absence. This is a difficult area and each case will depend on its facts. It is important to get specific legal advice in such situations.

So what do you think? Worth getting het up about or will I just get nowhere?

Certainly worth pursuing. Are you in a trade union? If yes, please go to them immediately and ask for support. If not, then you need to write formally to your employer setting out why you think you're entitled to the bonus (basically you can reproduce what's above), and asking them to either pay it to you or explain in detail why they are not.
If they won't pay, it would be worth taking their letter to a solicitor or the CAB for advice.
Hope this helps!

Um, I would think twice about this. I think the legal position on benefits is that you are entitled to the same as any other employee, with the exception of renumeration (ie pay). Any bonus is renumeration, therefore I don't think they have to give you the full 20%.

If you have been there to contribute then getting the bonus is fair enough. But you haven't. You've been there half the year, you get half the bonus.

Your maternity pay is exceptionally good. Be grateful for what you have.

The advice you found on the internet is correct. If your bonus is contractual and/or forms part of your normal remuneration, you are not entitled to it during maternity leave, and annual amounts can be pro-rated.

During maternity leave you can't receive salary, only maternity pay. Presumably you are entitled to SMP and your employer elects to pay contractual maternity pay topping this up to a level equivalent to your salary? But it's not actually salary you are receiving.

Throughout maternity leave you are entitled to benefits, including holiday, and a discretionary bonus - for example, a Christmas bonus or 10 year service bonus or similar, one that you are not entitled to as per your contract - would be more likely to be considered a benefit and therefore must be paid at the same level as staff who are at work.

It sounds as though your bonus probably fits into the contractual bonus/remuneration category - you are guaranteed 20% of your salary annual in your contract and indeed it is quoted in your contract as forming part of your remunderation.

Have a read here for more detailed information.

Thanks for the advice. I've done some more research and believe that I am entitled to the full 20% bonus as part of the Equal Pay Act of 1970. This states that:

--

Equal pay law is there to protect you during maternity leave in the same way as it is while you are working.

Maternity leave and equal pay issues are usually connected to bonuses or pay rises that have been given while you are on maternity leave.

Bonuses

If your bonus is contractual, then it will be covered by equal pay laws as it is part of your pay. You would not normally be entitled to receive it during OML or AML, unless your employer has a specific policy that states otherwise.

--

It is the section above which talks about my employer's specific policy that I think is relevant to me in this case. This (20%) part of my bonus is contractual (not discretionary) as it is guaranteed and guaranteed at a certain percentage. It is part of my pay. I would not normally be entitled to it during maternity leave if I was not entitled to my pay during this time, however my company's maternity policy states that I am entitled to my full pay whilst I am on maternity leave (and hence I received my full salary for the 6 months I was on leave), and this contractual, guaranteed bonus is part of that pay that I'm entitled to as part of the company's policy.

It's a grey area though, and I doubt I will get too far (as the difference isn't really worth going to court over)... but I know that this is yet another area where I am being shafted by my company. I know for example that I am on smaller wage (by some margin in some respects) compared to my male counterparts who do the same job as me.

Thanks for the replies, I really appreciate it.

But you don't receive salary during maternity leave. In fact you can't receive salary during maternity leave apart from 10 'keeping in touch' days, otherwise you lose your entitlement to SMP.

Your employer pays you contractual/occupational maternity pay which tops up your SMP to a level equivalent to your normal salary level, but they are not paying you your salary.

I think you're right Flowery - in that as it's not "pay" as in "salary" that they could argue they have different policies for bonuses than they do for topping up SMP during OML. However, I still believe that this is a retention / loyalty bonus, and not a performance one, and that as long as I am employed on the day the bonus is awarded, then I should receive the full amount -- I called to check this a couple of weeks back and was told on the phone that this was the case but now they are back tracking.

Anyway, like I said, I have decided to raise my points but not push the issue if they don't back down - the money in question is not a huge sum (after tax!) so I will leave it there.

Thanks again.

no problem and best of luck, nothing lost by raising the issue as you say.

I think it will come down to how your maternity pay policy is worded.

Everything Flowery has said is right (as ever!). However, if the wording of the maternity pay policy suggests that bonuses etc get taken into account when calculating 'full pay' for six months, you might have more of a case. If it talks about 'basic pay' or similar (which most do) then I'm afraid I agree that you're a bit scuppered.