Reduction of bonus due to maternity leave - is this discrimination?

[ItsYourTurn]

I've just received a letter from my Employer regarding my performance related bonus payment. They've confirmed what percentage i've been awarded but have then gone on to say that the payment has been reduced because i was on maternity leave for more than 9 weeks of the awarding period (April '09 to April '10). They've basically paid me half of what i was expecting.

My performance review was done mid April at which point my Manager confirmed what he had scored me as, so i had a rough idea of what payment to expect. At no point was i told that my bonus would be pro rata due to my maternity leave so it was a bit of a surprise to recieve this letter.

Are they allowed to do this? Any advice would be greatly appreciated. Many thanks.

Your employer "must continue to give you any contractual benefits she would normally receive, as if she were at work"

www.direct.gov.uk/prod_consum_dg/groups/dg_digitalassets/@dg/@en/@employ/documents/digitalasset/dg_0 78787.pdf

I think what they're doing is pretty dodgy.

sorry, no idea why that huge gaps there.

My employer does this but a) clearly communicated it in the terms and conditions of the letter at the beginning of the year and b) they pro-rata on the time that you were working. So if you have half the year off you should get half but if it's only three months you lose a quarter.

I'd ask them where/how this has been communicated to you and also if this bonus forms part of your benefits package then they can't remove it arbitrarily (sp?). Not a legal opinion but I know the benefits thing does apply to things like health cover or company cars.

I thought that there was an exception re contractual benefits with respect to remuneration??

some explanation here

It may also depend if you were on ordinary maternity leave or additional maternity leave.

My employer pays profit share/bonuses while you are on ordinary mat leave, but not while you are on additional mat leave, as this is covered by different rules. They are pro-rataed, and the period on additional mat leave is subtracted.

from reading the article that lal linked to, it sounds like you should expect to lose 9 weeks' worth of bonus but in fact you have lost half ie 26 weeks' worth. (Assuming you work full time).

If I were you I would point this out and ask for explanation.

Do you work for the public sector? Only your OP sounds very much like our set up. I was reading the rules (because I'm new and didn't know how it worked) and it says that if you were not at work during the reporting period, because of unpaid leave or maternity leave, you can't meet the criteria for the bonus because you won't have actually met all your targets.

If that is the case you are stuffed

why would she only lose 9 weeks of bonus as the op only said she was off for more than 9 weeks - how long in total were you off?

How much of the period were you off for? Is the reduction proportionate to that time?

Is the bonus contractual or is it discretionary? Do you automatically get it if you reach performance thresholds?

It can be legitimate to pro rata bonus on maternity leave, depending on the type of bonus and so long as it's proportionate to the time you're off. I'd need more details to comment on your situation though.

If its a discretionary bonus then they can do what they like pretty much. They don't even need to pay you one if they don't want.

If its a contractual bonus they can still reduce it but likley by what is proportionate.

We need to know what the "bonus year" is and how many weeks of this is.

Thanks for the replies everyone.

I was on maternity leave for 9 of the 12 months - this was normal not additional maternity leave.

My letter states "your annual bonus for 09/10 will be £...., as this is the greater of a pro-rated 2% of your salary as at 31 March 2010 or the minimum guaranteed award. Your bonus has been reduced for one or more of the following reasons:-" Goes on to state maternity leave, long term sick, joined part way through the year etc etc.

It's a performance related bonus & no i don't think it's contractual although they do have it listed in the "renumeration & benefits package" that lists all the great reasons to work for the company (!) such as leave entitlement, private healthcare, childcare vouchers etc etc.

It's not private sector but run very much like it. Judging by the link posted it seems they're within their rights to do it. Just a shame i wasn't made aware of it before hand.

"I was on maternity leave for 9 of the 12 months - this was normal not additional maternity leave."

You only get 26 weeks of ordinary maternity leave so at least some of it must have been additional mat leave!

By seeyoukay Wed 30-Jun-10 22:48:04
"If its a discretionary bonus then they can do what they like pretty much."

That's not true at all. If the bonus is genuinely completely discretionary, and is a one off payment, such as Christmas bonuses or similar, there could well be a case for sex discrimination if the woman on maternity leave isn't paid it alongside all other staff. lal123's link confirms that. More here including reference to a couple of cases.

However it sounds as though the OP's bonus would be remuneration so pro rata would be correct.

What area do you work
I didn't think this was allowed at all

I don't get it.

If you're not working, then surely any work related bonus should be pro-rated down accordingly to compensate? Seems fair to me.

Not trying to annoy you OP, just genuinely curious as the same happened to me, but I thought it was reasonable?

I don't often give my opinion of whether the law is right or not, I normally just say what it actually is, however I do think the law is right here.

If a bonus is part of your normal remuneration it should be treated as your basic salary is. You don't get basic salary when you are on maternity leave, only for the portion of the year when you are at work, so similarly your bonus should also reflect the time you were at work.

Otherwise you'd get scenarios where women are off for the entire bonus year, or are only there for a few weeks, but still get a full bonus. For some people bonuses are a large proportion of their salary so you'd end up with women getting maternity pay plus a large portion of normal salary.

In my view it's right that bonuses which form part of normal remuneration are pro rated to reflect how much of the bonus year the woman was working (plus the two weeks of compulsory maternity leave).

Genuinely discretionary bonuses are slightly different as I mentioned earlier.

Lukewarm - I agree actually (and that's as someone who has taken maternity leave and had this happen).

Because benefits have to continue, there are weird rules as Flowery has highlighted on discretionary benefits. However, performance related contractual bonuses can be pro rated and, IMO, it is reasonable for them to be. Why should I get a full performance bonus if I wasn't there for the full year? To me, it's just like salary. If I'm on leave, I don't get it.

I honestly wonder sometimes whether some of these issues actually harm women's position in the workplace. I can understand why a small employer (big ones can absorb it) would be annoyed at having to pay a big discretionary bonus to a woman who has been off for most of the year. The big sell on maternity leave is meant to be that it doesn't cost the employer, because SMP is refunded. However, as that gets further and further erroded, I think, very sadly, small employers may become even less keen to employ women at the sort of age where they might have babies. Sorry, bit of a hijack. [Gets off soapbox].

I am not a legal person but I am pretty sure they are not allowed to do this; they should treat you as if you were at work for the duration of your maternity leave.

I would ring ACAS and find out for sure?

emy72 -have you read any of the replies?

lal123 - no because of the huge blank I initially thought that there as only 1 reply. Sorry! I've seen the rest now!!!!

It looks odd doesn't it!

Thanks for explaining the difference Flowery - I was interested because though I was off for most of 2008 on maternity leave I still got my full bonus - the whole company gets x percent depending on profits and then x percent on top depending on salary - but this is because it is a whole company bonus and not contractual. Interesting.

To be honest the only reason i was a bit 'peeved' was because i wasn't told by my Manager when i had my review that my bonus would be pro rata. So was expecting to get the full bonus & therefore a tad dissapointed when the letter dropped through my door telling me otherwise.

I've had maternity leave with the same company previously with my first child & on that occasion i was paid the full bonus amount. However the company has changed drastically over the last 5 years & are really cutting back on their operating costs (things such as long service award payments, additional annual leave for long service, sick leave allowance etc have all been amended or removed recently).

Don't get me wrong, i am of course still grateful for getting any sort of bonus at all!!