The process of making employees redundant is rarely straightforward, but can be further complicated where the law affords the worker additional protections, such as if the employee is pregnant or on maternity leave.
This guide will explain the key issues for employers dealing with redundancy during maternity leave, to help ensure fair and lawful handling of the process and to reduce the risk of tribunal claims.
Deciding to make someone redundant while on maternity leave
Employees who are pregnant or on maternity leave are protected by two key concepts – the ‘protected period’ and the requirement to offer suitable alternative employment to a person on maternity leave in preference to other colleagues.
The Equality Act 2010 defines the ‘protected period’ as beginning at the start of the employee’s pregnancy and ending either when they return to work from ordinary or additional maternity leave, or two weeks after the end of their pregnancy, if they are not entitled to maternity leave.
During the protected period an employer will have discriminated against the employee if, in relation to a pregnancy of hers, the employer treats her unfavourably:
- because of the pregnancy, or
- because of illness suffered by her as a result of it.
An employer will also have discriminated against an employee if they treat her unfavourably by reason of being on compulsory maternity leave or because the employee is exercising or seeking to exercise, or has exercised or sought to exercise, the right to ordinary or additional maternity leave.
In addition, the Act clarifies that if the discriminatory treatment outlined above happens after the expiry of the protected period, it will still be treated as having happened during the protected period if the decision to implement it was taken during the protected period.
During the protected period, the employee in question does not need to compare their treatment with anybody else (for example, a man) in order to show that they have been discriminated against.
Suitable alternative employment
Under the Employment Rights Act 1996 and Regulation 10 of the Maternity and Parental Leave Regulations 1999, an employer must offer an employee on maternity leave at risk of redundancy suitable alternative work if there is some, and this offer should be in preference to other employees at risk of redundancy, even where they might be better suited to the role. In other words, if there is a suitable alternative position, it must be given to the employee on maternity leave.
You should remember that during the redundancy process, the obligation to review suitable alternative vacancies within your organisation continues right up until the employee’s contract terminates.
You should also remember that this protection is specific to employees on maternity leave, it does not apply to pregnant women who have not yet started their maternity leave.
Can employers make an employee redundant if on maternity leave or pregnant?
The short answer to this is yes, an employer can make an employee redundant if they are on maternity leave or pregnant, but subject to the legal protections outlined above.
In order to carry out a successful redundancy you must be certain that the employee in question has not been selected, either consciously or subconsciously, for redundancy because of their pregnancy or the fact that they are on maternity leave, and you must be able to show that this is the case.
This means answering the following questions.
Is there a genuine redundancy situation?
A genuine redundancy is where you no longer need certain employees because the business they work for has ceased, or you no longer have a need to as many employees to carry out that kind of work.
Sometimes employers find that they can manage without the employee while they are on maternity leave. This is not a genuine redundancy situation as the employee would not have lost their job if they had not gone on maternity leave.
You should also assess whether redundancies be avoided by offering employees reduced hours or periods of unpaid leave.
Have you followed the requirement to consult with your employees?
This means contacting all members of staff, including those on maternity leave, to explain that redundancies may be happening, and keeping in touch with them throughout the consultation process. It should consist of constructive dialogue and information-sharing between the organisation and its employees.
If there are between one and nineteen employees being made redundant then there are no rules on how this consultation should be carried out, except that it should be meaningful. If you fail to consult an employee who is on maternity leave about their redundancy then this will almost certainly amount to unlawful discrimination.
Have you adopted non-discriminatory selection criteria?
When it comes to drawing up the selection criteria by which employees will be dismissed, you should consult with your employees and their trade union representatives where applicable. You should also pay attention to their feedback as it may help to prevent you from discriminating against pregnant employees or those on maternity leave. If you do not agree with the feedback you receive on your proposed selection criteria you should document carefully why you do not agree, as this could be produced as evidence in the Employment Tribunal.
Common criteria are individual skills and qualifications, and an employee’s performance and their overall capability at work. When using material from performance appraisals, make sure that these give a balanced view of the employee, as during pregnancy or maternity leave an employee’s appraisal might show lower scores than usual.
If you decide to use attendance and sickness records as part of the criteria, make sure that you discount any sickness or absence due to pregnancy or maternity.
Have you considered suitable alternative employment?
You are required to consider if there is suitable alternative employment available for all the employees you select for redundancy. In the case of those on maternity leave, if there are suitable alternative positions available, these must be offered to the employee(s) on maternity leave in preference to other employees, even where those other employees may be better qualified for the role.
Whether or not a position is suitable for the employee is an objective test, but must also take into account the employee’s individual circumstances. If the employee unreasonably turns the job offer down then they will lose their right to a redundancy payment. However, it would be considered reasonable for them to use health, personal or family commitments to turn down the job.
Mitigating legal risk of redundancy during maternity leave and pregnancy
In order to mitigate the legal risks, you must carry out a meaningful consultation process with the employee(s). The golden rule is that this process should take enough time for both the employer and the employee to fully consider their positions and any feedback that has been provided as part of the consultation. In most cases, two separate meetings with an employee should be sufficient, but more may be required depending on the circumstances.
This can be complicated where the employee is not actually in work. You might consider conducting a meeting virtually as there is no legal requirement to carry out the consultation face-to-face. In this case you should be careful to obtain the employee’s consent first and make sure that they do not feel ‘bullied’ into attending a video conference. For some employees, a scheduled telephone call will be easier to manage and arrange. You should also make sure you facilitate the attendance of a trade union representative or colleague where appropriate.
The key thing is to engage early with the employee as to their preferences and needs, and to try to accommodate these wherever you can.
It is important that the employee is not presented with a ‘done deal’ or finished plan for their redundancy. This will invalidate the consultation process and could lead to a claim for unfair dismissal against you. Therefore, the initial information you provide to employees should be an overview, including why you need to make redundancies and the pool of employees at risk.
At the first individual meeting you should explain why the employee has been included in ‘the pool’, timings and what the redundancy packages, if any, will look like. At all stages, you must make clear to the employee that the consultation meetings are an opportunity for your employee to ask questions and feed back their ideas to you.
It is advisable for someone to take minutes at the meetings, to be circulated to the attendees after the meeting.
If you decide that an employee who is pregnant or on maternity leave is to be made redundant, you should arrange a further meeting with them to explain the decision and outcome of the selection process, and look again at whether there is alternative employment available in the organisation.
At the final dismissal meeting you should also allow the employee to be accompanied by a trade union representative or colleague, if you have not done so until now.
You must also inform the employee of their right to appeal against the decision to dismiss them and provide them with the procedure for doing so.
Failure to follow the duties
Redundancy is one of the five potentially fair reasons for the dismissal of an employee stated in the Employment Rights Act 1996. However, if your employee shows that they have been made redundant because they are pregnant or on maternity leave then this will be automatically unfair dismissal and unlawful discrimination. Where an employee is successful in claiming unfair dismissal in an Employment Tribunal, the Tribunal would be able to make a ‘Basic Award’ and a ‘Compensatory Award’. These are orders that the employer must pay a certain amount in compensation to the employee.
The Basic Award is calculated in a similar way to redundancy pay, taking into account the employee’s age and length of service. The Compensatory Award can be up to the cap that is set each year or one year’s gross pay, whichever is the lower. Where an employee also wins their discrimination claim, the Tribunal would be able to make a compensatory award of its choosing. This can take into account injury to the employee’s feelings and is not subject to a statutory cap.
Even where you have genuinely non-discriminatory reasons for making a pregnant employee or someone on maternity leave redundant, if you mishandle the redundancy process your employee may still bring a claim for unlawful discrimination and unfair dismissal against you.
Following a meaningful and well-documented individual consultation process should enable you to show that you have acted reasonably in making the decision to dismiss the employee by reason of redundancy during maternity leave.
Managing Redundancy During Maternity Leave FAQs
Does maternity leave affect redundancy pay?
No, maternity leave does not affect the amount of redundancy pay you will receive. You remain in employment while you are on maternity leave, so your total service for your employer will include the time you spent on maternity leave. When it comes to calculating your redundancy pay, your employer must use the normal week’s pay you received before starting maternity leave.
What happens if my company closes while I am on maternity leave?
If your company closes while you are on maternity leave then you are still entitled to receive statutory maternity pay for the full 39-week period. Your maternity leave will end when your notice period expires. You may also be due redundancy pay, and potentially, notice pay and holiday pay. If your company is not in a position financially to be able to pay you what it owes you then you should apply to the government. The Official Receiver or insolvency practitioner will give you information on this and a case reference number in order that you can apply. Payments are capped at £538 per week for each of redundancy, notice and holiday pay.
The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.