Redundancy is rarely straightforward, but the process becomes particularly challenging if the employee is on maternity leave.
The law recognises the vulnerable position of pregnant workers and those on maternity leave and affords them additional legal protections. This does not mean employers cannot make workers redundant while on maternity, but employers have to be particularly cautious and ensure they are acting in compliance with the law or risk tribunal claims for unlawful discrimination and automatically unfair dismissal.
Employee rights during pregnancy and maternity leave
In relation to redundancy, there are two specific areas of legal protection for employees who are pregnant or on maternity leave: first, the ‘protected period’ during which women who are pregnant or have recently given birth are protected from discrimination; and second, the requirement for employers to offer a suitable alternative job to someone on maternity leave before other any other colleagues.
Importantly, the legal protections from discrimination apply to all types of workers from the first day of their employment, including employees, casual workers, agency workers, freelancers and the self-employed.
Under the Equality Act 2010, the protected period begins at the start of the employee’s pregnancy and ends 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.
It would be unlawful discrimination if:
- An employer treats an employee unfavourably during the protected period because of her pregnancy or as a result of an illness she contracted as a result of it.
- An employer treats an employee unfavourably because she is on maternity leave or is exercising or seeking to exercise, or has exercised or sought to exercise, the right to ordinary or additional maternity leave.
- The Act also states that even if the above-mentioned discriminatory treatment occurs after the protected period has ended, it will be treated as having occurred during the protected period if the decision to implement it was made during the protected period.
During the protected period, the employee in question is not required to compare their treatment to that of anyone else (for example, a man) in order to prove that they were discriminated against.
Workers are protected from pregnancy discrimination as soon as their employer knows, believes or suspects they are pregnant, although workers do not have to notify their employer of the pregnancy until 15 weeks before their due date.
If the employee chooses not to notify their employer, and as such their employer is not aware of the pregnancy, she would not benefit from maternity rights such as time off work for antenatal appointments and she would not benefit from protection from pregnancy discrimination if she is treated unfavourably, for example, if she is disciplined or dismissed for absence due to pregnancy-related illness.
Alternative suitable roles
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 who is facing redundancy suitable alternative work if it exists, and this offer should be given priority over other employees facing redundancy, even if they are better suited to the role. In other words, if a suitable alternative position exists, it must be offered to the maternity leave employee first.
Remember that your obligation to review suitable alternative vacancies within your organisation during the redundancy process continues until the employee’s contract expires.
It’s also worth noting that this protection only applies to employees on maternity leave; it doesn’t cover pregnant women who haven’t yet begun their maternity leave.
Can you dismiss an employee on maternity leave?
The short answer is yes, you can dismiss an employee who is on maternity leave or pregnant by redundancy, but you have to follow a fair and lawful dismissal process. You must be certain that the employee in question is not selected for redundancy because of their pregnancy or the fact that they are on maternity leave, either consciously or subconsciously, and you must be able to demonstrate this. Consider the following:
Is there a genuine redundancy?
A genuine redundancy occurs when you no longer require certain employees because the business for which they work has closed or you no longer require as many employees to complete the work.
Employers may discover that they can function without the employee while she is on maternity leave. The employee would not have lost their job if she had not gone on maternity leave, so this is not a true redundancy situation.
You should also consider whether you can avoid redundancies by offering employees reduced hours or unpaid time off.
Have you consulted with affected employees?
This entails notifying all employees, including those on maternity leave, of the possibility of layoffs and keeping in touch with them throughout the consultation process. It should include constructive communication and information sharing between the company and its employees.
There are no rules on how this consultation should be conducted if there are between one and nineteen employees being laid off, except that it should be meaningful. If you fail to consult a maternity leave employee about their redundancy, you are almost certainly engaging in unlawful discrimination.
Are the redundancy selection criteria fair?
Individual skills and qualifications, as well as an employee’s performance and overall capability at work, are common redundancy criteria. When using material from performance appraisals, make sure that they present a balanced picture of the employee, as an employee’s appraisal may show lower scores than usual during pregnancy or maternity leave.
If you decide to use attendance and sickness records as a criterion, make sure to exclude any sickness or absence due to pregnancy or maternity leave to avoid discriminating against pregnant or maternity-leave employees.
Alternative options for employment
You must consider whether or not all of the employees you choose for redundancy have suitable alternative employment. If there are suitable alternative positions available for those on maternity leave, these must be offered to the employee(s) on maternity leave before other employees, even if those other employees are better qualified for the role.
It is an objective test to determine whether or not a position is suitable for an employee, but it must also take into account the employee’s unique circumstances. If the employee refuses the job offer for an unreasonable reason, they will lose their right to a redundancy payment. However, it would be reasonable for them to decline the job due to health, personal, or family obligations.
Managing legal risk
You have to carry out a meaningful consultation process with the employee in order to mitigate the legal risks. The golden rule is that this process should take enough time for both the employer and the employee to fully consider their respective positions as well as any feedback received during the consultation. In most cases, two separate meetings with an employee should suffice, but depending on the circumstances, more may be required.
When an employee is not working and on maternity leave, this can be complicated. Because there is no legal requirement for the consultation to be conducted face-to-face, you might want to consider holding it virtually. In this case, be sure to get the employee’s permission first and make sure they don’t feel pressured into participating in a video conference. A scheduled phone call will be easier to manage and arrange for some employees. You should also make arrangements for a trade union representative or a colleague to attend if necessary.
The key is to ascertain the employee’s preferences and needs early and to try to accommodate these as much as possible.
It’s critical that the employee isn’t given a “done deal” for their redundancy. This will render the consultation process null and void, potentially resulting in a claim for unfair dismissal against you. As a result, the first piece of information you give employees should be a high-level overview, including why you need to make redundancies and who is at risk.
You should explain why the employee has been placed in ‘the pool,’ the timelines, and the redundancy packages, if any, at the first individual meeting. You must make it clear to the employee at all times that the consultation meetings are an opportunity for them to ask questions and provide feedback to you.
It is a good idea to have someone take minutes at meetings so that they can be distributed to the attendees afterward.
If you decide to dismiss an employee who is pregnant or on maternity leave, you should meet with them again to explain the decision and the outcome of the selection process, and to see if there are any other job openings in the company.
If you haven’t already done so, you should allow the employee to be accompanied by a trade union representative or a coworker at the final dismissal meeting.
You must also inform the employee of their right to appeal the dismissal decision and provide them with instructions on how to do so.
Failing to meet your obligations
The Employment Rights Act of 1996 lists redundancy as one of the five potentially fair reasons for dismissing an employee. However, if your employee demonstrates that they were dismissed because they were pregnant or on maternity leave, this is considered an automatically unfair dismissal. It is more straightforward for employees to establish automatic unfair dismissal,
If the worker is able to prove their dismissal was due their pregnancy or maternity, they do not then need to show that their employer acted unreasonably or failed to follow a fair procedure, as is necessary to establish the basis of an ordinary unfair dismissal claim. The reason, in itself, will be considered automatically unfair, with no further consideration as to either the reasonableness of the decision to dismiss or the procedural fairness of the employer’s actions.
If an employee wins an unfair dismissal claim in an Employment Tribunal, the Tribunal can make both a ‘Basic Award’ and a ‘Compensatory Award.’ These are orders requiring the employer to pay the employee a certain amount of compensation.
The Basic Award is calculated in the same way as redundancy pay, with the employee’s age and length of service factored in. It has a limit of £16,140. The Compensatory Award is limited to either £88,519 or one year’s gross pay, whichever is less. If an employee wins their discrimination claim as well, the Tribunal can make any compensatory award it wants. This is not subject to a statutory cap and can take into account injury to the employee’s feelings.
Even if you have legitimate non-discriminatory reasons for dismissing a pregnant or maternity leave employee, if you mishandle the redundancy process, your employee may be able to successfully sue you for unlawful discrimination, for which you could be ordered to pay an uncapped award of damages.
Following a thorough and well-documented individual consultation process should allow you to demonstrate that you acted reasonably in dismissing the employee due to redundancy while she was on maternity leave.
DavidsonMorris’ employment lawyers can help with all aspects of workforce management and planning, including redundancies, dismissals, settlements and contentious exits. Working closely with our specialists in HR, we deliver comprehensive advice on the options open to you as an employer and provide practical support through the redundancy process, with particular experience in complex circumstances such as managing redundancy during maternity leave. For help and advice with a specific issue, speak to our experts.
Managing Redundancy During Maternity Leave FAQs
Can you make someone redundant while on maternity leave?
Employers can make employees redundant while on maternity, but they have to follow a fair and lawful redundnacy process, and be sure they can prove that the dimissal is not due to their sex or personal situation.
Does maternity leave affect redundancy pay?
Employees being made redundant while on maternity leave with more than two years' service are entitled to statutory redundancy pay. This is calculated using the employee's normal weekly pay or average weekly pay prior to the start of their maternity leave and not their maternity pay.
What happens if my company closes while I am on maternity leave?
You will continue to be entitled to 39 weeks of maternity leave and pay. If your employer is declared insolvent, your statutory maternity pay should be covered by HMRC rom the date your employer is declared bankrupt. Your employer should continue to pay your statutory maternity pay entitlement and once declared bankrupt, HMRC should cover the remainder of your statutory maternity pay entitlement.
Last updated: 9 December 2021