What effect will new maternity laws have?

20-Aug-2008

New rules on maternity pay and maternity leave will begin to be implemented from October. So what impact will they have on recruiters?

Changes are being proposed in the way in which the statutory maternity pay and maternity leave system operates.

What impact will these changes have upon employment businesses that supply temporary staff to end-user clients? What is the current position?

The obligations imposed on employment businesses with regard to maternity leave and maternity pay depend upon whether or not the business employs individuals under contracts of service (agency employees) or engages them as workers under contracts for services (agency workers).

Both agency employees and agency workers may be entitled to statutory maternity pay of 90% of average weekly earnings for the first six weeks of maternity leave, and then up to £117.18 for the next 33 weeks.

Statutory maternity pay (SMP) will be calculated on the average gross weekly earnings in the eight-week period up to and including the 15th week before the expected week of childbirth.

To qualify for SMP, agency employees and agency workers must have been employed/engaged for at least 26 weeks. For agency workers, they may be deemed to have that continuity even if there are gaps within the 26-week period when they were not working.

Calculating SMP for agency workers or agency employees can be difficult where they have irregular working patterns.

Where they have worked regularly within the eight weeks prior to the 15th week before the expected week of childbirth it is a simple matter of taking the average weekly pay over that eight-week period. If work has been more sporadic, it may be necessary to extend the period over which the average is calculated.

Only agency employees, irrespective of their length of service, are entitled to statutory maternity leave, which is currently a maximum of 52 weeks. There are changes that will take effect on 5 October, and further proposed changes that will impact upon the maternity rights of both agency employees and agency workers. The changes which come into effect on this date will have a limited impact on the agency sector.

Specifically, for babies due on or after 5 October, their mothers will, where they are entitled to maternity leave (so not applicable to agency workers), be entitled to maintain all contractual benefits during the full 52-week maternity leave period. Currently they can only maintain these contractual benefits during the first 26 weeks of maternity leave. This will only have an impact where agency employees are entitled to additional contractual benefits, other than basic pay and access to a stakeholder pension.

However, other changes likely to occur in the near future may have greater impact on the situation.

• Agency employees and agency workers are entitled to statutory maternity pay. 
• Only agency employees are entitled to statutory maternity leave. 
• Changes in October 2008 will have limited impact upon the agency sector. 
• The government does, however, intend to increase statutory maternity pay to 52 weeks with effect from 2010. 
• The implementation of the Agency Workers Directive may have a significant impact in this area. 
• The government intends to extend maternity leave rights to partners of mothers.
• The government intends to increase statutory maternity pay to 52 weeks with effect from 2010. This will impact both agency workers and agency employees. 
• The introduction of the Agency Workers Directive may impact upon this area. This will require agencies to ensure that in respect of both agency employees (unless they are paid between assignments) and agency workers that they will be entitled to the same basic working and employment conditions as permanent employees. Will that cover enhanced maternity pay or maternity leave? The position is not yet clear, and we await the draft legislation. 
• The government proposes to introduce extended rights for paternity leave, which is likely to come into effect in 2010. This will entitle the partner of a woman who is entitled to maternity leave to take part of their maternity leave as paternity leave. It is likely only to impact upon agency employees rather than agency workers.
  

In summary

• Agency employees and agency workers are entitled to statutory maternity pay.
• Only agency employees are entitled to statutory maternity leave.
• Changes in October 2008 will have limited impact upon the agency sector.
• The government does, however, intend to increase statutory maternity pay to 52 weeks with effect from 2010
• The implementation of the Agency Workers Directive may have a significant impact in this areas.
• The government intends to extend maternity leave rights to partners of mothers.