Alabaster v Woolwich Building Society (EAT IRLB June 2000)

Women on maternity leave can benefit from pay increases during their maternity leave period, even if the date of the increase falls outside the relevant period for calculating their maternity pay entitlement, the Employment Appeal Tribunal held in the recent case of Woolwich plc v Alabaster (unreported 7 April 2000) This was a test case supported by the Maternity Alliance and the Equal Opportunities Commission.

The rules governing the payment of SMP are in the Statutory Maternity Pay (General) Regulations 1986. They provide that a woman is entitled to be paid during her maternity leave a higher rate of 90% of her normal weekly earnings for the first six weeks of leave, followed by a fiat rate payment thereafter. Her normal weekly earnings are calculated by reference to her average earnings over the eight week period commencing 14 weeks before the expected week of childbirth.

Mrs Alabaster worked for the Woolwich. Her expected week of childbirth was in February 1996, and her entitlement to maternity pay was calculated under the regulations with the relevant period for assessing her earnings being the eight week period prior to 29 October 1995.

With effect from 1 December 1995, Mrs Alabaster was awarded a pay increase. Because the date of the pay increase was after the relevant eight week period, her six week's earnings related maternity pay did not take the increase into account. Mrs Alabaster lodged a Tribunal claim arguing that the European law, and in particular the European Court of Justice decision in Gillespie v Northern and Social Services Board 1996 ICR 498, required the benefit of the pay increase to be reflected in her maternity pay.

The Employment Appeal Tribunal agreed with Mrs Alabaster's argument on this point. They concluded that the Gillespie decision meant that a woman on maternity leave was entitled to the benefit of a pay increase, whether back-dated or having immediate effect, even where the pay increase had effect after the eight week calculation period.

Regulation 21(3) would therefore need to be amended to reflect this.

This decision is of course dependant on the woman being entitled to earnings related maternity pay. After the six weeks earnings related maternity pay period, Mrs Alabaster - like all other women relying on the statutory scheme - became entitled to the flat rate weekly maternity payment not based on her earnings. The entitlement to the flat rate payment remains unaffected by this decision.

As a result of this decision, any woman who, like Mrs Alabaster, is awarded a pay increase which takes effect after the eight week calculating period set out in the 1986 Regulations, can rely on the Gillespie decision to ensure that the increase is taken into account in assessing her earnings related maternity pay. However, even though the point relies on European law, the case must be brought under the unauthorised deduction provisions of Part II of the Employment Rights Act 1996.