It is not unlawful in itself to make an employee redundant who is pregnant or on maternity leave. This means that, subject to the special protection enjoyed in respect of alternative employment referred to below, the fairness and lawfulness of the redundancy dismissal will be determined in the same way as other redundancy dismissals. So, as long as redundancy is the real reason for dismissal, the dismissal is carried out fairly and the rules on alternative employment are followed, there will be no liability for unfair dismissal.
However, if the selection of the employee for redundancy is because she is pregnant or on maternity leave, this would give rise to claims for automatic unfair dismissal and direct discrimination. Pregnancy and maternity discrimination might also occur if the employer does not adequately consult with the employee because she is on maternity leave.
In addition, employees on maternity leave enjoy priority for alternative employment in a redundancy situation. This means that where an employee who is on maternity leave is selected for redundancy, she is entitled to be offered suitable alternative employment, if it is available, in priority over other potentially redundant employees.
Redundancy dismissal and entitlement to statutory maternity pay
If an employee is entitled to statutory maternity pay (SMP) at the time she is dismissed for redundancy, she will continue to receive SMP for the remainder of the SMP period. This is because receiving SMP is not dependent on remaining an employee throughout the payment period. This applies whether the reason for the dismissal is redundancy or not.
An employee who is made redundancy whilst on maternity leave is entitled to a statutory redundancy payment as if she were not on maternity leave. This is because any periods of absence due to maternity leave are ignored for the purposes of calculating the payment due.
Suitable alternative employment
As outlined above, if a redundancy situation arises whilst an employee is on maternity leave and it is not reasonably practicable “by reason of redundancy” for her employer to continue to employ her under her existing contract, the employee is entitled to be offered a suitable alternative vacancy (where one is available) to start immediately after her existing contract ends. This includes any vacancy with an associated employer.
The new employment must involve work which is both suitable and appropriate for the employee, and the terms and conditions as to the capacity and place in which she is to be employed, and the other terms and conditions must be substantially no less favourable than under her original contract.
This gives employees on maternity leave priority over other employees also at risk of redundancy and is a rare example in the UK of lawful positive discrimination. Failure by the employer to comply with this obligation would make the dismissal automatically unfair dismissal, and could also constitute discrimination on grounds of pregnancy and maternity.
Compensation for unfair dismissal is subject to a statutory cap but there is currently no limit on the compensation which may be awarded for discrimination.