Advo Payroll Adviser Helen Lynch discusses the Alabaster vs Barclays Bank Plc legal ruling and how it relates to maternity pay.

What is Alabaster?

A white compact, translucent mineral used in sculpture?

A neutral shade on a Dulux paint chart?

It is both of the above but in this instance we are looking at Alabaster vs Barclays Bank Plc and the ruling of the European Court of Justice relating to maternity pay.

The Alabaster ruling says that if a woman gets a pay rise, even once maternity leave has been started and relates to work she did before or during the maternity pay calculation period, her Statutory Maternity Pay (SMP) must be recalculated to include that increase.

SMP is usually calculated based on the average weekly earnings during a specific 8 week period, depending on when then the baby is due to be born.  If an employer awards a pay increase that is backdated which affects those pay weeks then the higher rate of SMP during the first few weeks of SMP will be higher.  This does not effect the lower rate of SMP.

Example

• An employee is due to have a baby in Mid December
• SMP is calculated on earnings in June & July
• In September you award a pay rise that is backdated to May
• The SMP must be re-calculated using the higher salary i.e. what the employee would have earned in June & July.  The difference must be paid in the next pay period.

What if I Have Missed Recalculating?

If you have missed backdating a pay rise for someone who is on maternity leave it is suggested that you rectify this as soon as possible.  Employees do have the right to claim back any underpaid SMP.  If the employee is still in your employment their claim has a time limit of 6 years.  If they have left your employment the time limit lessens to 6 months.

Summary

The Alabaster ruling ensures that women are not financially penalised on maternity pay if they receive a backdated pay rise that applies to their maternity pay calculation.

If in doubt please reach out to your Payroll Adviser who will be happy to advise, recalculate and also offer opinions on the Dulux paint chart.