What is a Section 278 Agreement?

A Section 278 Agreement is a legal agreement between a developer and a highway authority to carry out highway works.

Bonuses And Maternity Leave: What HR Needs To Know

When an employee is on maternity leave, their contract continues, and they remain entitled to most benefits – except for “wages or salary” (as defined by Regulation 9 of the Maternity and Parental Leave Regulations 1999). Bonuses, which often fall into this category, need careful handling.

What’s the general rule?

Under the Equality Act 2010, treating someone unfairly because of pregnancy or maternity is unlawful. But employers can reduce bonus payments to reflect time taken on non-compulsory maternity leave.

Employers must pay:

Bonus due for the period before maternity leave started
Bonus for the two weeks of compulsory leave immediately after birth
Bonus for the period after maternity leave ends

The rest of the bonus period can be reduced proportionately to reflect time off.

What types of bonuses are covered?

Most performance-related bonuses, including team and company targets, and regular bonuses like Christmas bonuses, are treated as deferred pay and fall under this rule.

Even discretionary bonuses are likely to be covered. If they’re paid regularly, they may be seen as a contractual entitlement, regardless of how they are labelled. The same pro rata principle applies.

Be prepared to adjust targets

If performance targets are used to calculate bonuses, clearly explain how these will be adjusted to reflect any period of maternity leave. For example, by pro-rating targets or applying average performance measures. Failure to do this could risk a claim of discrimination.

Don’t forget share schemes

Other long-term incentive plans (like share awards) should also follow the same approach, with awards reduced in line with time spent on maternity leave.

What should HR do?

Make sure bonus schemes clearly state the rules on maternity leave
Define the bonus period (e.g. calendar year or financial year)
Be transparent on how performance targets will be adjusted if an employee has been on leave