Pensions A-Z is a collection of insights to help you further increase your awareness of pensions law.
Search the Pensions A-Z by selecting the first letter of your topic:
Family Leave: Basics
There are several types of leave which may apply when an employee (or their spouse / civil partner) has a baby or adopts a child:
An employee has the right to take up to 12 months leave. Most women are entitled to 39 weeks’ statutory maternity pay. To qualify, they must have been employed by the same employer continuously for at least 26 weeks into the 15th week before the week the baby is due and earning an average of at least £97 a week. Those who do not qualify may be entitled to a basic payment called Maternity Allowance.
Fathers are entitled to take a single block of one or two weeks’ leave after the birth of their child. To qualify for statutory paternity pay they must:
- be the biological father or the mother's husband, partner or civil partner or have or expect to have responsibility for the child;
- have continued to work for the same employer for at least 26 weeks by the 15th week before the baby is due;
- continue to work for that employer up to the date the child is born; and
- be earning an average of £97 a week (before tax).
In respect of children born on or after 3 April 2011, fathers may take additional paternity leave if their wife/partner returns to work without taking their full leave maternity/adoption leave entitlement. This additional leave may not be taken until (at least) 20 weeks after the child’s birth/adoption placement and may be between 2 and 26 weeks. The time must be taken as one continuous period and partial weeks are not permitted. The father is entitled to the same rate of statutory pay (if any) that the mother would have received had she been on leave.
Adoption leave mirrors maternity and paternity leave.
Employees with children under 5, or disabled children under 18, may take up to 4 weeks’ parental leave each year in respect of each individual child. Such leave is normally unpaid (it is only paid at the discretion of the employer).
In each of the above cases, the statutory pay is a minimum requirement. Employers can provide more – more generous terms and conditions will be included as specific terms in the contract of employment.
The position on pensions
While being paid, an employee must pay pension contributions on the basis of the salary they actually receive. However, the employer pays contributions as if the employee were earning their usual salary. In addition, any cover for death in service must continue.
For periods of unpaid leave, no pension contributions are required and death in service cover need not continue, subject to the requirements of the employee’s contract. Pensionable service before and after any period of unpaid family leave must be treated as continuous.
There is debate whether, in a defined contribution context, the employer should supplement the member’s contributions to make up the difference between the amount which is paid (based on actual pay received) and the amount which would have been paid had the contributions been based on the employee’s usual salary. The legislation is unclear, but many commentators believe that the employer is not obliged to provide a top-up. In a defined benefit context, the issue is covered by the employer meeting the balance of the costs.
Author: Georgina Jones