repayment of maternity pay

by Roderick Ramage, solicitor,

first published in New Law Journal ( on 22 January 1999


This article is not advice to any person and may not be taken as a definitive statement of the law in general or in any particular case. The author does not accept any responsibility for anything that any person does or does not do as a result of reading it.


Employers must pay statutory maternity pay to women, who are absent from work because of pregnancy and qualify for it:  (i) at least 26 weeks’ continuous employment ending with the week immediately before the 14th week before the expected week of confinement, (ii) normal weekly earnings in the last eight of those weeks at least the current lower earning limit (£64 pw), and (iii) be pregnant and have reached or have been confined before the start of the 11th week before the expected week of confinement (Social Security Contributions and Benefits Act 1992, s164).  SMP is payable for up to eighteen weeks starting not earlier than the eleventh week before the expected week of confinement at a “higher rate” of nine-tenths of the woman’s normal weekly earnings before the above 14th week for the first six weeks and then the “lower rate” of £55.70 for the remaining twelve weeks.  The employer may normally recover 92% of the statutory maternity pay by deduction from its Class 1 National Insurance Contributions.  A small employer (NI contributions not over £20,000 pa) may recover 100% plus an additional 7%.

During her maternity leave period a woman is entitled to the benefit of all the terms and conditions of her employment except remuneration (Employment Rights Act 1996 s 71).   The employer may agree to pay remuneration during all or part of a woman’s absence and, if it does so, the contractual pay and the statutory maternity pay are set off against each other.  In Boyle and Others v Equal Opportunities Commission European Court of Justice Case C-411/96 (The Times 29 October 1998) a dispute arose over a provision in an employment contract, under which contractual maternity pay in excess of the statutory maternity pay could be repaid to the employer if the employee failed to return to work for at least one month after the birth of the child.  The ECJ held that the provision was not precluded by community law.

The following precedent is of an agreement supplemental to existing employment terms, by which the employee is given contractual maternity pay subject to a condition for claw back if she fails to return to work for a specified period.  Similar provisions could be incorporated in the employment contract.


THIS DEED is made on (date) between:

(first) (name) plc/Ltd a company registered in England and Wales with number (number) whose registered office is (address) ("[Party-A]"); and

(secondly)   (name) of (address) ("[Party-B]").



1.       In this agreement the following terms shall have the following meanings:

“Contractual Maternity Pay”


-      during the first [six (or) twelve] weeks of her Maternity Leave 100%; and

-      during the next [twelve (or) six] weeks [50]%

of the [Party-B]’s salary at the rate in force immediately before the start of her Maternity Leave less in each case the amount of her Statutory Maternity Pay.

“Maternity Leave”

means the whole of:

-      the [Party-B]’s maternity leave period in accordance with her rights under the Employment Rights Act 1996;

-      the period during which she is subsequently absent form but entitled to return to work under that Act; and

-      any additional period of leave which [Party-A] permits her to take.

“Principal Agreement”

means a service agreement made on [date] between the parties.

“Statutory Maternity Pay”

has the meaning given to it in the Social Security Contributions and Benefits Act 1992.



2.       [Party-A] shall pay Contractual Maternity Pay to the [Party-B] during the first [eighteen] weeks of her Maternity Leave.



3.       If the [Party-B] returns to work immediately after the end of her Maternity Leave she shall be entitled to work part time (but not less than half time) for one month and if she does so then she shall be paid the proportion of her salary which her hours actually worked bear to the hours which would have otherwise have been her normal hours of work.



4.1     The [Party-B] shall reimburse to [Party-A] the Contractual Maternity Pay paid to her in accordance with the following scale.


event giving rise to repayment

amount of repayment

The failure of the [Party-B] to return to work on the first working day after the end of her Maternity Leave



The termination of the [Party-B]’s employment after her return to work and before the expiry of [twelve] months from the end of her Maternity Leave



The termination of the [Party-B]’s employment more than [twelve] months but less than [eighteen] months after the end of her Maternity Leave




4.2     The [Party-B] shall not be liable to make any reimbursement to [Party-A] under this agreement if the termination was as a result of:

-       her resignation on the ground that she became entitled to and did resign summarily; or

-       dismissal by [Party-A] except on grounds on which [Party-A] became entitled to and did terminate her employment summarily.



5.       The date on which the [Party-B] must return to work under this agreement may be postponed [for not more than one month] to such date as is specified in a medical practitioner’s certificate supplied to [Party-A] before the end of her Maternity Leave and certifying that she is not fit to return to work on medical grounds.



6.       Principal Agreement shall remain effective in all respects except as expressly altered by this deed.


(executed as a deed)


copyright Roderick Ramage


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