Welcoming a new baby is a profound life event, bringing both joy and significant change. However, even for established professionals, the excitement is often accompanied by practical concerns regarding finances. Through my work, I’ve noticed that a number of women – successful, hardworking women – are concerned about how maternity leave impacts their bonus entitlements.
You have worked hard to reach your level of seniority, and taking time out to care for your child should not mean your previous professional contributions are erased. The law provides a safety net to ensure you are treated fairly, but understanding the nuances of your specific remuneration package is vital.
Understanding Your Bonus Structure
To determine your rights, we must first look at the specific nature of your bonus. In senior roles, these generally fall into two categories:
1. Contractual Bonuses: If your contract outlines a specific formula (such as a percentage of revenue or sales), your employer generally has very little room to manoeuvre. If you meet the stated criteria, you must be paid in line with the contract.
2. Discretionary Bonuses: Many organisations prefer schemes that grant them “absolute discretion” over payments. However, for sophisticated employees, it is important to know that “absolute” rarely means legally absolute. Your employer is bound by an implied duty of mutual trust and confidence that exists between you and them. They must exercise their discretion honestly, rationally, and in good faith – they cannot withhold a payment capriciously, just because they feel like it, because you’ve been on maternity leave for some of the bonus year.
How Bonuses Are Treated During Maternity Leave
While your regular salary is usually replaced by Statutory Maternity Pay or an enhanced company scheme, bonuses are treated separately to ensure you are not penalised for taking maternity leave.
The Pro-Rata Principle. The general rule is one of fairness. If your bonus acts as a reward for past performance or an incentive for future work, you are typically entitled to receive it, though it may be prorated to reflect the time you were away.
· Time before leave: You are entitled to the full bonus for the period you worked prior to your leave starting.
· Time on leave: Employers can reduce the bonus proportionally to reflect the period you were not working.
The Compulsory Maternity Leave Exception. There is a specific exception regarding the two weeks of Compulsory Maternity Leave immediately following the birth. For the purposes of bonus calculation, this fortnight must be treated as if you were working. Your employer cannot reduce your bonus for this specific period.
Company-Wide Performance If part of your compensation is based on company or department-wide performance and is awarded to everyone regardless of individual output, your absence on maternity leave should not impact this payment. It is generally not acceptable to prorate this if you were employed for the full year, even if you were on maternity leave for part of it.
Adjusting Your Targets
For those in senior positions, bonuses often depend on hitting specific KPIs, billable hours, or sales figures. It is crucial that your employer adjusts these targets to make them achievable, given your absence. Failing to modify performance criteria to account for maternity leave can be considered discrimination; you should not be set up to fail simply because you took time away to have a baby.
Potential Red Flags
Occasionally, an employer may attempt to withhold a bonus by claiming payment is strictly conditional on being in “active service” on a specific date. However, because most bonuses are designed to reward past work or incentivise loyalty, using this justification to pay you nothing is legally risky for an employer.
Steps to Take If You Have Concerns
If you suspect your bonus has been miscalculated, or you are being treated differently from colleagues who were not on maternity leave, there is a pragmatic path forward:
1. Check the Details: Review your contract and bonus scheme rules to see if the payment is discretionary or guaranteed.
2. Informal Inquiry: Errors can be genuine mistakes. Often, a conversation with HR or your line manager can resolve the issue.
3. Formal Grievance: If an informal approach fails, you can lodge a formal grievance. You should include the potential claims that arise from a failure to pay your full bonus entitlement. Legal advice will help you compose a grievance that covers all relevant factors.
4. Legal Action: If internal resolution is not possible, you may have claims for unlawful deduction from wages, discrimination, and/or breach of contract. Please note that legal claims usually have strict deadlines – sometimes just three months minus one day from the date of the underpayment, though this is going to increase to six months under the new Employment Rights Act 2025.
Here to Help
Balancing a demanding career with a growing family is a juggling act, and legal disputes are the last thing you need during this time. If you feel your bonus has been withheld or miscalculated, please get in touch.
Once I have confirmed that we don’t have a conflict of interest (i.e., we do not already act for your employer), we will arrange a brief, free exploratory chat. In this session, we will talk through your specific situation, and I can explain how I can help and outline the next steps to get you onboarded so I can help you secure the fair treatment you deserve.
Get in touch at clare.chappell@carbonlawpartners.com – I look forward to helping you.