Are you confused about bonuses during maternity leave?
When an employee goes on maternity leave, their contract of employment continues, so they’re still entitled to most contractual benefits, except for wages/salary. Bonuses often fall into this category, so they need careful consideration.
In this blog we address when bonuses must be paid, how to adjust targets fairly, and how to stay legally compliant.
What the law says about bonuses and maternity leave
Under the Equality Act 2010, it’s unlawful to treat someone unfavourably because of pregnancy or maternity.
However, maternity leave is split into compulsory and non-compulsory periods—and bonus payments can be reduced to reflect the non-compulsory leave, provided it’s done fairly and proportionately.
When do you have to pay bonuses?
You must pay bonuses due for:
- The period before maternity leave began.
- The first two weeks of compulsory leave after the baby is born.
- Any period after the employee returns to work.
You can reduce bonuses for the remainder of the maternity leave—but only on a fair, proportionate basis, reflecting time not worked.
What types of bonuses are affected?
Bonuses which are treated as deferred pay, including:
- Most performance-based bonuses (individual, team, or company targets).
- Regular bonuses, like annual or Christmas bonuses.
- Some discretionary bonuses (if they’re paid regularly they can be seen as a contractual entitlement even if labelled non-contractual).
How to adjust performance targets fairly
If your bonus scheme relies on meeting performance goals, you’ll need to adjust these targets fairly for employees who take maternity leave. For example:
- Pro-rata targets.
- Apply average performance measures.
Top Tip: Explain how your calculation works in your bonus policy to avoid confusion or discrimination claims.
Don’t forget share schemes and LTIPs
Long-term incentive plans (LTIPs), including share awards and equity schemes, should follow the same rules. Awards can usually be adjusted in proportion to the time the employee was on non-compulsory maternity leave—this should be clearly documented and applied consistently.
Final thoughts
Being transparent and fair around bonuses during maternity leave isn’t just a legal duty — it’s also a reputation and retention issue. Employees who feel they’ve been short-changed are more likely to bring claims.
To avoid legal risk and maintain employee trust:
- Review your bonus policy. Make sure it covers maternity leave scenarios clearly.
- Define the bonus period. Be clear whether bonuses are based on the calendar year, financial year, or another timeframe.
- Explain how adjustments work. Outline your method for adjusting performance targets and bonus eligibility.
- Communicate clearly with all employees so they know what to expect during maternity leave.
Further reading
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The team at Hunter Law is here for you. We can handle your HR issues, finesse your policies, and keep you up-to-date on evolving legislation. Please get in touch with our legal team, we’d love to help.
