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If an employee is made redundant during their maternity leave, does the SMP payable on termination need to include employer pension contributions?

23 September 2021

It is relatively unlikely that there is an ongoing obligation to make pension contributions once employment terminates, unless there were a contractual right or a right in the pension scheme rules (which would be surprising) for the following reasons:

  • In terms of auto-enrolment, our understanding is that when an employee leaves employment, they will cease to be eligible for auto-enrolment contributions as they will no longer be a jobholder (that is working, or ordinarily working, in Great Britain under a contract).
  • While the entitlement to SMP continues because of section 164 of the SSCBA 1992, maternity leave ends when the employment ends. In terms of the discrimination arguments that apply in terms of rights during maternity leave, it is our view that given that maternity leave is brought to an end when employment terminates, so would the pension contribution rights that attach to it.  In any event, the rights as they relate to membership of an occupational pension scheme would appear to be no less favourable than those of any other employee whose employment terminates, that is, they become deferred members as there is no continuing employment on which to base membership of the occupational pension scheme (as active membership is work-based).  

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