Starting at the beginning, the change in legislation relating
to SMP this Tax Year was a result of the case between M.K Alabaster
and the Woolwich PLC & Secretary of State:
Mrs. Alabaster qualified for SMP and went on
maternity leave from 8th January 1996. Her SMP was
calculated on earnings received in the period 1st
September 1995 to 31st October 1995.
With effect from the 1st December
1995 she received a salary increase but this pay rise was not
reflected in her SMP, as it was not within the ‘set period’ used to
calculate average earnings.
Mrs Alabaster claimed that the rise should have been reflected in
her SMP payments, and took the case to the European Court of
Justice (ECJ).
The ECJ agreed with Mrs Alabaster and stated
that “…any pay rise awarded between the beginning of the period
covered by the reference pay and the end of the maternity leave
must be included in the elements of pay taken into account in
calculating the amount of such pay. This requirement is not
limited to cases where the pay rise is backdated to the period
covered by the reference pay.”
There was already legislation in place to
allow the challenge of SMP payments if a backdated pay
rise was awarded which would have affected the average earnings
calculation. The crucial difference with this ruling is this;
it entitles employees to claim additional SMP if a pay rise took
place with an effective date which falls in the period from the
beginning of the ‘set period’ to the end of her maternity
leave.
The DWP is also advising that any pay rises which are effective
before the start of the set period, but where the earnings used for
SMP calculation have not been adjusted to reflect that pay rise,
must also result in a re-calculation of SMP.
