SMEs may have to make significant adjustments to handle changes in maternity benefits, due to come into force in October.

The changes are expected to put a substantial financial strain on SMEs as they will be required to provide all non-cash benefits for the entire duration of maternity leave. Previously, they were only obliged to provide benefits for the first 26 weeks.

The amendment to the Sex Discrimination Act (SDA) is expected to impact on SMEs through salary sacrifice schemes. Head of employment law at Stevens and Bolton, Stephanie Dale said: ‘There is a particular implication for small employers here especially with things such as the popular childcare salary voucher scheme.’

The Government Equalities Office and Business, Enterprise and Regulatory Reform spokesperson commented: ‘We recognise that the changes to the SDA will mean an increase in costs for some employers and we acknowledged this in the impact assessment that accompanied the amending regulations.’ Further: ‘Employers affected will be those who provide benefits of terms and conditions of employment (other than remuneration), and employ women who take maternity leave for periods longer than 26 weeks, and do not currently provide those benefits after the 26th week, (i.e. during additional maternity leave).’

Mace & Jones employment law partner Mark Hatfield warned that businesses need to be fully aware of changes so that employee rights are properly taken care of. He said the amendments will: ‘require [businesses] to review their policies and practices’.

Maternity leave changes are expected to cost businesses around £156 million. Mark Hatfield explained: ‘The difference in the treatment of Ordinary Maternity Leave and Additional Maternity Leave for terms and conditions will be removed.’ He explained that the additional burden on SMEs is particularly worrying when considered alongside the growing number of women taking AML and extended maternity pay to 39 weeks, with a long-sight view for 52 weeks. He said: This is important for employers who limit the provision of benefits, other than remuneration, during AML as this will need to change. Common examples are employers who recover company cars at the end of OML, those who stop private medical cover, or those who take a different approach to annual leave accrual. This “simplification” of the law does not alter the difference in rules about the job to which the employee returns, which still vary between OML and AML.”

The law will be relevant to all employees with an expected week of childbirth beginning on or after 5 October 2008.

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