Furlough and rights to parental leave and pay

The government’s Coronavirus Job Retention Scheme (the furlough scheme) has interacted with rights to parental leave and pay in complicated ways during the Coronavirus pandemic.

The law is clear that statutory payments, such as SMP or SAP, for employees who begin their maternity, adoption, shared parental or paternity leave after a period of furlough leave on a lower wage, must be based on their normal wages, that is, ignoring any furlough reduction.

However, this statutory adjustment applies only to wage reductions that are due to furlough. Anyone whose wages were reduced for other reasons before starting their leave, such as sickness or reduced hours, will have their SMP or SAP calculated based on the reduced wage, even if the reasons why their wage was cut relate to the Coronavirus. Unions can negotiate for contractual maternity and adoption pay to be based on normal wages for these workers.

The website of charity Maternity Action provides comprehensive advice on the impact of furlough on statutory parental payments.