Maternity pay rise a 'nightmare' for bosses

THOUSANDS of mothers will be entitled to higher maternity pay from next month ? leaving employers facing a bureaucratic nightmare.

A European Court ruling means that firms will have to include pay rises that women would have earned had they not been on leave.

Bosses may also be forced to backdate the rises to 1976, a complicated and expensive calculation for many companies. At the moment, women are given statutory maternity pay worth 90% of their full salary for the first six weeks of leave.

This is based on their earnings during an eight-week period early on in pregnancy. Pay rises after that date have been ignored. But under European rules that come into operation on April 6, employers must take into account any increase that a woman would have received had she not been on, or about to go on, maternity leave.

The increase will have to be backdated to cover the first six weeks of leave ? even if the rise is awarded after this period. The remaining weeks of the six-month paid maternity leave would still be paid at a flat rate ? due to rise to £106 a week in April.

The change follows a legal battle by Michelle Alabaster, 28, a secretary with the Woolwich in Bexleyheath, south east London. She went on maternity leave in 1996 after receiving a 12.9% rise which would have taken her salary to £12,801. But the rise came too late to affect her maternity pay.

The Woolwich was acting within the law but Mrs Alabaster, who has divorced since the case began, was convinced the law was unfair. After an eight-year battle the European Court agreed. It ruled in March, 2004 that leaving out pay rises breached the principle that women should not be penalised due to maternity.

The court-ordered rise could even be backdated to 1976 because that is when the Equal Pay Directive came into force, say EU legal experts.

The Court of Appeal is examining the case and will decide on the length of back-dating shortly. Lucy Baldwinson, employment lawyer at Allen & Overy, said: 'The time and administrative costs to employers will be significant.

'It's a nightmare for human resources because employers do not know where they are.' She added: 'Until the Court of Appeal makes a decision it is unclear how far back people will be able to make a claim.'

What worries bosses most is the bureaucracy involved, rather than the amounts. Financially, they have already expressed concern about Government plans to increase paid maternity leave from six to nine months by 2007.

Labour is also planning to allow fathers to take time off in place of mothers to look after new babies. It also wants to extend the right to request flexible working ? currently available to the parents of pre-school children ? to the parents of older children and those caring for sick and disabled relatives.