UK: Bonus Pro Rated For Maternity Leave Absence Not Unlawful

Last Updated: 6 April 2006
Article by Christopher Booth

The Scottish Court of Session has upheld the EAT's decision that an employer was entitled to reduce an employee's bonus pro rata to reflect her absence on maternity leave. The employee was not entitled to make a claim under the Sex Discrimination Act 1975 (the Act) since section 6(6) of the Act prevents monetary benefits regulated by a contract of employment from falling within the ambit of the Act.


The employer in this case, Asda, operated a discretionary bonus scheme, the purpose of which was to provide a means of rewarding all employees for their continued contribution to the business during the bonus year (being equivalent to the calendar year). The bonus was payable to all employees who had attained 12 months service as at December 2002, and who remained in Asda's employment on the payment date, namely 21 February 2003. The bonus scheme was prorated where an employee was on leave for 8 consecutive weeks or more.

Mrs Hoyland was employed at the relevant time as a Customer Services Assistant at Asda's Dumbarton store. She was absent from work on maternity leave from 12 June until 3 December 2002. This amounted to a period of absence of 183 days in the 2002 bonus year and, in accordance with the bonus scheme rules, her bonus was pro rated to reflect her absence. As a result of the reduction of her bonus, Mrs Hoyland brought claims in the Employment Tribunal that she had suffered:

  • sex discrimination under the Act; and
  • a detriment under section 47C Employment Rights Act 1996 (ERA) for a reason related to maternity.

Employment Tribunal Decision

The Act makes it unlawful for an employer to discriminate against a person in the way he affords them access to benefits. However, section 6(6) of the Act provides that this does not apply to benefits consisting of the payment of money when the provision of the benefits is regulated by the woman's contract of employment.

Mrs Hoyland argued that the provision of the bonus was not regulated by her contract of employment and therefore was not covered by the exception in section 6(6) of the Act. The Employment Tribunal disagreed and found that the decision about whether Mrs Hoyland should receive her bonus was regulated by the bonus scheme. If she complied with the rules of the scheme, she was entitled to be paid the bonus, and this was not a matter left to the discretion of Asda. For the purposes of the work undertaken during 2002, the bonus scheme formed a part of her contract of employment.

The Employment Tribunal found that there was a pregnancy-related detriment contrary to section 47C ERA in relation to Asda's failure to pay Mrs Hoyland the bonus - however, this was limited to the two week period of compulsory maternity leave. Consequently, Mrs Hoyland was only awarded the reduction that had been made in respect of those two weeks (amounting only to Ł5.20).

The Employment Appeal Tribunal upheld the decision of the Employment Tribunal.

Court of Session Decision

The Court of Session had to consider the narrow issue of whether or not the payment of bonus was regulated under Mrs Hoyland's contract of employment for the purposes of section 6(6) of the Act. If it was, then she was not entitled to bring a sex discrimination claim. If it was not, she was entitled to bring such a claim.

The Court of Session upheld the EAT's decision that the bonus entitlement arose out of the contract of employment and was regulated by it, even if the entitlement was not part of the formal contract of employment. Consequently, Mrs Hoyland was not entitled to bring a sex discrimination claim.


The Court of Session agreed with Asda's Counsel that the exception in section 6(6) of the Act is intended to prevent an employer being exposed under both the Act and the Equal Pay Act in respect of the same matter. Mrs Hoyland had chosen to bring a claim for sex discrimination, whereas the Court's decision makes clear that her claim could only be considered under the Equal Pay legislation.

The Court's decision does not mean that an employer can now simply deny a bonus to employees on maternity leave. Each case will turn very much on its own facts, and factors to be taken into account are likely to include:

  • the contractual status of the bonus scheme
  • the purpose of the bonus - for example, is it intended to reward an employee retrospectively for work done, or is it designed to reward loyalty?
  • possibly, the treatment of other employees on leave for different reasons (e.g. career break).

Hoyland v Asda Stores Limited [2006] CSIH 21

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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