Settlement agreement when the employee is on maternity leave

Ending the employment of someone on maternity leave is the exit tribunals look at hardest: pregnancy and maternity discrimination needs no comparator and no service, a redundancy during the protected period gives the employee priority for any suitable vacancy, the protected conversation gives no cover, and statutory maternity pay continues after the employment ends. A settlement agreement can be the right outcome where the employee wants to leave or where a genuine redundancy has been handled properly, but it has to be built on that footing and offered with care. Drafting for the employer, I deliver the agreement and a note on the conversation in three working days for a fixed £795, or for £995 with the negotiation with the employee's adviser included.

Who this is for

Employers in England and Wales considering an agreed exit for an employee on maternity, adoption or shared parental leave or in the protected period after returning, whether the employee has asked to leave or a redundancy has arisen.

What matters in a settlement during maternity leave

Why an exit during maternity leave is the riskiest exit there is

Section 18 of the Equality Act 2010 makes it discrimination to treat a woman unfavourably because of her pregnancy or because she is on or has taken maternity leave, with no comparator needed, no qualifying period, uncapped compensation and an injury to feelings award, and dismissal for a reason connected with pregnancy or maternity leave is automatically unfair under section 99 of the Employment Rights Act 1996; a tribunal starts from the suspicion that an exit during maternity leave is connected to it, and the employer has to show that it was not, which means that the settlement must be built on a reason and a process that would survive that scrutiny, and the note helps the employer see whether it has one.

The redundancy protection and the priority for alternative roles

Under regulation 10 of the Maternity and Parental Leave etc. Regulations 1999, as extended, an employee whose role becomes redundant during pregnancy, maternity leave or the protected period of eighteen months after the birth must be offered any suitable alternative vacancy with the employer or an associated employer ahead of other employees, on terms not substantially less favourable, and a failure makes the dismissal automatically unfair; a settlement on redundancy during maternity leave should recite that the protection was applied (the vacancies considered and offered, or the absence of any), because a redundancy settlement that skipped the priority is a settlement of a claim the employer will lose if the agreement fails.

The claims and why the protected conversation does not help

The protected conversation under section 111A of the Employment Rights Act 1996 covers ordinary unfair dismissal only, and an employee on maternity leave has discrimination and automatic unfair dismissal claims that it does not cover, so the offer must be made without prejudice on the basis of a genuine dispute or, where the employee has herself raised leaving, in response to her proposal; an offer that the employer makes to an employee on leave with no dispute and no request from her is admissible in a discrimination claim and reads as the employer deciding she should not come back, which is the claim; the note explains how the conversation can be had, and when it should not be.

Statutory maternity pay after termination and the package

Statutory maternity pay under the Statutory Maternity Pay (General) Regulations 1986 continues to be payable for the remainder of the thirty-nine weeks after the employment ends, so the agreement should provide for its continued payment through payroll and should not treat it as part of the compensation; enhanced maternity pay is a contractual matter and any repayment condition should be waived; the package then comprises notice (with post-employment notice pay taxed as earnings under section 402B of the Income Tax (Earnings and Pensions) Act 2003 and calculated on pre-leave pay), accrued holiday (which accrues throughout the leave), the statutory redundancy payment where the reason is redundancy, and compensation within the thirty thousand pound exemption under section 403, priced against uncapped exposure; the accountants confirm the treatment.

The conversation with someone on leave and the timing

The employee is at home with a baby, may have limited time and energy, may not be checking work email, and should be contacted through the channel she has agreed for keeping in touch, with the conversation arranged at a time she chooses, with a companion if she wants, and with a longer period than the Acas Code's minimum to consider the offer; the timing should be driven by the reason (a redundancy consultation that has reached the point of outcome) or by her request, never by the approach of her return date, because an offer made in the month before she is due back is an offer the tribunal will read as being about the return; the note sets out the approach.

The waiver, the reference and the return that will not happen

The agreement waives the claims specifically on the terms section 203 of the Employment Rights Act 1996 and section 147 of the Equality Act 2010 lay down (pregnancy and maternity discrimination, sex discrimination, automatic and ordinary unfair dismissal, the regulation 10 claim, detriment for family leave), with the employer paying towards the adviser's fees under the section 413A exemption in the Income Tax (Earnings and Pensions) Act 2003; it attaches a reference, agrees the announcement, deals with the keeping in touch days and the equipment, and contains confidentiality within the limits the law sets (the protected disclosure carve-out that section 43J of the Employment Rights Act 1996 makes compulsory and the Employment Rights Act 2025 rules against confidentiality over harassment and discrimination, in force on a timetable the regulations set); it should also state the termination date in a way that fits the maternity pay and leave, because the return date in the original notice no longer applies.

What it costs

Settlement agreement, £795. Drafted for your situation, with a note on how to have the conversation. Three working days.

Settlement agreement including reasonable negotiation with the employee's adviser, £995. The agreement in three working days. The negotiation then runs until the agreement is signed or it becomes clear it will not settle. Reasonable negotiation means what, in my experience, amounts to the standard back and forth on a settlement agreement. If the employee or their adviser is being unreasonable, for example by conducting themselves unprofessionally or requiring a substantial rewrite that needs material further legal advice to you, I will flag it and we will discuss how best to proceed, which may involve further fixed-fee work. That would be unusual.

Buying online forms the engagement on payment. The scope is what the settlement agreements for employers page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A bespoke settlement agreement drafted for the exit you are dealing with
• Proper waiver of the relevant statutory claims, so the agreement does what you are paying for
• Advice on the tax treatment, including the £30,000 exemption and what falls outside it
• Confidentiality, non-derogatory statements and an agreed reference
• Reaffirmation or replacement of restrictive covenants, which is often the real value
• A short note on how to open the conversation and keep it without prejudice or protected
• One round of amendments after the employee's adviser responds

What is not included

• Advising the employee, which their own adviser must do independently for the agreement to be valid
• Tribunal representation if the matter does not settle
• Payroll processing of the settlement sums
• Handling the settlement payment, since I do not hold client money

Questions I am often asked

Our employee on maternity leave has told us she does not want to come back. Can we agree a settlement?

You can, in response to her proposal, with the maternity pay continuing and the package reflecting her claims. An exit she has asked for is a different case from one the employer proposes, and the note explains how to document it.

Her role is redundant while she is on leave. Can we make her redundant?

Only after offering her any suitable alternative vacancy ahead of other employees, which the regulations require during the protected period. A settlement on redundancy should recite that the priority was applied.

Does statutory maternity pay stop when the employment ends?

It does not. It continues for the rest of the thirty-nine weeks, paid through payroll, and the agreement should say so rather than treating it as compensation.

Related guidance and services

• Settlement agreements for employers, £795, the service this page describes
• Employment contracts and handbooks, £595
• Shareholders agreement, £995
• Family leave policies
• Settlement agreement when the employee has raised discrimination

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: October 2026. Email geoffrey@caesar.co.uk.