Equality Act 2010 & Family Leave Protection
Maternity Redundancy Settlement Agreement UK (2026): Rights, Rules & Payouts
Facing redundancy during pregnancy or maternity leave is one of the most stressful experiences in professional life. UK employment law provides powerful protections that make maternity dismissals exceptionally risky for employers. If your employer proposes an agreed exit, you hold substantial statutory advantages to secure a fair settlement package.
Statutory Summary: Maternity Redundancy Rights 2026
In the UK, making an employee redundant during pregnancy or maternity leave is subject to strict statutory protections. Under the Protection from Redundancy Act 2023 and Regulation 10, employers must offer any suitable alternative vacancy without competition. Failure to do so makes dismissal automatically unfair. Settlement payouts must pay remaining Statutory Maternity Pay on top of uncapped compensation.
The 18-month redundancy protection window and Regulation 10
The Protection from Redundancy (Pregnancy and Family Leave) Act 2023 expanded maternity rights across the UK. Supported by the 2024 Amendment Regulations, the law establishes an extended 18-month protected window.
Your protection begins the day you notify your employer in writing of your pregnancy. For statutory maternity leave, protection lasts 18 months from the expected childbirth week. It also applies for 18 months from the actual birth date.
This statutory timeline covers your entire 52-week maternity leave period. It also extends for roughly 6 months after you return to work.
Regulation 10 Priority: Absolute Right to Alternative Vacancies
Under Regulation 10 of the Maternity and Parental Leave etc. Regulations 1999 (MPLR 1999), your employer has a strict duty. If your existing role is at risk of redundancy, your employer must offer you any suitable alternative vacancy.
Your employer cannot require you to attend competitive interviews or complete selection assessments. You have first refusal over all other affected employees.
Failing to offer an existing suitable vacancy makes your dismissal automatically unfair. This protection is enforced under Section 99 of the Employment Rights Act 1996.
If you suffer a pregnancy loss before 24 weeks, your statutory redundancy protection continues for two weeks after the end of the pregnancy. For pregnancy loss after 24 weeks, you remain entitled to full maternity leave, SMP, and 18 months of redundancy protection.
Why pregnancy and maternity dismissals are automatically unfair
UK employment law treats pregnancy and maternity dismissals with absolute seriousness. Under Section 99 of the Employment Rights Act 1996, selecting an employee for redundancy because of pregnancy, childbirth, or maternity leave is automatically unfair.
In addition, Section 18 of the Equality Act 2010 makes it unlawful to treat an employee unfavourably because of pregnancy or maternity. You do not need two years of continuous service to bring this claim. It is a Day-One statutory right.
Unlike ordinary unfair dismissal, compensation for unlawful discrimination under Section 124 of the Equality Act 2010 is completely uncapped. The standard statutory compensatory award cap of £123,543 does not apply.
| Statutory Feature | Standard Redundancy | Maternity Redundancy |
|---|---|---|
| Tribunal Compensatory Cap | Capped at £123,543 or 52 weeks pay | Completely uncapped (Equality Act s.124) |
| Qualifying Service Required | 2 continuous years of service | 0 days (Day-one statutory protection) |
| Vacancy Priority | Competitive selection permitted | Absolute priority without interview (Reg 10) |
| Injury to Feelings Award | Not available in unfair dismissal | Available under Vento bands (£1,300 to £62,900+) |
| Protected Conversation Secrecy | Covered by Section 111A ERA 1996 | Excluded (Section 111A does not apply) |
| Statutory Pay Protection | Redundancy pay only | Redundancy pay plus ring-fenced SMP |
Vento Bands for Injury to Feelings in 2026
In any pregnancy discrimination claim, you can claim compensation for emotional distress alongside financial loss. Tribunals calculate this using Vento bands, updated by the Ninth Addendum to Presidential Guidance effective 6 April 2026:
Isolated comments or minor administrative oversights during pregnancy.
Maternity redundancy dismissal, sham restructuring, or failure to offer vacancies.
Sustained campaigns of exclusion, severe distress, or retaliatory victimisation.
Catastrophic career destruction or severe documented psychiatric injury.
Most maternity redundancy settlement negotiations benchmark the injury to feelings element against the Middle Band (£12,600 to £37,700).
The Statutory Maternity Pay (SMP) ring-fencing rule
Employers often attempt to roll remaining SMP into a generic settlement figure. This practice is unlawful.
Under Section 164 SSCBA 1992 and Regulation 21 SMP Regs 1986, contracting out of SMP is void. Any clause attempting to waive your statutory maternity pay is legally invalid.
If you qualified for SMP, every remaining week must be paid in full. Your employer must pay this sum on top of any redundancy compensation.
How SMP Qualification Operates on Termination
You qualify for SMP by working in the 15th week before your expected week of childbirth. You must also meet standard statutory earnings thresholds.
Once qualified, your right to all 39 weeks of SMP is locked in. Even if your employment terminates through redundancy or a settlement agreement, your employer must pay the remaining balance.
- First 6 weeks: 90% of your average weekly earnings before tax.
- Remaining 33 weeks: The statutory rate (£187.18 per week in 2026/27) or 90% of your earnings if lower.
Employers Reclaim SMP from HMRC
Your employer can reclaim 92% of your SMP from HMRC, or 103% if they qualify for Small Employers Relief. Because the government reimburses this cost, there is no justification for an employer to deduct or offset SMP against your redundancy compensation.
How maternity settlement payouts are calculated in 2026
A comprehensive maternity redundancy settlement agreement is made up of four distinct financial components. Understanding each part ensures you do not accept an offer below the typical range.
Your instructed solicitor will ensure every element is calculated separately in the written agreement:
1. Statutory Redundancy Pay Baseline
Capped at £751/weekCalculated based on your age, length of service, and weekly pay up to the 2026 statutory cap of £751 per week (SI 2026/310). This amount forms the calculated statutory baseline (subject to eligibility under Section 141 ERA 1996).
Under Section 403 of ITEPA 2003, statutory redundancy pay is 100% tax-free.
2. Ring-Fenced Statutory Maternity Pay
All Remaining WeeksAll remaining weeks of your 39-week SMP entitlement. This cannot be absorbed into termination compensation. It is paid as a distinct statutory line item subject to PAYE and National Insurance.
Your employer must continue paying this via monthly payroll or as an upfront lump sum.
3. Notice Pay (PILON / PENP)
Contractual NoticePayment in Lieu of Notice (PILON) based on your full normal contractual salary, not reduced maternity pay. Under Section 402D of ITEPA 2003, notice pay is taxable under PAYE as Post-Employment Notice Pay.
You should also receive accrued, untaken annual leave paid in full.
4. Ex-Gratia Compensation & Discrimination Premium
Negotiated SumThis represents the true incentive for signing the agreement. It compensates you for loss of office and waiving your uncapped discrimination and automatically unfair dismissal claims.
Often negotiated between 3 and 9 months of gross salary, plus an injury to feelings sum assessed under the Vento bands.
Benchmark your settlement value
Use our independent calculator to benchmark your statutory redundancy, remaining SMP, notice entitlement, and ex-gratia compensation range.
Calculate my settlement estimate →Worked case study: Senior Product Manager on maternity leave
To understand how statutory protections translate into financial figures, consider this realistic 2026 example of an employee facing redundancy while on maternity leave.
Sarah is a 34-year-old Senior Product Manager at a London technology firm. She has 4 continuous years of service and earns £52,000 per year (£1,000 gross per week).
The Dispute Scenario
Four months into her 52-week maternity leave (week 17 of maternity leave), Sarah is informed of a departmental restructuring. Her employer claims her role is redundant.
An open Product Owner vacancy exists in another division. Under Regulation 10, Sarah is entitled to be offered that role automatically without interview. Her employer ignores Regulation 10 and invites her to an off-the-record discussion.
Her employer offers statutory redundancy pay plus 1 month notice, attempting to extinguish her remaining 22 weeks of Statutory Maternity Pay.
| Payment Element | Initial Employer Offer | Negotiated Settlement |
|---|---|---|
| Statutory Redundancy Pay | £3,004 (4 yrs × £751 cap) | £3,004 (Tax-free under s.403) |
| Remaining SMP (22 weeks) | £0 (Attempted waiver) | £4,117.96 (Ring-fenced & paid in full) |
| Contractual Notice Pay (PILON) | £4,333 (1 month only) | £13,000 (Full 3 months contractual notice) |
| Ex-Gratia Loss of Office | £2,000 token offer | £26,996 (Tax-free under s.403 cap) |
| Pre-Termination Injury to Feelings | £0 | £15,000 (100% tax-free under s.406) |
| Legal Fee Contribution | £0 | £1,000 + VAT (Paid by employer to solicitor) |
| Total Financial Package | £9,337 gross | £62,117.96 total settlement |
Key Outcome & Takeaways
By instructing an independent SRA-regulated solicitor, Sarah challenged her employer on the Regulation 10 breach, uncapped discrimination exposure, and invalid SMP waiver.
Her final settlement increased from £9,337 to £62,117.96. Furthermore, £45,000 of the final settlement was structured completely tax-free (£30,000 under s.403 and £15,000 under s.406).
Her employer paid the £1,000 legal fee contribution directly to her solicitor under Section 203(3). Sarah paid nothing out of pocket for her legal representation.
Tax treatment breakdown: Tax-free £30,000 vs taxable SMP
Structuring your settlement agreement correctly can save thousands of pounds in income tax. Under UK tax law, different elements of your package receive completely different tax treatments.
HMRC applies strict rules under the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003). Your agreement must separate each payment clearly:
£30,000 Exemption (s.403)
Under Section 403 of ITEPA 2003, genuine compensation for loss of employment and statutory redundancy pay are tax-free up to £30,000.
Any ex-gratia compensation exceeding £30,000 is subject to income tax at your marginal rate.
Injury to Feelings (s.406)
Under Section 406 of ITEPA 2003, compensation for injury to feelings related to discrimination occurring before termination is completely tax-free.
This sum sits outside the standard £30,000 limit with no ceiling on its tax exemption.
Notice Pay (PENP s.402D)
Payment in Lieu of Notice is classified as Post-Employment Notice Pay. It must be taxed via PAYE with normal income tax and National Insurance deductions.
Notice pay cannot be disguised as tax-free compensation.
Statutory Maternity Pay
SMP is statutory remuneration, not compensation for loss of office. It is subject to income tax and National Insurance deductions as normal.
It must be paid through payroll alongside standard RTI reporting to HMRC.
For an in-depth breakdown of tax calculations, explore our guide on the tax-free £30,000 settlement exemption and our review of PILON tax rules.
Negotiation strategy and Section 111A loss of confidentiality
Employers often attempt to shield settlement proposals by labelling letters as "Section 111A protected conversations" or "without prejudice".
Under UK law, this protection does not apply to maternity disputes. Section 111A(4) of the Employment Rights Act 1996 expressly states that protected conversation rules apply solely to ordinary unfair dismissal claims.
Section 111A does not protect discussions involving pregnancy discrimination or automatically unfair dismissal under Section 99. If your employer tries to push you out during maternity leave, those communications can be cited in open tribunal proceedings.
5 Key Points to Review with Your Independent Solicitor
- Request all terms in writing: Ask for any verbal proposal to be provided in a formal draft settlement agreement.
- Note the ACAS 10-day guideline: ACAS Code of Practice 4 (para 12) recommends a minimum of 10 calendar days as general guidance to consider a settlement proposal, though an employer may set binding deadlines or withdraw an unaccepted offer under English contract law (Routledge v Grant). Consult a solicitor promptly before any deadline expires.
- Review internal vacancies: Check your employer's careers portal and listings for open roles to discuss Regulation 10 priority suitability with your solicitor.
- Confirm ring-fenced SMP: Verify with your solicitor that remaining SMP is explicitly itemised alongside your statutory redundancy and ex-gratia termination compensation.
- Confirm an agreed reference: Discuss attaching an agreed factual written reference schedule and mutual non-derogatory clauses with your solicitor.
For a detailed guide on managing employer conversations, read our overview of protected conversations and without prejudice rules.
Independent legal advice: Your employer covers the fees
Under Section 203(3) ERA 1996, waiving statutory rights requires independent legal advice. You must receive advice from an independent, insured solicitor.
Your employer covers the legal fees. Employers typically contribute between £500 and £1,500 plus VAT towards your legal advice.
Your solicitor invoices your employer directly. They can request higher fee contributions if negotiations are required to resolve Regulation 10 breaches or SMP disputes.
What Your Solicitor Protects
- Verifies that remaining Statutory Maternity Pay is paid in full on top of the settlement sum.
- Checks that your redundancy calculation accurately reflects the £751 weekly statutory cap for 2026.
- Ensures ex-gratia compensation and pre-termination injury to feelings are properly structured for tax relief.
- Inserts comprehensive agreed reference clauses and mutual non-derogation commitments.
- Protects you against aggressive warranties, clawback clauses, or unworkable restrictive covenants.
Learn more about selecting the right legal representative in our guide to employer-recommended solicitors versus independent advisers.
Official independent resources
If you are facing redundancy during pregnancy or maternity leave, you can access free guidance from official UK statutory organisations and charities:
ACAS (Advisory, Conciliation and Arbitration Service)
Free, impartial guidance on maternity rights, redundancy consultations, and early conciliation.
Maternity Action
The UK's leading charity dedicated to promoting and protecting the rights of pregnant women and new parents.
Equality Advisory and Support Service (EASS)
Official government helpline advising individuals on discrimination under the Equality Act 2010.
Legislation.gov.uk
Access original UK statutes including the Protection from Redundancy Act 2023 and SI 2026/310.
Check your maternity settlement offer today
Calculate your statutory redundancy baseline, check your ring-fenced SMP, and connect with an SRA-regulated solicitor. Your employer covers the legal fees.
Frequently asked questions
Can my employer make me redundant while I am on maternity leave?
Yes, but only if a genuine redundancy situation exists and your selection is completely free from discrimination. Under Regulation 10 of the MPLR 1999, you have absolute statutory priority for any suitable alternative vacancy without attending interviews. If a suitable vacancy exists and your employer fails to offer it, your dismissal is automatically unfair under Section 99 ERA 1996.
What is the 18-month redundancy protection window under the 2024 regulations?
Under the Protection from Redundancy (Pregnancy and Family Leave) Act 2023 and the 2024 regulations, your redundancy protection window lasts for 18 months. It starts when you inform your employer of your pregnancy. It continues through maternity leave until 18 months from the expected week of childbirth or your child's actual birth date.
Can my employer include my Statutory Maternity Pay (SMP) inside a settlement sum?
No. Under Section 164 of the Social Security Contributions and Benefits Act 1992 and Regulation 21 of the Statutory Maternity Pay Regulations 1986, contracting out of SMP is legally void. If you qualify for SMP, your employer must pay all remaining weeks of your 39-week entitlement in full on top of any settlement sum.
How much should I receive in a maternity redundancy settlement agreement in 2026?
A fair maternity settlement package includes your statutory redundancy pay (capped at £751 per week from 6 April 2026), full notice pay, all remaining statutory maternity pay, and an ex-gratia compensation sum. Because pregnancy dismissal is automatically unfair and tribunal awards are uncapped under the Equality Act 2010, ex-gratia sums often reflect injury to feelings under the 2026 Vento bands (£1,300 to £62,900+).
Is an employer protected conversation confidential if I am pregnant or on maternity leave?
No. Section 111A of the Employment Rights Act 1996 covers pre-termination discussions only for ordinary unfair dismissal. Under Section 111A(4), confidentiality does not apply to pregnancy and maternity discrimination or automatically unfair dismissal under Section 99. You can refer to these conversations in an employment tribunal claim.
Who pays the solicitor fees for reviewing my maternity settlement agreement?
Your employer covers the legal fees. Under Section 203(3) of the Employment Rights Act 1996, a settlement agreement is only legally valid if you receive advice from an independent, insured solicitor. Employers typically contribute between £500 and £1,500 plus VAT, and your solicitor bills your employer directly.
Related Guides & Calculators
Redundancy Pay Calculator UK 2026
Calculate your statutory redundancy entitlement under the £751 weekly cap.
Discrimination Settlement Agreements UK 2026
Learn how uncapped compensation, injury to feelings, and the 2026 Vento bands work.
Tax-Free Settlement Agreements: The £30,000 Rule
Understand how Section 403 and Section 406 tax exemptions protect your severance.
Settlement Agreement Payouts: How Much Should You Get?
Explore commercial negotiation benchmarks, notice pay rules, and severance ranges.
References and Legislation
- Protection from Redundancy (Pregnancy and Family Leave) Act 2023
- The Maternity Leave, Adoption Leave and Shared Parental Leave (Amendment) Regulations 2024 (SI 2024/265)
- The Maternity and Parental Leave etc. Regulations 1999 (SI 1999/3312), Regulation 10 (Redundancy during maternity leave)
- Employment Rights Act 1996, Section 99 (Dismissal to which section applies - leave for family reasons)
- Equality Act 2010, Section 18 (Pregnancy and maternity discrimination: work cases) & Section 124 (Remedies)
- Social Security Contributions and Benefits Act 1992, Section 164 (Statutory maternity pay - entitlement and liability to pay)
- Statutory Maternity Pay (General) Regulations 1986 (SI 1986/1960), Regulation 21 (Contracting out and void agreements)
- Employment Rights Act 1996, Section 111A (Confidentiality of pre-termination negotiations and exceptions)
- Employment Rights Act 1996, Section 203 (Restrictions on contracting out & valid settlement conditions)
- Income Tax (Earnings and Pensions) Act 2003, Sections 401-403 (Payments connected with termination) & Section 406 (Exception for injury)
- The Employment Rights (Increase of Limits) Order 2026 (SI 2026/310) (£751 statutory weekly cap)
Disclaimer: SettlementCheck is an independent information service and calculator platform, not a law firm. The content on this page is for general information only and does not constitute formal legal advice. Independent legal advice on settlement agreements is reserved for instructed SRA-regulated solicitors. Use our free calculator to evaluate your settlement offer.