19 February 2014
What are the risks for Hong Kong employers when calculating bonuses for employees who have been on maternity leave?
If an employer disentitles an employee or reduces the amount of an employee's bonus due to the employee having taken maternity leave then it may be at risk of a claim for unlawful discrimination.
The key legal considerations in determining if there is unlawful discrimination are as follows:
Is there less favourable treatment on the grounds of the employee's pregnancy?
If ‘yes’ (for example, but for her pregnancy the employee would have been entitled to participate in the bonus scheme), then this is likely to amount to direct discrimination unless an exception applies.
If ‘no’, then has the employer applied a requirement or condition across the board (including to a person who is not pregnant) but:
- which is such that the proportion of persons who are pregnant who can comply with it is considerably smaller than the proportion of persons who are not pregnant who can comply with it;
- which the employer cannot show to be justifiable irrespective of whether or not the person to whom it is applied is pregnant; and
- which is to her detriment because she cannot comply with it.
If a smaller proportion of employees who have taken maternity leave during the bonus year can comply with the bonus criteria, then the employer is at risk of a claim for indirect pregnancy discrimination unless it can show that it is justified in its approach.
All the facts and circumstances need to be considered in assessing the legal position including:
- Is the bonus for past performance or future incentivisation or both?
- What are the conditions or criteria for determining entitlement to and the amount of any bonus? What is the rationale or justification for such conditions or criteria?
- If it is a performance based bonus, how is the employee's performance assessed? Is the period while on maternity leave disregarded?
- What has been the past practice in relation to awards to employees who have taken maternity leave during the bonus year?