Guide

Paternity leave and pay

Contractual issues during paternity leave

An employee's contract of employment continues throughout paternity leave unless either you or the employee expressly ends it or it expires.

Terms and conditions during paternity leave

During paternity leave an employee has a statutory right to continue to benefit from all the terms and conditions of employment which would have applied to them had they been at work, except for the terms relating to wages or salary (unless their contract provides otherwise).

Examples of contractual terms and conditions that continue during paternity leave include:

  • gym membership
  • participation in share schemes
  • reimbursement of professional subscriptions
  • the use of a company car or mobile phone (unless provided for business use only)

Continuous employment and paternity leave

Paternity leave doesn't break continuity of employment.

Similarly, paternity leave counts towards an employee's period of continuous employment for the purposes of entitlement to other statutory employment rights, eg the right to a redundancy payment.

It also counts towards assessing seniority and personal length-of-service payments, such as pay increments, under the contract of employment.

Accrual of annual leave

An employee continues to accrue statutory - and any contractual - annual leave entitlement throughout paternity leave.

An employee may not take annual leave during paternity leave - but may take it immediately before or after paternity leave.

Contributions to a pension scheme

While your employee is on paternity leave, you should calculate employer contributions to their pension scheme as if they are working normally and receiving normal pay for doing so. This is regardless of whether or not the employee is receiving ordinary statutory and/or enhanced paternity pay.

If the rules require employee contributions to continue during paternity leave, the employee's contributions should be based on the amount of ordinary statutory and/or contractual paternity pay they are receiving.

Employee contributions will therefore stop if the employee is not receiving any paternity pay - but the pension scheme rules may still allow them to make voluntary contributions.

See know your legal obligations on pensions.