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The main problem she may have is that the business isn't required to comply with the FMLA since they employ less than 50 people.

Actually, it's in the UK, so even if the business had 50 people, it wouldn't be required to comply.

Additionally, Federal FMLA does not require paid leave - only up to 12 weeks of unpaid leave, with the requirement that an equivalent job be offered upon return. (Some states may supercede the Federal regulations with requirements for paid leave.)

In this case, since the OP's colleague does not wish to continue to work in the office, but rather wishes to work at home, it's not necessarily an 'equivalent' job. So even if the OP's colleague were in the US, working for a company with over 50 employees, FMLA still would not provide any requirement for the company to allow the OP's colleague to work at home. So rather than saying that the company doesn't want to employ the OP's colleague after she finishes maternity leave, I would say that the OP's colleague doesn't wish to continue employment subject to the same conditions that she was hired under.

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