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Is shared parental pay another pay time bomb?

04 September 2014 #Employment


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The Shared Parental Leave Regulations 2014 come into force on 1 December 2014 and apply in respect of babies expected to be born on or after 5 April 2015. A key issue for employers to consider, particularly those who pay more than the statutory minimum amount of maternity pay, is what rate of shared parental leave to pay?

Statutory shared parental pay will be available for up to 39 weeks (as with statutory maternity pay), reduced by the number of weeks of statutory maternity pay taken by the mother. However, it will be paid only at the same flat rate as the lower rate of maternity pay, currently £138.18 per week. Plus, only the mother can take the initial six weeks of leave at 90 per cent of her weekly earnings.

Hence, shared parental leave will overlap with a mother`s right to take maternity leave. It will , however, replace the right to additional paternity leave introduced by the coalition government in 2011, and which also has a current statutory rate of pay of £138.18 per week. Under that scheme, employees are able take up to 26 weeks` leave to care for their child once the mother has returned to work from statutory maternity or adoption leave, or ended her entitlement. Fewer than one in 50 new fathers are using their right to extra paid time off if their partner goes back to work after having a baby, according to a BBC news report

To qualify for shared parental leave, both parents need to have at least 26 weeks` service with their current employer and earn at least the minimum threshold needed to qualify for maternity allowance. Qualifying  parents of a child (including adoptive parents) can then decide how to divide a total of 52 weeks of leave between them.

So, that covers the statutory position. Both statutory maternity pay and shared parental pay will be paid at the same flat rate.

However, if, as an employer, you pay enhanced maternity pay, ie pay higher than the statutory rate and/or paid for longer than the statutory period, what rate of shared parental pay will you pay? Employers are perhaps likely to want to pay a woman on shared parental leave the same rate of pay as a woman on maternity leave. However, that raises issues as to what rate of pay a man on shared parental leave should be paid? Can an employer pay enhanced maternity pay and/or enhanced shared parental pay to a woman but pay only the statutory rate of shared parental pay to a man? There is a clear discrimination law issue there.

In a case reported this week, Shuter v Ford Motor Company, a  tribunal has given judgment in a sex discrimination claim brought by a male engineer at Ford who claimed he was unfairly financially disadvantaged during his five-month additional paternity leave period. Although the two weeks’ ordinary paternity leave is paid at male employees’ full basic pay, under Ford’s paternity leave policy additional paternity leave is paid only at the statutory minimum. The claimant maintained that in comparison to female colleagues, he had suffered financial loss as under the company’s maternity leave policy, female employees are paid 100 per cent of basic pay for up to one year.

However, the employment tribunal accepted Ford’s evidence that its policies are part of a long-term plan to recruit and retain more women, who are under-represented in its workforce. It was able also to provide the tribunal with evidence, including statistical evidence, supporting its case that it needed to increase female representation in its workforce. One of the ways for the company to do this was to offer female staff generous maternity pay. Ford’s workforce in the relevant part of the business was just 6.2% female in 1999, rising to 8.9% by 2013.

Personnel Today also report that most employers do not know whether or not they should enhance shared parental pay. Employers may have very long established enhanced maternity pay provisions but as shared parental leave and pay comes into use, male employees are more likely to compare their shared parental pay with a female colleague’s enhanced maternity pay. One simple answer is to enhance shared parental pay, for both men and women, to the same rate as enhanced maternity pay. However, such a measure could come at a huge cost, depending on the gender profile of the workforce.

Seeking to scale back enhanced maternity pay provisions to accommodate shared parental pay may be another option, but likely to be fraught.

Perhaps the Ford case may provide guidance to employers seeking to justify paying female employees enhanced maternity pay but only statutory parental pay to male employees. However, in that case, the workforce was overwhelmingly male. The difficulty seems to lie where the gender profile of a workforce is more balanced.

According to a Norton Rose Fulbright survey published in April this year, 46 per cent of employers surveyed said that they would comply only with their statutory obligation to pay maternity pay and shared parental pay. Notably, 30 per cent said they would continue to pay enhanced maternity pay whilst only offering statutory shared parental pay.

The government’s line seems to be that the new shared parental pay provisions should not be affected by any enhanced maternity pay scheme, on the basis that maternity leave is a protected period by law, whereas there is no underlying legal obligation for to provide for shared parental leave and pay. However, the concern remains as to whether that is legally correct and how well enhanced maternity pay schemes will stand up from discrimination and possibly contractual challenges from male employees.

We are interested in hearing from employmentbuddy readers as to how this issue will impact their organisation.

Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at employmentunit@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.

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