Since the introduction of shared parental leave (SPL) in 2015, employers have been grappling with the tricky question of whether or not they are required to enhance SPL pay where they offer enhanced maternity pay.
Despite Government technical guidance stating that there is no legal obligation to match enhanced rates of maternity pay for parents taking SPL, many commentators suggested that failing to do so may ultimately result in successful discrimination claims by men.
Employers have been faced with the option of either enhancing SPL pay and absorbing the extra cost to the business or reducing their maternity benefits, neither of which are particularly attractive options. Many employers, therefore, have adopted a ‘wait and see’ approach, leaving in place enhanced maternity pay policies and statutory rates of SPL pay.
These policies have led to many prospective fathers being faced with the difficult decision of wanting to take shared parental leave but, by doing so, knowing their family will be financially worse off than if the mother-to-be took maternity leave.
Two recent cases have considered whether this practice by employers constitutes sex discrimination and their judgements have resulted in some helpful clarification, if not absolute certainty, on the lawfulness of this approach. The judgements in Capita v Ali, and in Hextall v Chief Constable of Leicestershire Police, all but closed the door on any claims of direct sex discrimination. However, the validity of a claim for indirect sex discrimination was not determined and, in the Hextall case, this issue has been remitted to the employment tribunal for re-consideration.
As the law stands, therefore, there remains no legal obligation for employers to enhance their SPL pay to the same extent that maternity pay is enhanced, but whether this approach is indirectly discriminatory is yet to be determined.
Should it be determined that failing to pay similar rates of maternity pay and SPL pay is indirectly discriminatory, affected employers will be open to discrimination claims primarily by their male employees. While it will then be open to the employer to objectively justify the difference in treatment, it may be difficult to do so in practice. Previous cases have indicated that employers will not be able to rely on cost alone as a reason for the continuation of otherwise unlawful discrimination.
Prudent employers will therefore be taking a step back and reconsidering the wider rationale behind these practices.
The most common justification for offering enhanced maternity pay is that it helps tackle the issue of gender inequality in the workplace by encouraging women to return to work after having a child. Some employers, however, are now considering alternative, gender neutral, approaches to achieve this aim. These may include:
increasing the ability for employees to work flexibly and part-time; and
building a gender-diverse organisation through campaigns and initiatives designed to challenge assumptions around childcare responsibilities.
SPL was first introduced, in part, to address the gender imbalance of men and women taking parental leave. The latest figures released by the Department for Business, Innovations and Skills, however, show that less than 2% of eligible couples currently make use of SPL. Although cultural stigma and workplace norms are contributory factors for this low uptake, the financial detriment that many couples would face if they chose statutory SPL pay instead of enhanced maternity pay, has undoubtedly had a significant impact on parental leave decisions around the country.
At a time when tackling gender inequality in their workplace is of greater importance than ever to businesses, following the introduction of an annual obligation on larger employers to report their gender pay gap statistics, an enlightened approach to SPL could pay dividends by helping to tackle the indirect reasons whereby women have tended to fall behind their average male colleague in the career stakes.
By introducing policies that go beyond the legal minimum now and removing the disparity between enhanced maternity and shared parental pay, employers can avoid the murky waters of this uncertain area of law, as well as encourage workplace gender equality by adjusting traditionally female weighted parental leave provisions and attitudes. Employers might also find that such policies are another way of recruiting the best talent.
Mark Hamilton is a partner and George Fellows is a trainee at Dentons