With shared parental leave coming into force next year, it remains to be seen how big an impact it will have on SMEs and pay inequality
Maternity leave has been a staple of business for decades now. Providing women the opportunity to take a year’s paid leave following the birth of a child inarguably has a valid and rightful place in the commercial world. However, to say that the system is perfect may be a little naïve. Many believe that problems of wage inequality stem from the very policy that, at its heart, is intended to ease the burden on working women. In that sense, recent and forthcoming changes to parental leave legislation in the UK should only be welcomed.
It’s worth noting first of all that working fathers have been entitled to additional paternity leave (APL) since April 2011, allowing them to take up to 26 weeks of paid leave depending on when their partner returns to work. But things have now been taken one step further. The Children and Families Bill, published in February 2013, has paved the way for the introduction of shared parental leave, which is set to come into force on April 5 next year. The new regulations state that, following a mother’s two weeks’ obligatory leave post-childbirth, parents can share the remaining 50 weeks, with an option to each take 25 weeks at the same time, as opposed to back-to-back. Alternatively, they can take shorter periods of shared leave within the 50 weeks, with the remaining weeks taken by either parent.
As far as the intention of the legislation is concerned, one would struggle to find a fault. “It certainly shows that the government is moving in the right direction,” says Aaron Hayward, solicitor at Douglas-Jones Mercer, the law firm. “It has recognised the vital importance of women to businesses in the UK and the need to offer them flexibility in order to return to work if they so wish. It will enable both parents to retain a link with the labour market and really allow more fathers to play a greater caring role.”
But the implications of shared paternity leave for businesses are quite telling, especially given that APL has been relatively unpopular up until now. “To-date, additional paternity leave has been relatively small in take-up,” says Hayward. “Businesses have therefore not had to cope with both their female and male workers potentially taking long absences. Planning-wise, they’ve only looked at the mothers but going forward they’re going to have keep in mind the fact that both the fathers and the mothers can take long absences.”
Even more telling is the effect the changes could have on start-ups. “Obviously having a number of staff – male or female – off work for an extended period is going to have far more impact on a small business of five employees than one that has 500 employees where the cover is going to be far more readily available,” says Hayward. “Especially in small businesses and start-ups you see a lot of partners working together as employees. So if partners can take their time off together, a small business could find itself without two key workers for a fairly significant time.”
Whilst it may sound as though the legislation is weighed in favour of employees, there remains plenty of protection for employers. First and foremost, in order to qualify for leave, an employee must have had 26 weeks’ continuous employment at the 15th week before the expected week of childbirth (EWC). Moreover, within the 52-week period, employees will need to give at least eight weeks’ notice of any leave that they’ll be taking, which should allow employers sufficient time to plan for that period of absence.
And as with any maternity and paternity leave, notice must also be given at end of the 15th week before childbirth. Should an employee change their mind about when they wish to take a period of shared parental leave, they can give notice on no more than three occasions. Employers also have the right to refuse an employee’s request for separate periods of leave; a right that they don’t possess in regards to one continuous stretch of leave. Hayward sounds a note of caution here though. “Whilst this can be refused by the employer, if it appears the business has a policy for refusing such requests, there could be potential discrimination issues.”
He also warns employers against complacency when it comes to planning for April 5 next year “Whilst it is commonly stated that it’s not coming in until April 5, this is based on the expected week of childbirth or adoption,” says Hayward. “If a child is born prematurely, parents could potentially qualify for shared parental leave earlier. Employers therefore shouldn’t just think ‘we’ve got until April’ because potentially it could be far sooner.”
With the guidance still to be issued on the regulations, Hayward hopes that a bit more clarity will be forthcoming in the next few months. “The common consensus, especially among small businesses and start-ups, is that employment legislation seems to be changing on a fairly frequent basis at the moment,” he says. “This particular piece of legislation is viewed by many as over complicated so hopefully the guidance will offer them some help and bring a bit of stability to businesses.”
It remains to be seen how much of a difference shared parental leave will make to the pay equality situation in the UK. The government has said there will be a new statutory payment for parents on shared parental leave with the same qualifying requirements that currently apply to statutory maternity and paternity pay. A number of surveys have found a large proportion of men saying they probably wouldn’t consider shared parental leave, with many citing pay as the principal reason. “Basically, if a business pays over the statutory minimum for maternity leave, they are not going to be required to match that by way of shared parental leave,” says Hayward. “As such, it may still be more financially beneficial for the mother to take maternity leave. The question therefore remains as to whether this is really going to have the effect that is intended”.
This isn’t to say SMEs shouldn’t be preparing ahead of time though. “They’d be well advised to begin organising their workforce and planning for absences as soon as possible,” Hayward concludes.