Lost labour

Upcoming changes to the statutory parental leave system could leave employers facing some tricky decisions, says Suzanne Horne

On 30 September the ­Government announced, among other things, that it would launch a consultation later in the year looking at the design of a new system of flexible parental leave.

Employment relations ­minister Ed Davey described the plans to come as “much more ambitious”. In the meantime, additional paternity legislation is retained as part of interim measures.

For readers who are not employment lawyers, at present employed fathers – including the partners or civil partners of children’s mothers – are entitled to two weeks’ statutory paternity leave (SPL) paid at the rate of £124.88 per week. However, the additional paternity legislation already in force means employed fathers with children due on or after 3 April 2011 will be entitled to receive up to six months’ additional ­paternity leave (APL), which can be taken once the mother has returned to work. Some of the leave may be paid if taken during the ­mother’s maternity pay period. This is known as additional paternity pay (APP).

So what is the impact of the additional paternity legislation? There will be the inevitable direct costs: the employer can only recover 92 per cent of the cost of the APP through HM Revenue & Customs, thus bearing the differential; and there will be costs involved in implementing and administering the legislation on an ongoing basis.

But there are also indirect costs, such as the cost of obtaining absence cover. ­Certainly, if work is reallocated and the team is already overstretched, this could lead to tensions and low morale. At worst, it could lead to health and safety issues.

More for longer?

But more interesting are the policy ­implications of the change. Employers that already operate enhanced maternity and paternity pay schemes face a dilemma. At present they can only recover the statutory element of the enhanced paternity pay, but this is limited to the two-week SPL period. Are they now under a legal obligation to extend this enhanced pay? The ­Government says no, but is this correct?

Employers who operate enhanced ­maternity pay schemes will have to consider if male employees are, or should also be, entitled to equally enhanced rights of pay – and if not, why not?

There is undoubtedly scope for challenge under the Equality Act 2010 and the EU Equal Treatment Directive. Indeed, this is more likely as a result of the European Court of Justice’s (ECJ) recent decision in Roca Álvarez v Sesa Start España (2010).

Given the similarities with maternity ­legislation, we are also likely to see ­employers wrestling with the problematic issues of pay rises, bonuses and pensions.

There may also be an unforeseen ­consequence. Employers may have to decide whether it should be mum or dad who takes priority. Take the issue of redundancy. Both the maternity and additional paternity ­legislation provide that, in the event of a redundancy situation where there is a ­suitable vacancy, the ’leave-taker’ is ­entitled to be offered the role. But what if there is only one job? The employer will have to make a tough choice with regard to whose statutory rights are more important.

Despite these planned changes, there are a few stark realities when it comes to the exercise of any statutory right. How likely is it that fathers will really exercise their right to additional paternity leave? The ­Government estimates that take-up in 2011-12 will be between 4 and 8 per cent of eligible fathers. This figure appears quite low, but an Equality and Human Rights Commission survey last year reported that 88 per cent said they would have liked to, but nearly half could not afford to do so. Affordability, therefore, may make equal treatment the key issue.

However, there is also the issue of ­perception. Fathers taking their statutory rights could perceive it as harmful to their careers and, let’s face it, this may be ­accurate. A woman’s absence from the ­workplace on maternity leave is thought by most researchers to be a factor in the gender pay gap. It is possible that a man’s absence could have the same detrimental impact.

A new approach

While we wait for details of the Government’s plans, it is clear it has picked up on a trend in many European jurisdictions. This is a move away from the traditional concept of maternity leave and benefits that are birth-related, and towards a generic parental leave and benefit entitlement ­available equally to men and women.

This change is further endorsed by the decisions of the ECJ in Roca Álvarez and the European Court of Human Rights in ­Konstantin Markin v Russia (2010). ­Therefore, we could be in for some radical developments, both for the profession and our clients.

Perhaps the absence of men and women from the workplace for childcare responsibilities may help to bring about a change in attitude to all parents in the workplace. If not, the unveiling of the Government’s plans could mean we ain’t seen nothing yet.

Suzanne Horne is of counsel at Morrison & Foerster