UK: Should Employers Match Enhanced Maternity Pay Under Shared Paternal Leave?

April 2015 saw the reshaping of family-friendly leave with the birth of Shared Parental Leave (ShPL). A mother can elect to curtail their maternity leave period two weeks after giving birth. She can then elect to convert the unused portion of that leave, so that up to 50 weeks' statutory leave and 37 weeks' statutory pay can be shared between both parents. BUT can employers offer enhanced contractual maternity pay to mothers for those 50 weeks, but only statutory shared parental pay to fathers?

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The baby elephant in the room

Whether an employer, who fails to match maternity pay enhancements, will face a successful discrimination claim from a man on ShPL has been the elephant in the room for some time. There is no express obligation on employers in the voluminous Shared Parental Leave legislation to match enhanced contractual maternity pay. But the question remains whether employers might be obliged to do so under the Equality Act 2010 in order to avoid discrimination claims from men on ShPL receiving less pay than women on maternity leave.

We now have the first Employment Tribunal decision on this question. It finds that the employer did directly discriminate against a male employee when it offered enhanced contractual maternity leave pay to female employees but only offered him statutory ShPL pay. The Tribunal accepted that the disparity was founded on an assumption that mothers are best placed to undertake caring for a baby, but that assumption was no longer valid in today's society.

Employment tribunal decisions are 'non-binding' and as such do not set a precedent that future tribunals must follow. Nevertheless, it may be persuasive and an indication of the direction for such claims in the future.

Here our employment and equalities experts consider the impact for employers of the potentially ground-breaking case of Ali v Capita Customer Management Limited and the baby elephant in the room - at what point is maternity leave no longer designed to protect a woman's biological condition following pregnancy, or the special relationship between mother and baby, and instead becomes akin to childcare.

Shared parental leave & enhanced contractual pay - a quick recap

Shared parental leave (ShPL) is designed to encourage:

  • Sharing of "family" leave between working parents.

    In very broad terms, mothers and adopters can choose to curtail maternity and adoption leave to opt in to shared parental leave. This doesn't replace existing maternity and adoption leave rights. Instead it enables mothers/adopters to elect to convert a portion of that leave, meaning up to 50 weeks' leave and 37 weeks' pay can be shared between both parents (the first two weeks immediately following the birth/placement for adoption cannot be converted); and
  • Flexibility for when the leave is taken.

    Parents can apply for continuous or discontinuous periods of leave which they can take at the same time or separately up to the child's first birthday/anniversary of placement.

The default position in relation to ShPL Pay is that it is paid at the flat statutory rate - currently £140.98 per week. Some employers offer contractual shared parental leave pay that is more favourable than the basic statutory entitlements. What is clear even before this decision, is that an employer cannot offer enhanced contractual shared parental pay to mothers only. If an employer chooses to offer enhanced contractual shared parental pay it must offer it to both mothers/primary adopters and fathers/mothers or primary adopters' partners.

But - and this is the big question - what is the position for employers who offer enhanced contractual maternity pay for women but statutory ShPL for men and women?

The Government's view is that there is no legal requirement for employers to offer corresponding enhancements to shared parental pay. Employers are free to offer more generous enhanced arrangements if they wish, but are not obliged to do so (the 'Employer's Technical Guide to Shared Parental Leave and Pay' September 2014). But this is simply the Government's view. It has now been tested.

Why the uncertainty?

Under section13(6)(b) of the Equality Act 2010, when a man is looking to establish less favourable treatment for the purpose of a sex discrimination claim, 'no account is to be taken of special treatment afforded to a woman in connection with pregnancy and childbirth'.

The introduction of ShPL, allowing for conversion of maternity leave to ShPL after only two weeks, increases the focus on whether there comes a point in time when maternity leave is no longer designed to protect a woman's biological condition following pregnancy, or the special relationship between mother and baby. Instead, it becomes childcare, in that the woman is taking leave to look after the child, something that men are similarly well placed to do.

Enter the case of Mr Ali

Recently, in Ali v Capita Customer Management Limited, an Employment Tribunal found the Government's view that there is no legal obligation on employers to match enhanced contractual maternity pay for those taking ShPL to be wrong. It has held that an employer directly discriminated against a male employee in only offering statutory pay if he took shared parental leave, whereas female colleagues taking maternity leave were entitled to enhanced contractual maternity pay.

In this case, following the birth of his daughter, Mr Ali took two weeks' paternity leave for which he received his full pay to which he was entitled to under his contractual terms. As his wife suffered from post-natal depression she wished, on medical advice, to return to work after taking the two weeks compulsory maternity leave. Mr and Mrs Ali therefore wished to convert the remaining 50 weeks of her maternity leave to ShPL as he was better placed to care for their new daughter. However, as Mr Ali's employer would only provide statutory pay he was unable to take that option for financial reasons. He complained this was discriminatory in that his female colleagues would have been contractually entitled to full pay not only for two weeks, but also for an additional 12 weeks. He subsequently brought claims for both direct and indirect discrimination.

The Employment Tribunal found the employer had directly discriminated against Mr Ali stating:

"It was not clear why any exclusivity should apply beyond the 2 weeks after the birth. In 2016, men are being encouraged to play a greater role in caring for their babies. Whether that happens in practice is a matter of choice for the parents depending on their personal circumstances but the choice made should be free of generalised assumptions that the mother is always best placed to undertake that role and should get the full pay because of that assumed exclusivity."

A feature of this case is that Mr Ali did not formally submit an application or take ShPL. The mere fact that he was deterred from taking ShPL due to the pay policy was sufficient to establish liability for discriminatory treatment, though it will be a factor relevant at a subsequent remedies hearing.

In addition, the Tribunal rejected the contention that the issue was one of indirect discrimination. The Tribunal found the contractual maternity pay policy itself was gender specific and so the claim was properly one of direct discrimination. This is significant in that there was no possibility of the employer being able to objectively justify the policy - it is not possible to objectively justify direct sex discrimination.

What does this mean for employers?

Employment tribunals are 'non-binding' and as such do not set a precedent that future tribunals must follow. Nevertheless, it may be persuasive, indicating how tribunals are likely to treat such claims in the future.

There are some areas where the reasoning of the Tribunal is clearly questionable. For instance, in finding that Mr Ali was able to compare himself with a female colleague taking maternity leave, it held that after the two week period of compulsory maternity leave, the special protection afforded under section13(6)(b) of the Equality Act 2010 ceases to exist. But they appear to have based that conclusion, at least in part, on an incorrect understanding of the law. The Tribunal repeatedly state that the special protection is limited to the two week compulsory maternity period, as in adoption situations there is "no two week period...so [ShPL] can start immediately upon adoption". The Tribunal does not address regulation 10(2)(b) of the not so snappily named Maternity and Adoption Leave (Curtailment of Statutory Rights to Leave) Regulations 2014. Under regulation 10(2)(b) it is not possible for the primary adopter to curtail the first two weeks of Ordinary Adoption Leave. Despite this oversight, the Tribunal is correct that a primary adopter can be either a woman or a man.

In 2014 a similar claim was rejected by a tribunal in Shuter v Ford Motor Co Ltd regarding Additional Paternity Leave (APL) and pay - the forerunner to ShPL - which enabled mothers to curtail their maternity leave/pay period after 20 weeks from the date of birth and transfer the balance to the father/mother's partner. In that case the male employee argued that the introduction of APL reflected Parliament's view that, after 20 weeks, maternity leave is no longer aimed at protecting the mother but at facilitating childcare, which can be undertaken by either parent. However, the tribunal disagreed. In its view, the purpose of maternity leave did not change. In any event, such a claim would be one of indirect discrimination and as such could be justified in light of evidence that the employer was pursuing a legitimate aim of attracting and retaining women in a male dominated workforce. The tribunal in the case of Mr Ali did not refer to the Shuter case.

Protecting a woman's biological condition following pregnancy or child care? The debate

Despite the question mark over some of the Tribunal's reasoning in Mr Ali's case, arguably there comes a point in time when maternity leave is no longer designed to protect a woman's biological condition following pregnancy, or the special relationship between mother and baby. Instead, it becomes more akin to childcare.

Following the introduction of ShPL and its forerunner APL, does the fact that women can transfer leave to the father in the first place mean that the leave is no longer aimed at protecting the mother's health and safety after childbirth? In respect of ShPL, this would be the case in respect of the whole period of maternity leave other than the first two weeks after childbirth?

In an era of changing traditional gender roles with more men wanting to take an active role in child-rearing from an early age, it is difficult to regard the whole of the woman's 52 week maternity leave period as designed to protect a woman's biological condition or the special relationship she has with the child, especially in the latter part of the 52 week maternity leave period. However, where the precise cut-off point is may still be up for debate:

  • Is it the point at which a woman can elect to curtail maternity and transfer leave to the father by way of ShPL- so two weeks after birth?
  • Would a six week period be more appropriate to reflect the period for which the higher rate of statutory maternity/adoption pay applies? If the tribunal in the case of Mr Ali is correct, presumably the differences in the statutory rates is also liable to challenge?
  • Would a 14 week period be more appropriate as under the Pregnant Workers Directive, where women must be granted the ability to take a minimum period of maternity leave of at least 14 weeks (though only two weeks is compulsory)?

Unsurprisingly, Capita Customer Management is seeking permission to appeal to the Employment Appeal Tribunal (PA-239/2017).

What should employers consider now?

We await appellate level binding judicial guidance on this debate which has significant cost implications for many employers. In the meantime, employers should

  • Ensure shared parental pay policies treat mothers/primary adopters and fathers/mothers' or primary adopters' partners equally (see our earlier alert Shared parental leave: the curious case of Mr and Mrs Snell).
  • Consider whether to offer enhanced shared parental pay which mirrors any enhanced maternity pay policy. While this is still a 'grey' area, pending the appeal, ask yourself:

    • Will enhanced ShPL pay assist in attracting and retaining talent in your organisation?
    • What are the potential discrimination risks if you offer enhanced maternity pay but not enhanced ShPL pay?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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