Are businesses obliged to enhance shared parental leave pay?

This article was first published in Reward Strategy Magazine.

Shared parental leave (“SPL”), which allows parents to take leave in the first year of their child’s life (or after their child’s adoption), subject to notification and eligibility requirements, was introduced in April 2015. Since then, many businesses have been concerned about discrimination claims if they pay enhanced maternity pay to their female staff but do not enhance pay for SPL. Three years on, what is the legal position?

When SPL was introduced, the Government reassured businesses that SPL would not create further hardships and red tape by stating that there was no obligation to enhance pay for SPL even if maternity leave pay was enhanced. However, does this mean a risk of very expensive and PR-damaging discrimination claims pursuant to the Equality Act 2010? Some employers, unable or reluctant to enhance SPL pay, withdrew all forms of enhanced pay to ensure equality of treatment for all staff. Following claims from concerned employees who did not receive enhanced pay for SPL when maternity leave pay was enhanced, the courts have now considered whether such a policy is discriminatory.

Is failing to offer male employees enhanced SPL pay direct sex discrimination if women are offered enhanced maternity pay?

No, said the Employment Appeal Tribunal (“EAT) in Capita Customer Management Ltd v Ali.

Mr Ali asked to be paid during SPL at the same enhanced rate as women on maternity leave, which his employer refused. The Employment Tribunal  found in his favour, stating that a man on SPL could compare himself with a woman on maternity leave, and if a woman on maternity leave received enhanced pay then failing to offer enhanced pay to staff on SPL could amount to direct sex discrimination. The EAT disagreed. It held that the purpose of the leave is of crucial importance. Maternity leave protects the health and well-being of the mother, whereas SPL facilitates the care of the child. There would only be a valid claim if a woman on SPL had been treated more favourably than a man on SPL. As both men and women on SPL would be paid statutory pay there was no difference in treatment and the claim failed.

This decision offers some comfort to employers, but the EAT has left the door open for potential future claims. It acknowledged the possibility that, when ordinary maternity leave ends (after 26 weeks) the purpose of maternity leave may change from recovery from childbirth, and the special bonding period between mother and child, to parenting. Therefore it may be possible to compare a man on SPL and a woman in the latter stage of her maternity leave given that the purpose of both types of leave would be to care for the child. Accordingly, there may still be future claims on this issue.

Does failing to offer male employees enhanced pay for SPL amount to indirect sex discrimination?

Possibly. We still await clarity from the courts as to whether staff taking SPL may have a valid claim for indirect sex discrimination if they are not offered enhanced pay whereas women on maternity leave are. The Employment Tribunal indicated that such treatment would not amount to either direct or indirect sex discrimination in Hextall v Chief Constable of Leicestershire Police. Mr Hextall complained that by only receiving statutory pay whilst on SPL, he had been treated less favourably than his female colleagues on maternity leave, who received enhanced pay. The Employment Tribunal held that the appropriate comparator was a woman on SPL and not a woman on maternity leave. On appeal, the EAT remitted the case back to a new Employment Tribunal to make findings of fact which were originally omitted and the issue was whether failing to enhance pay for SPL could be indirectly discriminatory against men because they did not have the choice that mothers had to remain on higher rates of maternity pay or to opt in to SPL. Watch this space to see what a different Employment Tribunal decides.

What should employers do now?

As the law stands there is no legal obligation to enhance SPL pay to the same extent that maternity pay is enhanced. Many businesses are adopting a “wait and see” approach to see how this area develops before also offering enhanced pay for SPL. Following these decisions, it will be business as usual for most employers, though they still need to be alert to the risk of possible discrimination claims.

Key points

1. Check if your business offers enhanced pay for some or all types of family-related leave and watch out for further rulings in this area.
2. Consider whether enhanced pay can lawfully be justified as against non-enhanced pay (costs savings alone would not defeat a potential claim for indirect sex discrimination).
3. Seek legal advice on the potential for future SPL claims. Any proposals to enhance SPL pay must be planned carefully to avoid other discrimination claims.