Legal

What will new paternity leave proposals mean for business?

13 Aug 2019 By Sarah King

Government plans to introduce 12 weeks of leave for new fathers aim to reduce the UK’s gender pay gap, says Sarah King 

Many viewed Theresa May’s proposals on paternity leave – made before she left office in July – as part of a wider effort to salvage her prime ministerial legacy. The plans suggested that the first four weeks of paternity leave would be paid at 90 per cent of normal salary. An additional eight weeks’ paternity leave would be unpaid. This is intended to reduce the gender pay gap by encouraging increased sharing of parental responsibilities, and enabling women to return to work sooner.

It is a commendable policy. At present, fathers receive just two weeks’ paid paternity leave at the lower of 90 per cent of their salary or the SPP rate. May’s policy would double the period of paid paternity leave and significantly increase paternity pay for most employees. 

ONS figures for 2018 show that the gender pay gap reduced to 8.6 per cent for full-time employees – down 0.5 per cent from 2017, when Mrs May announced her drive to tackle the gender pay gap. However, the gap among all employees is 17.9 per cent. 

A cap on the proposed paternity pay is reportedly now being considered for those earning more than £100,000, to reduce the costs to businesses. Such a cap seems unnecessary and unjust. It would primarily assist city firms and investment banks – the very companies that can afford to pay for paternity leave. But it would not help small businesses, where the greatest burden of the new policy is likely to fall. 

Furthermore, a cap may be open to challenge on the grounds of being discriminatory on the grounds of sex, since maternity pay is not capped on the grounds of earnings. Current case law has unsuccessfully challenged the inequity of paternity pay compared to maternity leave. 

Past experience also suggests that the uptake of the unpaid element of new paternity leave rights may be very limited. Statutory shared parental leave is already available for fathers, intended parents, adoptive parents or the mother’s partner. However, it’s estimated that as little as 2 per cent of those who are eligible use the scheme.

The 2015 shared parental leave scheme enables parents of a new baby to share 50 weeks of parental leave, less the period that the mother has spent on maternity leave. Parents may also share up to 37 weeks of paid parental leave, less any period of paid maternity already taken. In theory, this enables parents to share the responsibilities of the maternity leave period. 

Parents may also take 18 weeks' ordinary parental leave for each of their children before the child turns 18. The annual limit per parent is four weeks for each child, but employers can agree to allow more. Employers can postpone parental leave by up to six months where they can show it would cause significant disruption to the business.

As it stands, fathers get two weeks paid paternity leave, but are also entitled to 50 weeks shared parental leave, together with four weeks ordinary parental leave. Yet relatively few fathers avail themselves of these rights. It therefore seems unlikely that the unpaid eight weeks of the new paternity leave scheme would be taken up by most fathers, particularly since during the maternity period mothers are typically on reduced pay. 

Most families would struggle to pay the bills with one earner on maternity leave and the other unpaid. This may also be the case even for higher earners, since higher incomes can lead to higher outgoings.

Certainly, the uptake of unpaid shared parental leave has been very low. This may be partly down to the notoriously complex parental leave scheme. Hopefully, the new paternity scheme will be simpler to understand and to administer. That may help increase the uptake of paternity leave, and so further reduce the UK’s gender pay gap.

Sarah King is an employment solicitor at Excello Law

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