The introduction of shared parental leave (SPL) in 2015 was big news at the time. The regulations were hailed by many as progressive, designed to give parents more choice regarding their childcare arrangements and enabling mothers to return to work sooner, while allowing their partners to be involved in their child's early years care.
Many studies published at that time emphasised the benefits that SPL could bestow upon employers, ranging from talent attraction and retention to improved financial results and the narrowing of the gender pay gap.
Despite the aim of the policy being to promote equality among parents, an overwhelming majority of businesses chose to offer only statutory shared parental pay (SPP). This left many parents in the tricky position of having to choose between maternity leave often paid at an enhanced rate and SPL paid at statutory rate or unpaid. As a result, the uptake was low. In 2019, only 2 per cent of eligible couples made use of the scheme, according to research by EMW based on HMRC figures.
Discrimination and SPP
Since 2015, a number of employees have sought to argue that it is discriminatory for employers to enhance maternity pay while not doing the same for SPP. This created uncertainty and concern for many employers. However, the Employment Appeal Tribunal (EAT) has now considered the position and employers are able to breathe a sigh of relief – for the time being.
In its ruling in Price v Powys County Council, handed down in March this year, the EAT determined that it will not constitute direct sex discrimination for an employer to pay an employee on SPL a lower rate of pay than an employee on adoption or maternity leave.
Mr Price, who had sought to take a period of SPL following the birth of his child, alleged that his employer's policy, which offered enhanced rates of maternity and adoption pay but only offered the statutory minimum to those on SPL, amounted to direct sex discrimination. His claim failed. The EAT held there were several material differences between SPL and both adoption and maternity leave and, as a result, his claim could not succeed. The correct comparator for Price was not a female employee on maternity or adoption leave, but a female employee on SPL. Under his employer's policy, a female employee on SPL would have received the same rate of pay as he did.
What does this decision mean for businesses?
This decision will provide welcome comfort for employers, and suggests that they can differentiate between SPL and other types of leave when determining how such leave will be paid. That difference in approach will not be directly discriminatory.
However, employers should remain mindful of the following practical considerations:
- While it is unlikely to form the basis of a direct discrimination claim, a savvy employee could still try to frame an equal pay claim on the basis of any difference under such policies. This is what happened in the Court of Appeal case of Hextall v Chief Constable of Leicestershire Police. In that case, the claim (brought by a male employee receiving unpaid SPL who sought to compare himself to a female receiving enhanced maternity pay) failed because claims are barred where more favourable terms relate to treatment afforded to women in connection with pregnancy or childbirth. However, that exclusion is unlikely to apply where a man seeks to compare himself to a woman taking adoption leave. As such, the door remains ajar to the possibility of equal pay claims in adoption cases.
- Since the introduction of the government's Good Work Plan, it is now a requirement for an employee's contract of employment to contain full details of the company's paid leave policies, or a signpost to them. This includes details of the rate of remuneration for maternity leave, adoption leave and SPL. Having these pay details stated alongside each other is likely to highlight any disparity to employees and result in increased employee relations issues.
- New generations of workers, of all genders, are pushing for greater equality when it comes to childcare responsibilities. Studies continue to suggest that businesses that offer balanced and well-paid family policies see improved rates of retention, enhanced employee satisfaction rates and overall better financial results. Employers that are still offering statutory SPP may want to revisit their policy to ensure that it aligns with the company's strategies, values and culture.
The uptake rate of SPL in the UK continues to lag behind other countries and there is a long way to go before this changes. In the meantime, the most progressive employers will be considering this decision with interest, while balancing it against the desire to create a flexible workplace that offers equal opportunities for all.
Elizabeth Marshall is a senior associate at Dentons