Full review of parental leave as current system ‘not working’

Jake McManus, Solicitor

Last month the House of Commons Women and Equalities Committee (“WEC”) released its report setting out the findings of its inquiry and call for evidence in respect of potential reforms of the UK’s statutory parental leave system. This is following the Labour Government’s commitment to review the parental leave system within its first year of government as a first step towards “long-term reform”, stating that the current system “does not work” for working families. The Prime Minister confirmed on the 1^st of July that the Government is launching a full review of the parental leave system and has issued a call for evidence to inform the work of its review.

The Government has already published some of its plans within the Employment Rights Bill, including making statutory paternity leave and unpaid parental leave a day-one right for employees. However, the WEC’s report urges the Government to go further, drawing attention to the disparity between statutory maternity leave (52 weeks) and statutory paternity leave (2 weeks), in what they refer to as an example of the UK having “one of the most gender unequal statutory parental leave systems in the developed world”.

The WEC’s report identified the following as key issues:

• Statutory pay: The rates of statutory pay are regarded as the most pertinent issue, which in the WEC’s view inhibits take-up of statutory family leave entitlement. Statutory family leave pay is less than half the National Living Wage and is therefore considered by the WEC to be out of step with the cost of living for working families. The WEC’s inquiry found that employees are taking less leave to prevent financial hardship. Affordability is also the most significant factor for parents when deciding to take Shared Parental Leave.
• Gender disparity in leave period: The UK offers just two weeks of statutory paternity leave versus up to 52 weeks maternity leave, falling behind other developed countries and contributing to the gender pay gap. The WEC consider this to be out of step with how most parents want to share their childcare responsibilities and reinforces gender stereotypes in relation to childcare.
• Gender disparity in pay: Whilst paternity leave will become a day-one right under the Employment Rights Bill, the eligibility requirements for statutory paternity pay will remain the same. As such an employee may be entitled to take paternity leave without being entitled to statutory pay.
• Eligibility requirements: Self-employed parents and Kinship carers (for example, a close family friend or extended relative caring for a child where the parents are unable to) are excluded from the statutory provisions in respect of family leave and pay.
• Shared Parental Leave: Whilst the WEC considered Shared Parental Leave (SPL) to be beneficial to parents in that it can provide flexibility and support during the early years of childcare, the eligibility requirements for SPL are complex and therefore many parents are put off from taking it.

Recommendations

The WEC’s report recommends the following in response to the above key issues:

• Extending Paid Paternity Leave: increase statutory paternity leave to 6 weeks and make statutory paternity pay a ‘day-one’ right.
• Improving Statutory Pay: raise statutory paternity pay to match statutory maternity pay (90% of earnings for the first six weeks). In the long term, consider phased increases in all parental pay rates to reach 80% of average earnings or the Real Living Wage, without cutting existing maternity entitlements.
• Encouraging Uptake: make paternity leave more flexible in how and when it is used within the first year of a baby’s birth or adoption.
• Increase support for the self-employed: introduce statutory paid leave to all self-employed and non-employee working parents and introduce a Paternity Allowance that is the equivalent to the existing Maternity Allowance.
• Reforming SPL: increase access to SPL by including the self-employed and those on lower incomes. Review the current eligibility requirements, which the WEC regards as “complex”, with a view to simplifying the eligibility criteria.
• Strengthening Paternity Leave protections: review the legal protection against paternity discrimination, including protection from redundancy for those taking paternity leave, and take steps to raise awareness of paternity rights amongst both employers and employees.

What does this mean for employers?

The WEC’s report recommends changes to legislation relating to parental leave and rights. Whilst the Government has committed itself to reviewing the parental leave system more generally, it has not set out exactly what changes will be made, aside from making paternity leave and unpaid parental leave a day one right. At this stage it remains speculation as to whether any of the WEC’s recommendations will be implemented by the Government, however employers would be prudent to keep an eye on any further developments given the Government’s pledge to review the parental leave system and its recent call for evidence.

In the meantime, employers may find it beneficial to review their current offerings in relation to the various types of family leave and pay. Offering enhanced leave and pay that goes above and beyond the statutory minimum requirements is often desirable to job applicants and is therefore a useful tool to attract talent and retain current staff. As highlighted in the WEC’s report, some of the eligibility rules and criteria in relation to family leave can be complex – especially shared parental leave – and employers should review their policies to ensure that they are clear and easy to follow by both employees and those in management positions. It is likely that family leave policies will need to be updated following changes to the parental leave and pay system whenever the Government updates the relevant legislation, especially any paternity and shared parental leave policies.

The Kuits employment team are well-versed in reviewing and updating workplace policies and ensuring that they are in line with best practice, whilst remaining bespoke to a business and its procedures. If you would like expert advice in relation to parental leave or to review your current family leave workplace policies, or if you wish to discuss incoming changes introduced by the Employment Rights Bill more generally, please contact the team at info@kuits.com.