Can you pay shared parental leave differently to enhanced maternity pay? A Tribunal Judgment gives a clue to the answer
An Employment Tribunal has held that it was not discriminatory to pay statutory pay only to parents taking additional paternity leave.
In a potentially highly significant decision, an Employment Tribunal has held that it was not discriminatory to pay statutory pay only to parents taking additional paternity leave, even where the company paid employees on maternity leave full pay for up to 12 months.
Additional paternity leave is the current system under which the father (or partner of the mother) can take up to six months leave (from 20 weeks after the birth) provided the mother has returned to work. During this leave, statutory pay is the equivalent of any unused maternity pay, typically up to 19 weeks at statutory maternity pay rates.
For parents of babies due on or after 5 April 2015, a new regime of shared parental leave will be introduced aimed at giving parents greater flexibility about who takes leave and when (after the compulsory two week maternity leave). There has been considerable debate about whether employers will be obliged to mirror enhanced maternity pay schemes for those on shared parental leave. This Judgment in Shuter v Ford Motor Company Ltd is important because it found that this employer was not obliged to mirror maternity benefits to avoid discrimination.
Mr Shuter took additional paternity leave for five months following his wife’s return to work after maternity leave. Between them the parents took 12 months’ leave. At the time, it was Ford’s policy (said to be non-contractual) to pay employees on maternity leave full pay for up to 12 months. Mr Shuter was paid statutory pay only in accordance with Ford’s policy on additional paternity pay. He claimed circa £18,000 in “lost” pay alleging Ford’s policy was either directly or indirectly discriminatory because of his gender. The Tribunal dismissed both claims.
In relation to the direct discrimination claim, the Tribunal found that the correct comparator was a woman who was also taking additional paternity leave and not (as alleged) a woman on maternity leave. As a female employee on additional paternity leave would have only been paid statutory pay, there was no difference in treatment.
For the indirect discrimination claim it was agreed that the provision, criterion or practice was Ford’s policy of paying women on maternity leave full pay for up to 12 months and Ford conceded that men were disadvantaged by this (its workforce being predominantly male and those eligible for additional paternity leave were largely male). Therefore the only question for the Tribunal to consider was if the difference in treatment was justified. Ford’s position was that by offering full pay to those on maternity leave it aimed to recruit and retain women within its male dominated workforce. Evidence on behalf of Ford at the hearing demonstrated some achievement (a small increase in female employees) during the period since enhanced maternity pay had been introduced. The Tribunal considered that the justification defence was made out.
What does this mean for me?
This is only the decision of one Employment Tribunal so it may not be followed by others. The justification argument also turned on its own facts; your own arguments may not be the same. However, what it does demonstrate is a willingness by a Tribunal to distinguish between maternity leave and other paternity/parental leave. Indeed the Tribunal pointed out that the Equality Act specifically permits differences in treatment because of pregnancy and childbirth.
In this case Ford was able to demonstrate a clear aim for its policy and provide some evidence that this was having the desired impact. Had this not been the case, the outcome may have been different in respect of the indirect discrimination claim. Therefore if you are proposing to offer different rates of pay to different groups of employees, you must carefully consider and document your reasons for doing so and monitor whether the policy is having the desired effect.
The Judgment suggests that if you are considering whether to pay enhanced pay to those taking shared parental leave, the answer can be that paying those taking this leave the same rate regardless of whether they are male or female will not be discriminatory even if you pay those taking maternity leave only a different rate. Thought also needs to be given to any enhancement and whether men (or partners of the mother) are less likely to benefit, and if they are, what is your objective in doing so. Whatever enhancements you pay, you need to carefully consider and document why you are doing so.
As with any change in the law it will be some time before the full impact of the changes to parental leave will become evident and no doubt there will be test cases dealing with enhanced payments. This Tribunal decision gives limited guidance and employers should always consider carefully the impact of seemingly neutral policies on various groups within their workforce and take advice before policies are finalised.