Shared parental leave - to pay or not to pay? The dilemma for employers
The recent decision in Ali v Capita Customer Management Ltd is significant because, for the first time, the Employment Tribunal held that giving a father two weeks' paid paternity leave and shared parental leave at the statutory rate while giving female employees 14 weeks' paid maternity leave constituted direct sex discrimination.
Mr Ali worked as a Business Customer Adviser and in July 2013 his employment transferred under TUPE from Telefonica to Capita. His daughter was born on 5 February 2016 and Mr Ali took his 2 weeks paternity leave immediately following her birth and was paid for this. During his paternity leave he informed his manager that his wife had been diagnosed with post-natal depression. He then took a week’s paid annual leave to care for his wife and daughter.
On his return to work he was concerned about his wife and daughter. His wife had been medically advised to return to work to assist her recovery and Mr Ali discussed this with his manager. He was told that he was eligible for shared parental leave (SPL) under the Capita policy but would only be entitled to statutory pay. Mr Ali discussed this with his female, former Telefonica colleagues and they told him they were entitled to full pay for 14 weeks' maternity leave and after that, 25 weeks SMP. Mr Ali felt that in his particular circumstances he should get the same entitlement as them. He raised his concerns with his trade union who wrote to Capita explaining that Mr Ali's wife had decided to return to work and Mr Ali would suffer "a huge financial detriment" if he took SPL and that he was prepared to bring proceedings for direct and indirect sex discrimination. A lengthy grievance process followed and culminated in Capita deciding that it did not have a legal obligation to pay fathers at an enhanced rate for SPL. The actual complaint of alleged sex discrimination was not addressed in the grievance outcome letter and Mr Ali commenced Employment Tribunal proceedings for direct and indirect sex discrimination and victimisation.
Arguments before the Employment Tribunal:
Section 13 of the Equality Act 2010 provides that in a claim for direct sex discrimination in a case where the claimant is a man, no account is to be taken of special treatment afforded to a woman in connection with pregnancy or childbirth.
Capita argued that no account should be taken for the full 14 weeks' paid maternity leave period and that the special treatment extends for the whole of that 14 week period. This was because only women have the right to maternity leave and pay because they have given birth.
Mr Ali argued that in the context of pregnancy and childbirth any special treatment/distinction made by Capita between him and his comparator should be limited to the 2 week compulsory leave period after the birth, because this period of time was a health and safety measure associated specifically to childbirth. For the remaining 12 week period he should have received equal treatment as his female colleagues and been given the same paid leave. Paying him only the statutory sum for SPL deterred him from taking it.
Employment Tribunal decision
Dealing with the issue of the appropriate comparator, the Employment Tribunal rejected Capita's argument that Mr Ali could not compare himself to a female, transferred Telefonica employee entitled to the benefit of 14 weeks' maternity pay, because unlike that hypothetical comparator, Mr Ali had not given birth. Mr Ali was not comparing himself to a woman who had given birth and accepted that the 2 weeks immediately after the birth was time specifically associated with recovery after childbirth, a condition unique to women. In any event he did not suffer any less favourable treatment in that period because he received full pay while on paternity leave. In the subsequent 12 week period he was denied the benefit of full pay, which would have been given to a hypothetical female transferred Telefonica employee, caring for her child.
The Employment Tribunal agreed that Mr Ali could compare his treatment with that hypothetical comparator - that is, a female Telefonica transferred employee who had a baby in February 2016, taking leave. He was deterred from taking SPL because it was paid only at the statutory rate and he was less favourably treated and the reason for this was his sex.
The next issue for the Employment Tribunal was the question of whether any account should be taken of the special treatment of 12 weeks' full pay given to a woman after the 2 weeks compulsory maternity leave. Was the hypothetical female employee entitled to full pay as special treatment in connection with pregnancy or childbirth or should no account of that special treatment be taken?
The Employment Tribunal judgment makes interesting reading.
It was "important to consider this claim in the context of parental roles and choices as they are in 2016. Either parent can perform the role of caring for their baby in its first year depending on the circumstances and choices made by the parents. Inevitably more mothers will take primary responsibility from birth and immediately afterwards but that does not necessarily follow. There may be circumstances where different choices are made to suit the parents and their particular circumstances, like the choice the Claimant wanted to make because of his wife’s post-natal depression."
"Shared parental leave and pay allows parents to share the leave with only a 2 week period of leave post birth, kept exclusively for the mother’s maternity leave, the compulsory maternity leave period. This period is to protect the mother’s health and safety arising from the biological condition of pregnancy and mothers cannot waive their compulsory maternity leave period for the purposes of SPL. After this 2 week period there is no restriction and no "exclusivity" of leave for the mother only. This was a deliberate change in policy by the Government to encourage more flexibility and for fathers to take a greater role and be able to move away from outdated and stereotypical assumptions about which parent should care for the baby in the first year."
The Employment Tribunal clearly took into account that the objective in introducing SPL back in 2015 was to give both parents greater flexibility in choosing how to care for their child in the first year of its life including the option of parents taking time off together.
The Employment Tribunal went on to say. "It was not clear why any exclusivity should apply beyond the 2 weeks after the birth. In 2016, men are being encouraged to play a greater role in caring for their babies. Whether that happens in practice is a matter of choice for the parents depending on their personal circumstances but the choice made should be free of generalised assumptions that the mother is always best placed to undertake that role and should get the full pay because of that assumed exclusivity."
Mr Ali was asking for leave to perform the same role of caring for the child as his female comparator would have performed with full pay. The caring role he wanted to perform was not a role exclusive to the mother. It was not special treatment in connection with pregnancy and childbirth, rather, it was about special treatment for caring for a new born baby. This was not about denying full pay to women it was about equality of treatment in relation to pay for Mr Ali to access the same benefits for performing the same role.
The Employment Tribunal upheld the claim of direct sex discrimination (and a number of the victimisation claims).
Regarding the claim of indirect discrimination, the basis of this was that the Telefonica maternity policy was a provision, criterion or practice (PCP) that disadvantaged men. Capita successfully argued that if the PCP relied on was the maternity policy, it was not gender neutral. Rather, the policy was gender specific which is a complaint of direct discrimination and the indirect discrimination claim failed. Mr Ali's claim for indirect discrimination may have been treated differently if the PCP relied on had been the SPL policy, which, by its very nature, would be gender neutral.
A particular concern of employers at the time SPL was introduced was whether or not they should enhance SPL schemes to mirror enhanced maternity schemes to avoid sex discrimination claims.
The government guidance Employers' Technical Guide to Shared Parental Leave and Pay is clear on this point. “An employer is free to top up the statutory shared parental pay by paying some or all of the shared parental pay at a higher rate determined by the employment contract, which may or may not be the same as the employer offers mothers on maternity leave”. There is no legal requirement for employers to provide enhanced pay for SPL provided that women and men on SPL are treated the same. It is therefore up to the employer to decide how any differences in pay between men and women are treated and whether those differences should be maintained. The ACAS guidance Shared Parental Leave: a Good Practice Guide for Employers and Employees simply says that employers should ensure that they do not discriminate (inadvertently or otherwise) against employees in any way.
The difference in treatment between men and women taking SPL was the issue in dispute in the well-publicised case Snell v Network Rail . Mr Snell was awarded more than £28,000 for indirect sex discrimination, because his wife, who also worked for Network Rail received full pay for 26 weeks while taking SPL and 13 weeks at the statutory rate whereas Mr Snell only received the statutory rate when taking SPL.
Arguably, if enhanced maternity schemes are in place to aid a woman to recover from childbirth and to bond with the baby as opposed to care for the new born baby (as in Ali) then failing to enhance an SPL scheme wouldn't be direct discrimination.
The issue of indirect sex discrimination was dealt with very briefly in Ali. Interestingly at the Employment Tribunal evidence was given by Capita that of the employees who transferred from Telefonica there were 1,119 females and 1,189 males. Clearly there was no problem in recruiting and retaining female employees so any justification arguments might have been difficult unlike in Shuter v Ford Motor Company where failure to enhance additional paternity pay equivalent to its enhanced maternity pay scheme was neither direct nor indirect sex discrimination.
Capita have lodged an appeal at the EAT and one likely argument will be that the correct comparator for Mr Ali should be a female partner taking SPL rather than a woman taking maternity leave (which was in fact the initial argument put forward by Network Rail). The EAT may well conclude that sex was not the reason for Mr Ali's treatment, that is, the financial detriment he would experience by taking SPL because a female partner of a woman giving birth would have been treated the same way. If Capita's appeal is unsuccessful however, the Employment Tribunal decision could have significant implications for the majority of employers that have not enhanced their SPL schemes.
Another point to be aware of is that a different Employment Tribunal came to the opposite decision in Hextall v Chief Constable of Leicestershire Police. In that case, the Employment Tribunal held that it was not discriminatory to pay only statutory pay for SPL but to enhance maternity pay. The correct comparator was a woman on SPL and not a woman on maternity leave. That decision is also being appealed.
So, there are interesting times ahead with potential appeals to the EAT in both these cases and still uncertainty for employers about whether or not they should enhance SPL schemes.
There is no uncertainty however about the take up of SPL - it is still low. The government itself is not tracking the take up of SPL but it plans to evaluate the position in 2018. A CIPD report from December 2016 found that only 5% of fathers had taken SPL and 8% of mothers. An earlier report from Xpert HR found that where enhanced pay was offered for SPL employers are twice as likely to receive requests for it. Finally, it is worth mentioning that the government had intended to introduce legislation extending shared parental leave and pay to working grandparents by 2018. There was however no mention of this in the Conservatives' election manifesto or in the recent Queen's Speech.