Failure to enhance paternity pay could be indirect discrimination
From April 2015, the new system of Shared Parental Leave (SPL) will be introduced, and Additional Paternity Leave and Pay will be abolished. Yet a recent Employment Tribunal decision, although not binding on other courts, has demonstrated the issues that can arise when an employer enhances maternity pay but chooses not to enhance a related benefit, in this case Additional Paternity Pay. It is potentially highly relevant to employers considering whether or not to enhance Shared Parental Pay from next April.
In Shuter v Ford Motor Company Ltd, the employer ('Ford') successfully defended a sex discrimination claim by a man who did not receive enhanced Additional Paternity Pay.
The case indicates that not to enhance Shared Parental Pay where an employer already enhances maternity pay is unlikely to be direct sex discrimination, but could be indirect sex discrimination, which would need to be objectively justified.
Employment Tribunal decision in Shuter
Mr Shuter is an engineer with Ford, and when his newborn son was 7 months old he took around 5 months' Additional Paternity Leave (APL). While he remained entitled to Additional Paternity Pay (APP) he was paid at the statutory rate of £136.78 per week (now £138.18). However Ford had an established enhanced maternity pay scheme of paying women 100% of basic pay for up to 52 weeks. During his APL Mr Shuter lost salary of around £18,000 and claimed that the failure to replicate this scheme for APL for him amounted to direct and indirect sex discrimination.
In a well-reasoned judgment, the Employment Tribunal concluded that:
- A man taking APL cannot compare himself to a woman receiving enhanced maternity pay because there are substantial differences: namely the woman has been pregnant, given birth, is likely to have cared for the child since birth and possibly breastfed it. The man must compare himself with a woman taking APL (e.g. the civil partner of a woman on maternity leave), and Ford would have paid them the same - so there was no direct discrimination;
- even though a man can take APL instead of the mother after 20 weeks, maternity leave continues to be different from APL. Parliament was not trying to change the nature of maternity leave, and any difference in treatment would be permitted by a provision in the Equality Act 2010 that allows more favourable treatment of women to preserve the health and safety of the mother and special relationship with the child following birth;
- by paying full pay to women on maternity leave for up to 52 weeks, Ford had applied a provision, criterion, or practice which excluded employees of both sexes who took APL. This put men generally and Mr Shuter himself at a particular disadvantage, because by far the majority of employees taking APL are men, and they cannot take maternity leave. This was indirect sex discrimination. However, Ford succeeded in demonstrating that the practice was 'objectively justified'. Ford cited a number of reasons, but the only one the Tribunal expressly accepted as 'a proportionate means of achieving a legitimate aim' was the recruitment and retention of women in Ford's male-dominated workforce, for which Ford had expressly decided on generous maternity pay to support its published diversity target.
Implications for Shared Parental Pay
Although APL is being abolished from next April, the same principles are likely to apply in relation to Shared Parental Pay (ShPP). An employer who enhances maternity pay but decides not to enhance ShPP could argue that:
- In introducing SPL, Parliament has not abolished or changed the right to maternity leave, which remains connected to the biological condition of pregnancy and childbirth (though this would not of course apply to adoption leave); and
- a man must compare himself not to a woman on maternity leave, but to a woman taking SPL, who would receive the same (statutory) pay as him. There is no direct discrimination and it is in any event permitted under the Equality Act 2010.
However, there is still a risk of indirect discrimination. In the Ford case it was accepted by all that the majority of employees taking APL are men. In the case of SPL, employers could argue that because many women are also excluded from enhanced ShPP (SPL is available to either parent), it doesn't put men at a particular disadvantage and there is no indirect discrimination at all. Such a defence will depend on the statistical evidence available to support it.
If there is a finding of indirect discrimination, the employer could argue that providing enhanced maternity pay is objectively justified. This may be a tough hurdle if employers do not have the same male-dominated workforce as Ford. Ford could clearly demonstrate its reasons for enhancing maternity pay, and that it had carefully considered the issue when APL was introduced. More importantly, it also produced impressively detailed statistical evidence confirming the number of women it had retained in its workforce as a result of its policy and the proportion of men taking up paternity leave.
The Government's stated view in consultation is that employers who enhance maternity pay do not need to enhance ShPP. However, if the Shuter case is followed, that may not necessarily be correct. Ford cited similar Government guidance but the Tribunal made no reference to it on the question of justification.
The dilemma for employers is that enhancing ShPP could produce a greater uptake of SPL (currently estimated at only 2-8%) than might otherwise be the case.
What are the points that employers should take from this case?
- Employers that already offer enhanced maternity pay need to consider whether they will enhance Shared Parental Pay for all employees;
- employers who decide not to would be well advised to monitor the take-up of SPL by men and women and consider whether it could be established that men are particularly disadvantaged;
- if there is a risk of such a disadvantage, and therefore indirect discrimination, it will need to be 'objectively justified'. Not many employers will have the same arguments as Ford about a male-dominated workforce. In any event, the Shuter case is a timely reminder that any attempt to objectively justify indirect discrimination cannot be based on costs alone and must be fully supported by detailed evidence and statistics.
This month our Autumn Breakfast Clubs are looking at the topic of Shared Parental Leave, amongst others, across most of our offices. If you haven't already booked your place and would like to do so, please contact Emma Law on 029 2038 5393. Further details are available on our events page.
NB: The new system of Shared Parental Leave will have effect in relation to children whose Expected Week of Birth (EWB), or whose placement for adoption, begins on or after 5 April 2015, and from then Additional Paternity Leave and Pay will be abolished.