What issues will businesses face with the arrival of shared parental leave?

A new form of family friendly leave is set to be introduced for parents of babies whose expected week of childbirth falls on or after 5 April 2015 (and children who are matched for adoption on or after that date). Our overview is here. But behind the Government’s fanfare that this new leave will revolutionize a parent’s family and working life, we look below at the key issues businesses will face including:

• the administrative complexities for HR;
• should an employee taking shared parental leave receive an enhanced package similar to any package offered to those taking maternity leave?
• will managers understand this new right?
• how will leave be covered? and
• are there ways that employees could use the system to their advantage for other reasons?

What is this new right?

Shared parental leave essentially enables a mother to end (or declare that she wishes to end) her entitlement to 52 weeks maternity leave and 39 weeks statutory maternity pay and make any balance available to her and/or her partner as shared parental leave. So, for example, if a mother declares she will end her maternity leave/pay at week 26, her partner could take the balance of 26 weeks as shared parental leave whilst she is on maternity leave or perhaps once she has returned to work. Equally, the mother could take 26 weeks maternity leave, her partner could then take 13 weeks shared parental leave and the mother, having returned to work in the interim, could take a further 13 weeks shared parental leave. Subject to limited restrictions on how leave must be taken, the permutations are endless.

Our overview of the new right is here but a few key points to bear in mind:

• a mother must take the 2 weeks compulsory maternity leave following the birth of her child. She cannot elect to share that.
• together the maximum maternity and shared parental leave which can be taken is 52 weeks and must be taken by the child’s first birthday (or first anniversary of adoption)
• to take shared parental leave, the parent must be an employee and meet minimum service requirements. His or her partner must also meet an economic activity test.

So what key issues will businesses need to tackle?

Administrative complexities

Whilst the concept of parents sharing leave is relatively simple, the administrative requirements surrounding eligibility and taking leave are not. The legislation is complex. Whilst recognising that employers will want as much notice of an employee taking leave as possible, it also seeks to tackle the various scenarios that will arise such as parents wishing to change the “split’ of leave between them or the dates/blocks in which they take leave.

In essence, employers should expect to receive from an employee seeking to take leave:

• a notice confirming: the employee’s eligibility and that their partner passes an economic activity test; a declaration that the mother’s maternity leave has ended or will end on a specific date; and how leave will be split between the parents together with a non-binding indication of the proposed pattern of leave.
• up to three notices confirming the dates on which that employee will take leave or requesting variations to previously notified dates.

Employers will need to decide whether or not they will seek any evidence from their employee e.g. a birth certificate, the partner’s employer’s name and address etc. However, there is no obligation on the partner’s employer to respond to any request for confirmation of the partner’s details.

There are indications that online forms will be made available to help employees (and employers) with this process. 

What should an employee on shared parental leave be paid?

 A key issue for businesses will be how they pay any shared parental leave. An employee who takes shared parental leave may be eligible for statutory shared parental pay to the extent the mother has not exhausted her 39 week statutory maternity pay entitlement. Shared parental pay is only available at the flat rate so financially a mother will be better to continue on maternity leave and pay for at least 6 weeks since during that period statutory maternity pay is paid at the higher rate. 

The thorny issue for employers arises where it already provides an enhanced maternity pay scheme. Should that scheme be replicated for employees (of either sex) taking shared parental leave to avoid claims of discrimination? Whilst arguments can be made that the treatment of a male employee on shared parental leave should be compared to that of a female employee on shared parental leave thereby averting claims of direct sex discrimination, these arguments have been watered down by European case law which implies that the special treatment of a woman on childbirth is potentially more time limited than our current legislation suggests. 

Of more concern however is the risk of indirect discrimination claims. An Employment Tribunal recently held that an enhanced maternity scheme did indirectly discriminate against men taking additional paternity leave but in that case the employer was able to objectively justify the enhanced maternity scheme on the grounds of recruitment and retention of women. More detail is available in our alert here. 

Aside from the risk of discrimination claims, employers will also need to consider whether or not an enhanced shared parental pay scheme should be introduced from an employee relations perspective, particularly if a competitor provides such a benefit. 

Do your managers understand this new right? 

Managers must receive training to ensure they understand what rights their employees have on shared parental leave and to help them manage what may be tricky conversations – a request from a any employee who indicates that he wishes to take three chunks of leave, potentially with one week blocks of discontinuous leave in each chunk may not be well received. Whilst there is scope to manage any such “discontinuous requests” for leave, there will still be sensitivity around how this should be handled (particularly where different departments are adopting different approaches). In any event managers must be made aware that eligible employees are entitled to request three blocks of leave and potentially at times which do not suit the business. 

Aside from any discrimination and trust and confidence issues arising from such discussions, businesses should take note that an employee is protected by statute from being subjected to a detriment for exercising a right to shared parental leave. Any dismissal of an employee for that reason will be automatically unfair. 

How will you cover leave? 

One of the biggest day to day issues for managers will be how they can cover this potentially more disjointed leave. Whilst managers could with some certainty obtain maternity cover for a specific and continuous period, this new system is potentially more disruptive. Remember employees can take it in up to three chunks on as little as 8 weeks’ notice. 

Whilst much will depend on the particular business, the employee’s job role and the timing of leave, issues to consider include: 

• Will there be an impact on overtime? Will more financial provision need to be made? 
• If other employees will cover the work during normal working hours how does this fit in with your contractual and statutory obligations to them? Will employees be envious of those taking leave? Will it impact on their holiday requests (particularly if savvy employees seek to beat the Christmas holiday rota by taking shared parental leave)? Will there be employee relations issues? 
• Can you use “SPLIT” days to manage key business dates/projects. SPLIT days are a new right during shared parental leave for employees to come into work for a specific day or dates without bringing their shared parental leave to an end. An employee is entitled to take up to 20 SPLIT days (and for a woman these are in addition to the 10 KIT days she is entitled to during any maternity leave). There is some uncertainty over the rate of pay an employee is entitled to receive in respect of a SPLIT day, essentially it is for the employer and employee to agree but a normal day’s pay is likely to be the norm. 

Employees maximizing the advantages of the system

As touched on above, employers may find themselves embroiled in tricky employee relations issues with employees using shared parental leave to secure leave at certain times, such as Christmas, school holidays (albeit that it may be unpaid if the statutory pay entitlement has been exhausted). 

 Further, whilst it is hoped that such instances will be rare, it is not beyond the realms of possibility that employees eligible for shared parental leave and who find themselves at risk of redundancy may seek to take advantage of the enhanced protection given in relation to offers of suitable alternative employment to those on shared parental leave. The eight week notice requirement to take a period of shared parental leave will prevent this from becoming an issue in most ad hoc redundancies but it may potentially be used in larger scale redundancies or where an employee suspects that redundancies are in the offing. 

So is there an upside? 

Whilst we have focused above on the issues that the shared parental leave system may bring for businesses, it is important to remember that despite the publicity surrounding shared parental leave, no immediate surge of requests is anticipated. It will take time for employees as well as businesses to adjust to this potential new flexibility and ultimately much may come down to the financial implications for the families involved. 

However, the flexibility that this new right offers does make it significantly more attractive than the existing right to additional paternity leave and there is potential over the coming years for what may be an initial slow trickle of requests to gain more momentum as employers embrace a more flexible workforce and employees become more prepared to test these new flexible waters. For those employers who do receive the initial requests, this will be a time to test how shared parental leave can be used to the business’ advantage, perhaps using it to trial flexible working arrangements and change managers attitudes to employees with parental responsibilities, whatever their sex.