Shared Parental Pay - Will employers have to provide enhanced shared parental pay in line with their enhanced maternity pay schemes?

As employers prepare for the introduction of shared parental leave, one of the key questions they face is whether or not to provide enhanced shared parental pay to match their enhanced maternity pay schemes. The legislation provides that shared parental pay should be paid at a flat weekly rate of £138.18 or 90% of basic salary if this is lower. Employers are however wary of potential sex discrimination claims from male employees on shared parental leave if they do not receive similar benefits to female employees on maternity leave (and which in turn will impact on female employees on shared parental leave).

Shuter v Ford Motor Company

Employers should take note of the recent employment tribunal (“ET”) case of Shuter v Ford Motor Company if they choose to pay shared parental leave at a lower rate than any enhanced maternity scheme. In this case Ford successfully justified its policy of paying men on additional paternity leave the statutory minimum, even though it offered women on maternity leave generous enhanced pay.

Although this case related to additional paternity leave, the principles considered are similar.

The detail

Mr Shuter argued that he had suffered sex discrimination as a result of Ford’s policy of paying his 5 months’ additional paternity leave at the statutory minimum rate. By contrast a woman on maternity leave would be entitled to her full basic pay for 52 weeks under Ford’s enhanced maternity policy. As a result of this difference in treatment, Mr Shuter had been financially disadvantaged to the tune of £18,000.

The Tribunal rejected Mr Shuter’s claim of direct sex discrimination on the basis that he was not in a comparable position to a female employee on maternity leave. A female employee on maternity leave would have been pregnant, given birth, cared for the child since birth and possibly breastfed the child. Mr Shuter should instead be compared to a female employee who had taken additional paternity leave, for example a female spouse or civil partner. Such an employee would have been treated in the same way as Mr Shuter and been paid by Ford at the basic statutory rate. The Tribunal therefore concluded that any less favourable treatment of Mr Shuter was not due to his sex but because he had applied for additional paternity leave.

The Tribunal also rejected Mr Shuter’s claim of indirect sex discrimination. Ford conceded that there was a relevant group disadvantage for men in its policy of paying full pay to women on maternity leave 20 weeks after the birth of the child. The Tribunal however accepted Ford’s evidence that its enhanced maternity policy had been introduced with the purpose of attracting and retaining female staff who were significantly under-represented in its workforce. Ford was able to show that it had succeeded in increasing the number of female employees in its workforce since the introduction of its enhanced maternity pay policy. The Tribunal therefore accepted that Ford’s approach was justified.

What steps should employers take in light of this decision?

This decision is potentially helpful for employers who provide zero or lower enhanced pay to an employee on additional paternity leave (and the forthcoming shared parental leave) than an employee on maternity leave. However, it is important to remember that this is a first instance decision and another ET could reach a different conclusion. And in answering the question posed – Will employers have to provide enhanced shared parental leave in line with their enhanced maternity pay schemes? – employers must also be careful to weigh up other issues such as the impact on employee relations where different rates of pay are provided for different types of leave.  

Employers who do go down the route of paying shared parental leave at a lower rate than its maternity scheme should take note that Ford was able to provide detailed evidence to justify its approach. Employers should therefore be prepared to demonstrate the purpose of their enhanced maternity pay policy and its effectiveness in achieving that purpose. It may not be sufficient to argue that the employer is unable to accommodate the increased financial burden of enhancing shared parental pay in line with enhanced maternity pay.  

Where only enhancing maternity pay (and not shared parental pay), actions employers should consider include:

• Identifying any management documents or staff communications which set out the purpose of the enhanced maternity policy;
• if there is nothing in writing, documenting the rationale for the policy in any future review;
• analysing the impact of the policy and gathering relevant statistics.