The New Parental Leave rules - what they mean for the workplace
By Julian Cox, Partner at Fletcher Day
December 18 2013 - New statutory rules first trailed last year, have now been announced as coming into force in April 2015, which allow working mothers to effectively share their statutory maternity leave and pay entitlement with their partners.
After months of internal wrangling within the Coalition which threatened to de rail the plans after Conservative ministers urged the Liberal Democrats to make them more business-friendly, Deputy Prime Minister Nick Clegg finally announced last week the rules for a new system of shared parental leave and pay, together with the planned introduction date.
Heralding the new rules, the Deputy Prime Minister said:
"Women deserve the right to pursue their goals and not feel they have to choose between having a successful career or having a baby"
At the same time the rules are intended to breakdown "Edwardian" gender stereotypes, allowing men to become more hands-on fathers.
Reaction to the new rules has been mixed. Campaign group Maternity Action has described the reforms as being "a useful but very modest step in the right direction".
The government's announcement has not been universally welcomed though. The Institute of Directors has described the new rights as a "nightmare" that would "heap yet more burdens on struggling employers". Small business organizations have also warned about the administrative burden and cost involved.
By way of background, the government originally announced in its November 2012 response to the paper 'Consultation on Modern Workplaces', that it intended to introduce a new system of statutory parental rights applicable to employees and agency workers.
The Children and Families Bill 2012-13 ('the Bill') sets out the bare bones of the proposed new system of shared parental leave and pay. The intention is that the detail of the scheme will be set out in regulations.
In February 2013 the Department of Business Innovation and Skills ('BIS') published a consultation document entitled 'Modern workplaces: shared parental leave and pay - administrative consultation', which sought views on what that detail should be.
On 29 November 2013, the government published its response to the consultation. The key decisions and changes announced in the response are summarised in the Q & A below:
What can working parents and their employers expect under the new rules?
From April 2015, under the new system of shared parental leave and pay, eligible employees will be entitled to a maximum of 52 weeks' leave and 39 weeks' statutory pay upon the birth or adoption of a child, which can be shared between the parents.
At present, under the existing law which has been in place since April 2011, working mothers and father have been able to share some of the 52 weeks' existing leave entitlement. Working mothers have been able to transfer some of their maternity leave over to their partners, with the father able to take up to 26 weeks leave entitlement, beginning after the baby is 20 weeks old.
Under the new rules, with the exception of the first 2 weeks, the traditional 52 weeks of maternity leave, will be able to be shared between working parents. The cut off point for taking leave will be 52 weeks from the birth of the child.
Mothers will still be required to take the first two weeks of maternity leave for recovery, after which they can split the remaining 50 weeks of maternity leave with their partner provided they give their respective employers requisite notice.
This means a working mother will be able to choose to return to work and resume her career more swiftly whilst at the same time transferring her unused maternity leave entitlement to the father to take care of the child. Subsequent to this, both could even decide to switch back again if they so choose, with the working mother resuming maternity leave.
What if the mother changes her mind about sharing?
The new rules, build in a 6 week window, occurring after the child's birth, which affords flexibility. During this window, a working mother who has already notified her employer that she plans to share her maternity leave with the father may change her mind and decide to remain on maternity leave using up her entitlement to leave and pay herself.
How much shared parental pay will employees taking shared leave entitlement under the new rules be able to claim?
Shared parental pay under the new rules will be offered to working parents on the same basis as statutory maternity pay, unless their employer is more generous and offers enhanced maternity pay.
This means the parent who is on leave will be entitled to be paid for 39 of the 52 week leave period. Pay is based on salary and the prescribed statutory rates in force at the time.
Essentially, for the first six weeks the parent is on leave they will be entitled to receive 90% of his or her average weekly earnings before tax. For the remaining 33 weeks their pay entitlement will be 90% of his or her average weekly earnings or the rate of statutory maternity pay (currently £136.78 per week) - whichever is lower.
The level of statutory maternity pay remains an issue and potential obstacle to uptake under the new rules. Reacting to the announcement of the introduction of the new rules, TUC general secretary Frances O'Grady said:
"Shared parental leave is a welcome new step that should encourage more fathers to get involved in childcare from the very beginning.
"But unless it is backed up with better pay, many couples simply won't be able to afford to take it."
What will be the impact on existing paternity leave and pay entitlements under the new rules?
Working fathers will still be entitled to take two weeks' paid paternity leave entitlement immediately after the child's birth under the new rules The current rate of Paternity Pay is £136.78, or 90% of the working father's average weekly earnings (whichever is lower).
The government's original proposal suggested in 2011 to extend paid paternity leave by introducing a 'daddy month' comprising of an extra four weeks' paid paternity leave entitlement making six weeks in total has been shelved as "unaffordable" according to the Deputy Prime Minister.
Notice of paternity leave and play has been aligned so that notice for both must be given by the 15th week before the Expected Week of Confinement.
Fathers will still get the additional right though to two days off, unpaid, to attend ante-natal appointments (up to a maximum of six and a half hours for each appointment).
The plan is to review paternity leave entitlement in 2018.
Will keeping in touch ('KIT') days still exist under the new rules?
The new rules preserve the concept of KIT days. In addition to the mother's existing entitlement of 10 KIT days during her maternity leave, there will also be 20 additional KIT style days for each parent taking shared parental leave which will be given them a new name to distinguish them from KIT days. This name is still being decided by the government.
What do the new rules mean for employers?
There is no doubt that the new rules will present a potential headache for employers. In an effort to allay fears of the impact on businesses, appropriate notice requirements are built in to enable employers to plan for shared parental leave.
As a starting point, a working mother will have to give her employer at least eight weeks' notice of her intention to end her maternity leave and pay and start shared parental leave and pay.
The required notice can be given before the child's birth enabling her and her partner to begin shared parental leave and claim shared parental pay immediately after the compulsory two week period of maternity leave and pay.
Both parents are required to give their respective employers eight weeks' notice before beginning shared parental leave.
If they wish to take several blocks of leave then they must give their employers eight weeks' notice in respect of each period of leave. The eight weeks builds in a two week discussion period between employer and employee.
Working parents will be required to give an indication of their expected leave pattern when they notify their respective employers of their intention to take shared parental leave, although this is non-binding.
Working parents can request to take parental leave in a discontinuous pattern (e.g. every other month) for their employer to agree. Employers can reject the request, suggest changes to the request or insist the employee take the leave in a single continuous block. Employers cannot refuse leave outright though.
Under the new rules, working parents may make only up to three notifications for leave or changes to periods of leave (the government's proposal was for an unlimited number of requests and changes). It will still be open to working parents and their employers to agree further periods of leave and changes provided this can be agreed.
Are the jobs of parents protected on returning to work after taking leave?
Under the current maternity rules, a woman returning to work after taking ordinary maternity leave (of up to 26 weeks) is entitled to return to the same job in which she was employed before her absence.
For a woman returning from maternity leave having taken over 26 weeks, the position is slightly different. She is entitled to return to the same job, or, where this is not 'reasonably practical' for the employer, a 'suitable alternative job' on 'no less favourable terms'.
Similarly, under the new rules, working mothers and fathers taking total leave of 26 weeks or less will be legally entitled to return to the same job. This will be the case even if the leave is not taken in one block but spread out in a discontinuous pattern over, say, a year. Anyone taking leave of over 26 weeks will have the right to return to the same or a similar job.
What happens next?
The Bill under which shared parental leave and pay is to be introduced has already completed its passage though the committee stage in the House of Commons. It moved to the report stage on 9th December.
The government states in its response to the consultation, that it is currently preparing p secondary legislation setting out the detail of how the new rules will work which it intends to publish in draft before the Bill is made into statute.
Julian Cox, Partner at Fletcher Day
Julian Cox heads the Employment Law team. He is a specialist employment law solicitor with over fifteen years' experience and covers all aspects of employment law.
Fletcher Day is a full-service commercial law firm located in Central London, who advises UK and international client base on a broad range of legal matters.