Leave to pay

With the introduction of shared parental leave, Charmaine Pollock considers when equivalent enhanced pay can lead to indirect discrimination by employers

Shared parental leave (SPL) has arrived for babies due from 5 April 2015 and the rules are giving many organisations a headache, with enhanced pay a particularly tricky issue. Many employers are concerned about discrimination if they do not offer equivalent enhanced pay for SPL as for maternity leave. They are right to be alive to the issue, although the position is not yet settled.

Discrimination risk

The government has issued guidance reassuring employers that enhanced maternity offerings need not be extended to SPL. This is correct from a
direct discrimination perspective,
which requires employees to point to a comparator to show that they have been treated less favourably. The comparator for
a man taking SPL would be a woman taking SPL; hence, no direct discrimination.

But, indirect discrimination
is a different matter. Men are potentially more likely to take
SPL than women. Accordingly, operating a policy of enhanced pay for maternity leave but not SPL could disproportionately disadvantage men. Indirect discrimination can, however,
be justified if the policy is a 'proportionate means of achieving a legitimate aim'.
It, therefore, becomes a question of whether enhancing pay for maternity leave but not SPL
is justifiable.

The recent case of Shuter v Ford Motor Company Ltd dealt with the outgoing additional paternity leave regime, but provides insight into how tribunals may approach SPL.
Mr Shuter's claim of indirect discrimination failed because
the tribunal accepted that the policy's aim of retaining and increasing women in the workforce was legitimate, and Ford provided evidence that its enhanced maternity policy had been working, demonstrating proportionality.

While encouraging for businesses, caution is advisable. Although establishing legitimate aims should be straightforward, they could include, for example, the protection of the mother's health and of the 'special relationship' between mother and child following childbirth,
the challenge will come
when seeking to establish proportionality. Ford's workplace was extremely male-dominated. Proportionality may not be so easily evidenced in more balanced workplaces.

Policy motivations

Given the cost of enhancing
pay for both maternity
leave and SPL, why might organisations do it? Beyond the obvious employee relations and recruitment advantages, some organisations are driven by wider policy considerations.

The traditional split of maternity and paternity leave, and pay, arguably disadvantages both women and men, with women entrenched as carers and men restricted from
taking on that role. SPL has
been viewed as a tool to
improve gender equality by,
for example, normalising
longer periods of leave for
both genders. Enhancing pay
for SPL may help to accelerate that process.

Practical issues

Still, businesses have to be practical and cost is an important issue. So how can businesses balance the legal risk with their budgetary concerns?

Some businesses may
decide to enhance only for maternity leave. For them, the
key consideration is to mitigate risk by recording the reasons for taking this decision, bearing in mind the need for a legitimate aim and proportionality.

Businesses which are particularly concerned about both costs and the discrimination risk may opt to stop enhancing altogether, or to enhance
equally, but to reduce the level
of enhancement. This would remove the discrimination risk. However, if it encourages an e
arly return to work for mothers,
it could be counter-productive from a health perspective and lessen the chance of the mother being successfully retained.
If reducing the level of enhancement for mothers
is the only way to afford equal enhancement, then the option above may be more attractive and the decision-making process leading to that conclusion could help to demonstrate a legitimate aim and proportionality.

A halfway-house approach could be to offer a lower level
of enhancement for SPL than
for maternity leave. Although
this would not eliminate the discrimination risk, it may help
to reduce the risk of a claim and,
if a claim were to be brought,
to evidence proportionality.

Businesses may find other
ways to help them achieve
their aims. For instance, if they wish to support and reintegrate employees who have been out of the workforce for a long period, they could link the level of enhancement to the length
of time taken off. If the payment is conditional on a period of service upon return, this may help to achieve the aim of reintegration, although could also incentivise employees to take longer periods of leave.

Ultimately, businesses need
to think through the options carefully, to record their thought-process and to feel comfortable that the chosen route strikes the right balance for them. SJ

Charmaine Pollock is an associate at Travers Smith