Skip to main content

Do Employers Need to Pay Enhanced Shared Parental Pay to New Dads?

By June 14, 2019January 26th, 2021Member News & Updates

To date, some employers have paid enhanced maternity pay to female employees. But, when it comes to shared parental pay this is paid at the lesser statutory rate only. This means new fathers who take time off work may be paid less than a woman on maternity leave. Shared parental leave being a relatively new right since 2015 for both parents to take leave during a child’s first year of life or adoption, if the mother effectively gives up her right to maternity leave and pay so both parents can potentially use this more flexible, shared right. Two recent cases heard by the Court of Appeal (Ali and Hextall) have seen fathers challenge being paid less than enhanced maternity pay as being discriminatory treatment towards men.

So are employers obliged to match their enhanced maternity pay package with enhanced shared parental pay for men?

Following the Court of Appeal’s judgement in cases of Ali and Hextall, the answer to this long-debated issue, from a legal perspective, is no. The Court of Appeal held that, the fact both Capita and Leicestershire Police paid their female employees an enhanced maternity package but did not match this for their male employees who elected to take Shared Parental Leave (“SPL”), was not direct or indirect discrimination, nor a breach of the equal pay sex equality clause. The judgement overrules the Employment Appeal Tribunal, where the lower court previously found that although the policy did not amount to direct discrimination, it may still amount to indirect discrimination.

There has been much legal discussion about whether employers who offer enhanced maternity packages are obliged to match those benefits for anyone taking SPL. Thankfully, the recent judgement has provided some long-awaited clarity on the position. In Ali, the Court of Appeal considered whether his employer had directly discriminated against him and found the correct comparator for a man on SPL in receipt of Shared Parental Pay (“ShPP”) was a woman taking SPL; not, as was argued by Mr Ali’s lawyers, a woman in receipt of enhanced maternity pay. The Court’s reasoning behind this finding was the man could not compare himself to a woman taking maternity leave because their circumstances were materially different. The primary purpose of statutory maternity leave is the health and wellbeing of the pregnant and birth mother and not to facilitate childcare. The Court went on to find numerous differences between SPL and statutory maternity leave; for example, maternity leave is in part compulsory and could begin before the birth of the child, whereas SPL is optional and dependant on the mother giving up statutory maternity leave. When the Court compared Mr Ali with the correct comparator, a woman taking SPL, it found there to be no resulting detriment as they would receive the same amount of pay.

In Hextall, the Court of Appeal held Mr Hextall had not been indirectly discriminated against as it was not the provision, criterion or practice (“PCP”) of paying the statutory rate to those taking SPL that caused a disadvantage to men. His true case was that men in his position were disadvantaged by the fact only a birth mother was entitled to statutory and contractual maternity pay. Further, the Court applied the same differentiating factors as set out in Ali when deciding the correct pool of individuals for comparison purposes; accordingly, women taking maternity leave were excluded from the pool of comparators. It was clear thereafter that the PCP had caused no particular disadvantage to Mr Hextall (he was treated no differently to a woman on SPL) and his claim subsequently failed.

Finally, just to provide a brief comment on Mr Hextall’s claim pursuant to clause 66 of the Equality Act 2010, the sex equality clause. (The Act provides that a sex equality clause is read into all contracts of employment so that a woman’s contractual terms are no less favourable than a man’s and vice versa.) Although the Court of Appeal recognised that his claim was an equal terms case (contrary to the findings of the lower courts), it held the claim could not succeed because of the exclusion in schedule 7 of the Act, which barred him from relying on the sex equality clause where a claim is based on more favourable terms enjoyed by a woman as a result of pregnancy or childbirth.

The Court of Appeal’s findings will provide some reassurance to employers who currently offer an enhanced maternity package, but do not match this for those electing to take Shared Parental Leave. It is a well reasoned legal decision, but it is understood that Mr Ali and Mr Hextall are seeking permission to appeal to the Supreme Court.

At present, according to a recent government forecast, only 2% to 8% of eligible employees will take SPL. The low level of take up is thought to be largely down to the lack of pay available. Once this relatively new family leave right has been in place for a few more years, employers may be better placed to conduct a cost analysis to determine the financial impact of an enhanced SPL policy, together with assessing the demand for such a policy. During this bedding in period, societal attitudes and trends may change, which in turn could help trigger a change in the law.

Nicole Ross is a paralegal in our employment team based in Exeter. If you would like to discuss the content of this article or have any employment query please contact us on 01392 210700 or email at [email protected].