Beyond the letter of the law

Employers have responded positively to the raft of new
"family-friendly" legislation, according to research by law firm
Allen &Overy

 

Family-friendly policies in the workplace are at the heart
of this government’s social reform programme. Employers have been inundated
with new legislation, regulation and guidance on good practice. The right to
parental leave and to time-off for dependants was introduced in December 1999.
This was followed in April 2000 by new rules to simplify some of the complexities
of the maternity legislation. Then came direct rights for part-time staff in
July 2000.

 

To see how employers are responding to the new rules and to
gain some understanding of sector norms and practices, Allen & Overy’s
Lifestyle and Equality Group conducted a survey of its clients.

 

Respondents

 

Approximately 100 organisations took part in the survey and
more than half of those had 500 employees or more. Respondents came from a
range of organisations from FTSE 100 PLCs, investment banks, City institutions
and major corporations to charities, universities, regulatory bodies, museums
and small, family-run businesses. The questionnaire was also sub-divided into
sectors covering finance, manufacturing, technology, media, retail,
pharmaceutical and leisure.

 

Policies and flexible working

 

One of the most surprising and encouraging features of the
survey was the prevalence of policies dealing with family-friendly rights. The
questionnaire asked which of the following bespoke policies respondents had in place:
maternity; time-off for dependants; part-time working; job share; career
breaks; sabbaticals; equal opportunities; non-harassment; secondments; parental
leave; paternity; and homeworking. Every organisation had its own maternity
leave policy, and despite parental leave being a very recent right, 82 per cent
of respondents had their own policy.

 

Flexible working arrangements appear to be increasing in
popularity with 20 per cent of organisations having a job-share policy and 24
per cent allowing homeworking. However, only 56 per cent have a formal policy
on part-time working. 

 

These results are noteworthy because it appears from the
high level of policies in most areas that employers are being extremely
pro-active in terms of policy drafting and flexible working. There was a
particularly high correlation between the range of policies offered and
centralised personnel functions, although, perhaps contrary to expectation,
this seems to have little to do with the existence of trade unions and works
councils.

 

Maternity

 

The basic legal position is that employees, irrespective of
length of service, have the right to 18 weeks’ ordinary maternity leave. For
employees in service in excess of one year, the entitlement is to 40 weeks’
leave, 11 weeks before the expected week of childbirth and up to 29 weeks after
childbirth. This is referred to as additional maternity leave. In relation to
statutory maternity pay, eligible employees are entitled to 90 per cent of
average earnings for the first six weeks and a flat rate of £60.20 for 12
weeks. During the ordinary maternity leave period, an employee is entitled to
all the terms and conditions in her contract, except for pay. So for example,
holiday continues to accrue throughout the 18 weeks. On the commencement of
additional maternity leave, although the contract continues to subsist, there is
no legal obligation to continue benefits.

 

The results reveal an increasing trend of "topping
up" the basic statutory entitlements to pay and leave, perhaps reflecting
inadequacies in the current rights, particularly with regard to pay. Forty-six
per cent of respondents offered enhanced rights to leave and 51 per cent to
pay. The most generous on pay and leave was the pharmaceutical sector with 66
per cent offering both enhanced leave and pay. Other sectors, such as
manufacturing, scored low on leave (28 per cent) but high on pay (42 per cent).

 

The results were extremely interesting in relation to the
non-cash benefits offered during additional maternity leave, particularly as
respondents also top-up pay. The results showed a high percentage of respondents
willing to continue these benefits, even though there was no obligation to do
so. We surveyed the following benefits: private health insurance; pension;
holidays; life assurance; and company cars. Eighty-two per cent continued
private health insurance benefits, 76 per cent of respondents provided pension
benefits, 68 per cent holiday, 79 per cent continued life assurance cover and
64 per cent offered the use of the company car.

 

In the retail sector, every respondent continued private
health insurance, pension and holiday throughout the entire period of
maternity. In the financial sector, 87 per cent of respondents provided life
assurance and 84 per cent private health insurance.

These results clearly demonstrate that employers are opting
for administrative simplicity. It can be labour-intensive (and may have cost
implications) to stop and start benefits for employees. The provision of
enhanced benefit is also seen by employers as a recruitment and retention tool.

 

Part-time work and sex discrimination

 

The survey asked whether the maternity policy provided for
part-time work or job share on return from maternity leave as this can be a
very difficult issue for employers. While there is no right to return to work
on a part-time basis, employers are under an obligation to consider seriously
all requests for part-time work. Refusals would need to be objectively
justified in order to avoid a claim for indirect sex discrimination. The
leisure and pharmaceutical sectors scored extremely well in this respect. At the
opposite end of the spectrum, the financial and manufacturing sectors had the
lowest rates.

 

The survey also addressed the issue of whether an employee
who had been refused part-time work had issued sex discrimination proceedings.
The results were not altogether surprising. A larger proportion of sex
discrimination claims occurred in those sectors where returning to work
part-time was either prevented or discouraged (financial and manufacturing),
whereas claims were virtually non-existent in the sectors that offered flexible
working to maternity returners.

 

Parental leave

 

Only 12 per cent of organisations surveyed offered paid
parental leave, all of which were in the manufacturing and financial sectors.
When the right to parental leave was first introduced there was much
speculation that there would be a low take-up rate because it was unpaid. This
is not borne out by the survey. Thirty-six per cent of all organisations taking
part said that they had received requests for parental leave – the same or higher
than the take-up rate in those sectors that offer it on a paid basis: 34 per
cent in the financial sector and 21 per cent in the manufacturing sector.

 

None of the organisations surveyed has asked staff to
postpone taking leave, indicating that the right is not as disruptive to
business as some commentators had suggested. Although the legislation provides
a statutory right to parental leave only for parents of children born after 15
December 1999 (currently the subject of an "implementation challenge"
to the European Court of Justice), 22 per cent of organisations surveyed
offered parental leave to any employee with a child under five.

 

The statutory scheme does not allow for employees to use
parental leave as a means of returning to work on a part-time basis by taking,
say, two days’ parental leave each week. Leave may only be taken in blocks of
one week and upwards. Few of the organisations surveyed (22 per cent) provided
for leave to be taken in blocks of one week or less.

 

Time off for dependants

 

A high percentage (64 per cent) of organisations said that
employees had taken time off for dependants. Although there is no right to paid
leave, 48 per cent of respondents offered it on a paid basis, the majority of
which were in the financial (46 per cent), leisure (60 per cent) and
pharmaceutical sectors (33 per cent).

 

Conclusion

 

Although there was some criticism in the survey responses
about the volume of workplace legislation, for the most part the frustration
appears to be directed at the complexity of the rules rather than the rights
themselves. The results show that many organisations are embracing and
improving on the new statutory rights in an attempt to steal a march in the
increasingly competitive labour market. As an alternative to above-inflation
pay increases and volatile share option benefits, a family-friendly, flexible
working culture appears to be an increasingly popular way of countering the
problems of recruiting and retaining good staff.

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