Blair’s big balancing act

Enhanced
rights for working parents are set to feature in the Government’s election
manifesto, to help employees balance the demands of modern life. But employers
need to strike a balance, too, says David Yeandle

All the signs are that when the next General Election takes place – probably
in May – a major theme of New Labour’s employment policies will be improvements
to the legal entitlements of working parents. There is little doubt that
Stephen Byers, the Secretary of State for Trade and Industry, believes there
are some valuable electoral brownie points to be gained by proposing to
introduce changes that would build on the Maternity and Parental Leave
Regulations that came into force in December 1999.

While the detailed proposals that will be contained in Blair’s election
manifesto have yet to be finalised, it is possible to obtain a fairly clear
indication of what they might be as a result of the comprehensive consultation
exercise the Government has undertaken over the last six months. Following a pre-consultation
exercise almost unprecedented in its extensiveness, the DTI’s green paper Work
and Parents: Competitiveness and Choice was published on 7 December 2000.

The Government appears to be attempting to balance the provision of more
assistance for working parents with greater support for those businesses that
employ them as well as to reflect the significant changes to working patterns
that have occurred in recent years.

Employers faced with the various policy options also want to strike some sort
of balance. They want to avoid damaging their business competitiveness by
limiting any further regulatory burdens imposed on them but, at the same time,
they still want to be able to attract, motivate and retain employees in an
increasingly tight labour market.

Statutory maternity leave

For most employers, the proposed changes to statutory maternity leave and
pay are probably the least controversial in the green paper. The extension of
statutory maternity leave to, say, 12 months is something most employers would
probably be able to manage without much difficulty – although it would
inevitably mean additional costs. The longer a woman’s absence from the
workplace, the more likely it would be that employers would have to recruit a
temporary replacement rather than rely on other employees to cover for their
absent colleague.

However, it might be easier for employers to recruit suitable replacements
for women on maternity leave if they can offer them a longer period of
temporary employment. Furthermore, it is likely that when women return to work
after a longer period of maternity leave, they will be more committed employees
as they will have had a longer period to organise suitable childcare
arrangements.

On the downside, the longer a woman is away on maternity leave, the more
difficult it may be to reinstate her completely back into the workplace. In
today’s rapidly changing working environment, changes in organisational
structures, working arrangements, computer systems and so on can take place
over a relatively short period so that women returning to work after a longer
period of maternity leave may need some training to bring them fully back up to
speed. This is an area where the Government could give employers some financial
assistance by providing a "return to work" allowance to offset the
cost of providing this training.

Another way in which the Government could provide some practical help to
employers is changing the current legislation so that there is greater
certainty, at an earlier stage than now, of whether and when a woman is going
to return to work after having her baby. The idea suggested in the green paper
of introducing a maternity-leave contract to increase this level of certainty
is therefore something that warrants further examination. The Government could
also clarify an employer’s and an employee’s obligations to each other during
the period of maternity leave, as there is still a lot of confusion and
uncertainty about this in the minds of both employers and employees.

Statutory maternity pay

Another proposal in the green paper is to increase the level of Statutory
Maternity Pay (SMP) and, in particular, the flat-rate SMP of £60.20 per week
that is paid to women after their first six weeks’ earnings-related payments.
Various options are put forward for making this change, including increasing
the level of flat-rate SMP or paying the current level, or a higher rate, for a
longer period.

Any increase in SMP is likely to result in women being away from the
workplace for a longer period as fewer of them would be forced to return to
work before their maternity leave ends for purely financial reasons. However,
the primary concern of most employers is not the level of SMP itself, as this
is financed by the Government, but the level of reimbursement for the SMP they
pay their employees and the associated administrative costs they inevitably
incur.

While the Government has indicated in the green paper that it is willing to
consider increasing the number of employers who are fully reimbursed, it needs
to go further and extend this to all if it really wants to sell its package of
proposals as being business friendly. Moreover, it should recognise the
administrative costs that employers inevitably incur in acting as an agent of
the state when paying SMP to their employees.

It should also make a clear statement that it has no intention in the future
of reducing this level of reimbursement as employers remember only too well how
the reimbursement of other statutory payments to employees, such as Statutory
Redundancy Payments, was gradually eroded by previous administrations.

Another idea that is somewhat tentatively put forward in the green paper is
transferring the responsibility of making the payment of SMP to working mothers
from employers to the state. While some employers see some positive benefits in
the introduction of this change, as it would reduce their administrative costs,
others are less enthusiastic. Many companies have now incorporated the payment
of SMP into their administrative and payroll systems and, in some cases, make
additional top-up payments on a voluntary basis. They feel that transferring
the responsibility for paying SMP to the state is unlikely to reduce their
administrative costs as they would almost certainly need to have some interface
between their own arrangements and those of the state.

Parental leave

Statutory unpaid parental leave was introduced by the Government in December
1999 as part of the Maternity and Parental Leave Regulations 1999. Since it
only applies to parents whose children are born on or after 15 December 1999,
the number of employers that have had any real practical experience of these
new provisions is still relatively low. Employers therefore believe that it is
too early for the Government to be making any significant changes. Instead, it
should concentrate on disseminating good practice and making it easier for
employers to use the flexibilities in the current legislation.

When the Government introduced the Maternity and Parental Leave Regulations
1999, it argued they provided employers and their employees with some
flexibility in the way in which they could introduce this legislation by
allowing collective or workforce agreements. However, all the evidence to date
is that very few employers have made use of this flexibility, one of the main
reasons being the unnecessarily cumbersome rules associated with workforce
agreements. In particular, the requirement that the terms of a workforce
agreement on parental leave arrangements be expressly incorporated into the
individual contracts of all the employees who are covered by it – something
that is not required for workforce agreements on working time arrangements
under the Working Time Regulations 1998 – adds an unnecessary layer of
complexity.

One area of good practice that in recent years has been introduced by a
number of employers, both large and small, is the provision of a short period
of paid paternity leave for fathers of new-born babies. If at some stage the
Government introduces some element of paid parental leave on a statutory basis,
employers are likely to be less resistant if it takes the form of a short
period of paid leave that has to be taken by parents when their children are
born. This is likely to be less disruptive to employers as they would be able
to make necessary arrangements to cope with this period of absence more easily
if the approximate dates of leave were known in advance. Consequently,
employers could request a reasonable period of advance notification of when it
would be taken and, for mothers, it could be incorporated into their maternity
leave/pay arrangements.

Flexible working

The suggestion in the green paper that working parents should have a
statutory right to return to work on a part-time basis, or reduced hours, after
maternity and parental leave is the part of the Government’s package of
proposals that is being most strongly resisted by employers. Although many have
introduced a range of flexible working arrangements to meet the individual
needs of employees who are parents, they believe that the introduction of a
statutory right to such flexibility would have an adverse effect on business
efficiency and competitiveness as well as result in more employment tribunal
cases as employees tried to enforce this new right.

There is also concern that the introduction of a new individual right to
work part-time for working parents would be difficult to ring-fence and would
inevitably lead to other employees arguing they should have the same rights in
order to meet their own particular needs, whether looking after elderly
relatives or developing a hobby. However, many employers do believe flexible
working is an area where it would be helpful for the Government to disseminate
examples of good practice on a wider basis. This would raise awareness of the
variety of different arrangements available, some of which might be appropriate
for them and their employees. n

David Yeandle is deputy director of employment policy at the Engineering
Employers Federation

Towards a workable approach – an employer’s manifesto

1          Introduce a "return to
work" allowance to offset the cost of providing re-training to women after
extended maternity leave.
2          Provide for greater certainty at
an earlier stage of whether and when a woman is going to return to work after
having a baby.
3          Clarify the employer’s and
employee’s obligations to each other during maternity leave.
4          Reimburse employers for
administrative costs employers incur in paying statutory maternity pay.
5          Ensure responsibility for
paying SMP remains with the employer.
6          Guarantee that the level of
reimbursement will not be reduced in future.
7          Concentrate on disseminating
good practice in using the current parental leave legislation, rather than
introduce significant changes at such an early stage.
8          Remove the requirement that the
terms of a workforce agreement on parental leave be expressly incorporated into
individual contracts of all employees that
            are covered by it.
9          Limit paid paternity leave to a
short period that can only be taken when the child is born, and allow for
reasonable advance notification.
10        Disseminate examples of good
practice on the voluntary approaches to flexible working to raise awareness of
variety of possible arrangements.

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