So… can employers enhance maternity pay but not shared parental pay?

Recent tribunal decisions have provided some guidance on the legalities of offering enhanced maternity but not enhanced shared parental pay. But that does not mean employers avoid the risk of discrimination completely. Elizabeth Marshall and George Fellows explain.

Since the introduction of shared parental leave (SPL) in 2015, employers have been grappling with the tricky question of whether or not they are required to enhance shared parental pay where they offer enhanced maternity pay.

Despite Government technical guidance stating that there is no legal obligation to match enhanced rates of maternity pay for parents taking SPL, many commentators have suggested that failing to do so would ultimately result in successful discrimination claims by men.

As a result, employers have been faced with the options of either enhancing SPL pay and absorbing the extra cost, or reducing their maternity benefits, neither of which are particularly attractive. Of course, some employers have taken a ‘wait and see’ approach and hoped for the best.

However, there is some light at the end of this particular tunnel. The recent cases of Capita v Ali and Hextall v Chief Constable of Leicestershire Police have considered this issue, and the judgments provide some potentially helpful guidance in this area for employers.

Case history

In Capita, the claimant wanted to take SPL after his wife was diagnosed with post-natal depression and was advised by her doctor to return to work. Capita paid enhanced maternity pay for the first 14 weeks of leave, but only statutory SPL pay.

The claimant asked to be paid during SPL at the same rate as a woman on maternity leave and, after his request was refused, issued proceedings claiming direct discrimination. However, the EAT has now rejected his claim, confirming that his employer’s refusal to enhance SPL pay was not direct discrimination.

In the similar case of Hextall v Chief Constable of Leicestershire Police, a male police officer claimed both direct and indirect discrimination. Again, his claim was based on his employer’s policy of paying those on SPL the statutory minimum, while maternity pay was enhanced.

Adopting the same reasoning as in the Capita case, the tribunal again found that it was not direct discrimination to offer men on SPL a lower rate of pay than women on maternity leave, on the basis that the appropriate comparator for a man on SPL was a woman on SPL, and not a woman on maternity leave. The tribunal also extended this reasoning to reject the claimant’s indirect discrimination claim.

As the law stands there is, therefore, no legal obligation for employers to enhance their SPL pay to the same extent that maternity pay is enhanced.

Applying the test

However, the decision in Hextall in relation to indirect discrimination was appealed to the EAT, which found that the tribunal had fallen into error in its application of the test for indirect discrimination. This aspect has been referred to a new tribunal to reconsider.

Should the practice in the Hextall case be found to indirectly discriminate, any employers who have the same policies will be open to claims of indirect discrimination.

In each case, it will then be for the employer to objectively justify the difference in treatment but this may be difficult to do in practice. In particular, employers will not be able to rely on cost alone as justifying the continuation of an otherwise discriminatory policy.

While these cases do give us some additional guidance, there are likely to be further legal challenges in this area. As such, for those employers who currently pay enhanced maternity pay but only statutory shared parental pay, it may now be an appropriate time to re-evaluate the rationale behind those practices.

Wider purpose

From a financial perspective, enhancing shared parental pay to the level of enhanced maternity pay will lead to an additional cost. But this is unlikely to be significant.

Recent figures released by the Department for Business, Energy and Industrial Strategy show that less than 2% of eligible couples currently make use of SPL. Uptake may of course increase where employers decide to enhance the benefit, but the numbers are still expected to be low.

As well as financial considerations, employers should consider the wider purpose behind providing enhanced maternity pay, the most common consideration being that it encourages women to return to work after having a child.

Employers might consider whether there are alternative, gender-neutral approaches to achieve the same goals.

These might include:

•  increasing the ability for employees to work flexibly and part-time; and
• building a gender diverse organisation including campaigns and initiatives designed to challenge assumptions around gender roles.

The importance of employers tackling gender inequality in their workplaces has been highlighted by the now annual obligation on employers to report their gender pay gap statistics.

Employers will want to document the steps they are taking to address the gap if they want to avoid reputational and legal risk (through indirect sex discrimination claims). Introducing these broader changes could be part of a wider action plan to address these issues.

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While the legal position regarding enhanced SPL has been clarified by these cases, we anticipate similar claims will continue to be brought by disgruntled employees and that these issues may be examined by the Court of Appeal or even the Supreme Court in due course.

By doing more than the legal minimum now and removing the disparity between enhanced maternity and shared parental pay, employers can avoid the murky waters of this uncertain area of law, as well as the administrative headache of dealing with the discrimination claims that may follow.