A significant decision on shared parental leave and pay

21st June 2018

The Employment Appeal Tribunal (EAT) has recently confirmed in the case Capita Customer Management Ltd (Capita) v Ali and another UKEAT/0161/17 that it is not directly discriminatory against men if an employer does not enhance its shared parental pay in line with its enhanced maternity pay.

Shared parental leave (SPL), which was introduced in 2015, gives employees who are parents flexibility when taking leave in the first year after the birth of a child or the adoption a child. Parents are able to share a proportion of leave. They can decide to be off work at the same time and/or take it in turns to have periods of leave to look after the child.

From 2017, an employee who is eligible to receive statutory shared parental pay will either be paid £145.18 a week or 90 per cent of his/her average weekly earnings (whichever is lower).

Some employers provide enhanced rates of shared parental pay in line with their enhanced maternity pay but the legislation states that there is no statutory requirement for employers to provide similar enhancements. As a result, it was unclear whether this practice amounted to direct sex discrimination against men. The position has now been somewhat clarified.

Capita’s practice was to enhance maternity pay paid to employees on maternity leave but not to enhance shared parental pay for those on shared parental leave. Women on maternity leave received 14 weeks’ full pay, followed by 25 weeks’ basic rate Statutory Maternity Pay.

When Mr Ali’s daughter was born, he took two weeks’ ordinary paternity leave and was paid full pay. His wife was diagnosed with post-natal depression and returned to work with another employer. Mr Ali wanted to take further leave to look after his daughter. Capita told him he could take shared parental leave but they would only pay him at the statutory rate of Shared Parental Pay (SPP).

He issued tribunal proceedings, alleging direct sex discrimination, arguing that, as the SPL regime allows parents to decide between themselves who cares for a child following the mother’s compulsory maternity leave, it was discriminatory to pay the mother more than the father in respect of the remainder of the leave.

The tribunal had originally found that Mr Ali had suffered sex discrimination when Capita failed to pay enhanced shared parental pay equivalent to the maternity pay that a woman on maternity leave would have received for the same period.

But this decision was recently overturned by the Employment Appeals Tribunal (EAT). In its reasoning, it said that the purpose of maternity leave and pay was primarily to protect the health of the mother. This contrasted with adoption and shared parental leave, where the primary purpose was care of a child. As such, a woman on maternity leave and a man taking SPL are not in comparable circumstances because the purposes of the leave are different.

Second, even if Mr Ali had been comparable to a female employee on maternity leave, his claim still could not succeed because the Equality Act 2010 allows special treatment to be given to women in connection with pregnancy or childbirth. The EAT held that this exemption covers additional pay for a woman on maternity leave.

Therefore, it is not direct sex discrimination to pay a woman on maternity leave more than a man taking SPL, even when the leave is taken within the same short period after birth.

This decision is significant as it, to some extent, resolves the issue of whether or not it is directly discriminating against a man if a school pays enhanced maternity pay but only statutory shared parental pay.

Some areas of uncertainty remain. The EAT based its decision on the different purposes of the two types of leave, with maternity leave primarily protecting the health and wellbeing of the birth mother. This is the underlying aim of the Pregnant Workers’ Directive but the Directive sets a minimum period of 14 weeks’ leave only. This raises the question as to whether this purpose remains valid for longer periods of maternity leave.

It is also unclear whether it is indirectly discriminatory for schools not to enhance its shared parental pay in line with its enhanced maternity pay.

In the meantime, schools can potentially pay different rates of pay for maternity leave and shared parental leave without the risk of a direct sex discrimination claim, at least during the initial 14-week leave period. The argument remains that the purpose of maternity leave changes after a longer period.

Schools may still want to consider matching maternity and shared parental payments if doing so would have employee relations benefits.