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Should employers equalise shared parental pay with maternity pay?

In a judgment which will reassure many employers, two male employees, who argued that their respective employers’ failure to pay enhanced shared parental leave was an act of sex discrimination, have had their claims dismissed by the Court of Appeal.

What the law says

Provided certain eligibility criteria are met, an employee can take Shared Parental Leave (SPL) of up to 50 weeks and Shared Parental Pay (ShPP) of up to 37 weeks. The weekly rate of pay for statutory ShPP and statutory maternity pay are the same. While many employers provide women with enhanced maternity pay for part or all of their maternity leave period as a term of their contract of employment, very few employers choose to enhance ShPP at the same rate.

Employment Tribunal and Employment Appeal Tribunal (EAT)

Mr Ali was employed by Capita Customer Management Limited (Capita) following a TUPE transfer. Transferring female employees were entitled to enhanced maternity pay and male employees were entitled to two weeks’ paternity leave on full pay. However, there was no enhancement of ShPP for either mothers or fathers employed by Capita, and Mr Ali only received statutory ShPP.

Mr Ali brought claims against Capita for direct sex discrimination and victimisation for failure to pay enhanced ShPP, and was initially successful at the Employment Tribunal. However, the EAT disagreed with the tribunal, and decided that a man taking SPL should not be compared to a woman taking maternity leave and, even if it was appropriate to compare the two, any favourable treatment of a woman on maternity leave was rendered lawful on account of it being connected to pregnancy and childbirth.

Mr Hextall was employed by Leicestershire Police, who also had a policy of enhancing maternity pay above the statutory minimum, but only paying statutory ShPP. Unlike Mr Ali, Mr Hextall was unsuccessful at the initial tribunal stage. The EAT considered whether a failure to equalise these two family-friendly benefits was an example of indirect sex discrimination, eventually deciding that the tribunal had not correctly identified the correct pool of people who had allegedly suffered a particular disadvantage from the decision not to provide enhanced ShPP.

Court of Appeal

Given the factual and legal overlap between the two claims, the Court of Appeal heard the appeals for both of these cases as one. The court came down on the side of the employers in both instances.

In relation to Mr Ali’s direct discrimination claim, the court confirmed that the purpose of SPL is not the same as that of maternity leave. The court explained that the purpose of SPL is the facilitation of childcare, whereas maternity leave is to protect women in connection with the effects of pregnancy and childbirth. As such, this was not a valid comparison and there was no direct discrimination.

The court also decided that it was incorrect for Mr Hextall, and the tribunal, to have identified his claim as one of indirect sex discrimination, and that what Mr Hextall was actually seeking to bring was an equal pay claim, which is entirely separate under the Equality Act 2010. However, such a claim cannot be brought where the difference in contractual terms relates to a policy which gives women special treatment in connection with pregnancy or childbirth, and so again this claim was not made out.

It is possible that this claim will be appealed and come before the Supreme Court, but this establishes the current legal position on this subject.

What does this mean for employers?

The judgment clearly demonstrates that there is no requirement to provide an enhancement to SPL if an organisation takes the decision to enhance its maternity pay. Although,it may seem that these carry out the same function, the court was unequivocal in establishing that maternity pay is primarily for the protection of the mother in respect of pregnancy and childbirth and therefore fundamentally different from SPL. As such, those organisations who have decided to enhance maternity pay and not ShPP (or those that are considering taking this step) can take solace in this decision. The judgment represents well needed clarification on the relationship between these two rights.

As a result of the decision, organisations have a few options. Notwithstanding the legal position, employers could still decide to offer the same enhancements that are available to women on maternity leave to individuals who take SPL, to avoid any hint of unfavourable treatment. Although commercial considerations will be the ultimate guide for this, the relatively low uptake of SPL may mean that some organisations try to incentivise employees to take advantage of it. There will also be positive non-financial benefits from having a commitment to providing strong family-friendly rights to employees, which in our view should not be underestimated.

If this approach is chosen, organisations should ensure their policies are up-to-date and make clear the relationship between any enhanced terms and the statutory position. For example, male employees should not be able to double dip and claim for both their enhanced paternity pay and enhanced ShPP in respect of the same period, if these are both benefits that the organisation offers.

We originally reported on these cases in 2018, here.

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