An employment tribunal has ruled that an employer’s failure to pay enhanced shared parental pay, where it already paid enhanced maternity pay, amounted to indirect sex discrimination. This is the first reported decision challenging a failure to offer equivalent benefits between mothers taking maternity leave and parents taking shared parental leave. It is important to underline that tribunal decisions are not binding on other employment tribunals. However if the legal issues in this case are confirmed in a subsequent Employment Appeal Tribunal decision, the approach followed in this case will have significant consequences for those employers that chose not to provide enhanced benefits to parents taking shared parental leave.
Shared parental leave entitles parents to share up to 50 weeks of leave and 37 weeks of pay in the year following the birth or adoption of their child, provided that they meet certain eligibility requirements.
The minimum rate of shared parental pay is set by the Government and is currently £139.58 a week or 90% of an employee’s average weekly earnings, whichever is lower.
The Government has advised that it is “entirely at the discretion of employers whether they wish to offer” enhanced shared parental pay and has suggested that it would not be discriminatory if women were paid enhanced maternity pay but men and women were not paid enhanced shared parental pay. However this advice was always vulnerable to challenge following an earlier tribunal decision, Shuter v Ford Motor Company, which left open the possibility that an employer’s failure to pay fathers enhanced additional paternity pay in circumstances where mothers received enhanced maternity pay could amount to indirect sex discrimination.
David Snell and his wife both work for Network Rail. His wife intended to take 27 weeks’ leave following the birth of her child, whilst Mr Snell requested to take 12 weeks’ leave. Mr Snell subsequently discovered that whilst his wife would be entitled to 26 weeks’ full pay, he would only be entitled to shared parental pay at the statutory rate.
Mr Snell raised a grievance, alleging that Network Rail’s policy constituted sex discrimination. That grievance was not upheld. Network Rail advised Mr Snell that it had complied with its legal obligations as it was only required to pay him statutory shared parental pay. Mr Snell’s grievance appeal was also rejected.
Mr Snell raised a tribunal claim against his employer and during the course of proceedings Network Rail admitted that its policy was indirectly discriminatory. Mr Snell was subsequently awarded £28,321.03 in compensation by the tribunal. Network Rail has said in press reports following this case that it has reduced its maternity payments to bring them into line with statutory payments to avoid discrimination.
Following Shuter there has always been a risk that the payment of enhanced maternity pay without replicating the benefit for shared parental pay could result in a successful case of indirect sex discrimination. In Shuter the tribunal decided that Ford’s policy was indirectly discriminatory, but held that it was nevertheless a proportionate means of achieving a legitimate aim, namely promoting the recruitment, retention and development of women within a male-dominated workforce. In the present case, it is not yet clear whether Network Rail argued that its policy was a proportionate means of achieving a legitimate aim, and if it did, why the tribunal did not agree with this.
In our experience, a number of employers chose to retain their existing approach of providing enhanced maternity pay after shared parental leave was introduced but took the view that they would adopt the basic position and provide statutory shared parental pay. We advised employers at the time that if they chose to adopt this approach, they should document why they were unable to provide parents taking SPL with a similar level of benefit to mothers taking maternity leave. For many, cost was the key factor, but it should be noted that from a legal perspective there remains some debate as to whether or not cost can be the sole factor in an objective justification defence.
In light of this decision, any employer who failed to document their reasons for failing to equalise enhanced benefits should turn their attention to this issue and document their reasons for doing so now. It would also be prudent for employers who did document their reasons at the time to revisit them and consider whether they are still the same, or if circumstances have changed, or if the reasons are sufficient to withstand a legal challenge.
In short, employers who do not actively consider whether their position is objectively justifiable may be exposed to a claim. Employers must be able to demonstrate that they have a legitimate aim and that their approach goes no further than is necessary to achieve this. As many employers will be aware, the fact that it is simply too expensive to pay enhanced pay to employees on shared parental leave is unlikely to be sufficient. We can assist you with the legal aspects of an objective justification defence and factors that may be considered appropriate to achieve a lawful decision.
The right approach will obviously depend on the financial resources of the business, but we would caution against abolishing enhanced maternity pay, as Network Rail appears to have done. This could have significant reputational and contractual issues, in addition to affecting an organisation’s ability to attract new employees.