In an emphatic judgment, the UK Court of Appeal has ruled that it is not direct discrimination, indirect discrimination or breach of equal pay rights to provide enhanced pay for maternity leave and statutory pay only for shared parental leave.

Background

The system of shared parental leave (‘SPL’) allows parents to share leave between them for the purposes of caring for their new baby. This is done by the mother shortening her maternity leave.

It is relatively common for employers to pay enhanced pay to mothers on maternity leave, but less common to enhance pay for parents taking SPL. Two cases just considered by the CA raised arguments as to whether it is direct sex discrimination, indirect sex discrimination or contrary to equal pay law to pay different amounts of pay for maternity leave and SPL.

Under the Equality Act 2010 (‘EqA’), direct discrimination is where someone is treated less favourably than another person because of sex. Indirect sex discrimination occurs when an employer has a provision, criterion, or practice (‘PCP’) which applies to everybody, but results in one sex being put at a disadvantage. Unlike direct discrimination, it is possible for an employer to justify indirect discrimination.

The equal pay provisions of the EqA require men and women doing equal work to receive equal pay and equality in other contractual terms for doing equal work. This is done by implying a ‘sex equality clause’ into contacts of employment.

Facts of the cases

The first case involved a claim for direct discrimination. Mr Ali took two weeks of paternity leave from Capita Customer Management (‘Capita’) immediately after the birth of his baby, and then asked to take SPL so that he could care for the baby as his wife returned to work. Capita only paid basic statutory pay for SPL. Mr Ali was aware that female employees on maternity leave from Capita were entitled to 14 weeks at full pay and asked for the same treatment, but this was refused.

The Employment Tribunal (‘ET’) decided that this treatment of Mr Ali did amount to direct sex discrimination. The Employment Appeal Tribunal (‘EAT’) disagreed and upheld an appeal on two main grounds. First, the ET had used the wrong comparator for Mr Ali’s claim. The correct comparator was a female employee who was taking SPL in order to care for her child, who would have been treated in exactly the same way as Mr Ali. Secondly, even if Mr Ali had been able to compare himself with a female employee on maternity leave, his claim could still not succeed because the EqA allows special treatment to be given to women in connection with pregnancy or childbirth.

The second case involved claims for both direct and indirect discrimination. Leicestershire Police paid 18 weeks of enhanced maternity pay to mothers on maternity leave, but only paid statutory pay to parents taking SPL. Mr Hextall took 14 weeks of SPL in the period that, if he had been a woman on maternity leave, would have entitled him to full pay.

The ET found that this was neither direct nor indirect sex discrimination. Mr Hextall appealed to the EAT on indirect discrimination, and the EAT decided that the ET had not properly considered the legal test. The PCP in this case was that Leicestershire Police only paid statutory pay to parents taking SPL. According to the EAT, there was a disadvantage because a man is proportionately less likely to be able to benefit from an equivalent rate of pay when taking leave to act as the primary carer for his child. That was because men have to take SPL, while women who have given birth can choose to take maternity leave or SPL. The EAT also rejected the argument that this was an equal pay claim.

The Court of Appeal decision

The Court of Appeal (‘CA’) held that there had been neither sex discrimination nor a breach of equal pay rights in either of the two cases. The key points were as follows:

  • There was no direct discrimination, because the correct comparator for a man on SPL is a woman on SPL and everyone on SPL is treated the same. A man on SPL cannot compare himself with a woman on maternity leave, the CA held, because the purposes of the leave are different. Maternity leave relates to special protection of the birth mother after pregnancy and childbirth, including recuperation and protection of the mother’s biological condition, and developing the special relationship between mother and newborn child. The CA concluded that maternity leave is not just for the purpose of caring for the child, which meant that Mr Ali’s claim could not succeed.
  • In Mr Hextall’s case, the CA decided that this was an equal pay claim rather than a discrimination claim. All contractual terms that related to pregnancy and giving birth were not available to Mr Hextall because he is not a woman. A sex equality clause would give him a comparable term with the same rights to leave and pay to care for a newborn baby. But, crucially, the EqA says that a sex equality clause does not apply to contractual terms giving women special treatment in connection with pregnancy or childbirth. The whole of maternity leave is part of this special protection, so the equal pay claim must fail.
  • Claims for equal pay and sex discrimination are mutually exclusive. If something is properly characterised as an equal pay claim, it cannot also be indirect sex discrimination. This meant that Mr Hextall’s indirect discrimination claim could not be considered, because the CA had found that it fell within equal pay law.
  • For completeness, the CA went on to hold that the indirect discrimination claim would have failed anyway. The PCP was the application of the contractual provisions relating to SPL. The pool for comparison should not include birth mothers on maternity leave, as they are in a different situation from men and women on SPL. Therefore, men in Mr Hextall’s situation were not caused a particular disadvantage, because women on SPL were also limited to statutory pay.
  • Finally, the CA said that any indirect discrimination could be justified in any event as special treatment of mothers on maternity leave. Although the special treatment exemption was missing from the indirect discrimination provisions in the EqA, the CA regarded this as an error by Parliament because the exemption was included in EU law and in the previous UK legislation.

Implications

This judgment is good news for employers, as it gives a very clear message that it is lawful to enhance maternity pay but provide statutory pay only for SPL. The CA has taken the position that the whole period of maternity leave provides special protection for mothers after giving birth, meaning it is always permissible to treat this differently from SPL.

This result is not particularly surprising in Mr Ali’s claim for direct discrimination. It was always going to be difficult to show less favourable treatment of men in circumstances where both men and women can take SPL and are treated the same when they do so.

What is more unexpected is the CA’s treatment of indirect discrimination, as the EAT had taken the view that such a claim by Mr Hextall was possible. The CA deals with indirect discrimination quite briefly, with its decision turning on the point that women on maternity leave should not be included in the pool for comparison because they are in different circumstances. This does not seem to engage with the specific argument before the EAT, that women have a choice between maternity leave and SPL, while men have to take SPL. Even if women on maternity leave are excluded from the pool, the PCP of paying statutory pay for SPL will be applied to both men and women. Is it not still arguable that a man on SPL is disadvantaged, because many of the women on SPL would have the choice to take this as maternity leave instead?

This may be something of an academic point, as the CA thought that indirect discrimination was ruled out by the fact this ought to be brought as an equal pay claim. The CA’s reasoning on equal pay is quite complex, but the claim ultimately fails for the same reason as the direct discrimination claim: the exemption for special treatment of women in connection with pregnancy and childbirth.

Mr Ali had put forward detailed arguments that the nature of maternity leave had changed after the introduction of SPL, because after the two-week period of compulsory maternity leave parents can choose how to share leave between them. As this was designed to promote gender equality, there should not be a financial incentive for the mother to stay at home as the primary childcare giver with the father continuing to work as the primary breadwinner. The CA comprehensively rejected this argument, saying there was nothing in EU or UK law to support the conclusion that the primary purpose of statutory maternity leave is the facilitation of childcare.

A question remains as to whether the whole period of maternity leave in the UK is legitimately about the protection of the mother after childbirth. The minimum maternity leave period under EU law is 14 weeks, whereas the UK has chosen to extend this to 52 weeks. It is certainly arguable that the purpose of maternity leave ceases to be about the protection of the health and wellbeing of the mother after a certain period of time. The CA did not fully grapple with this argument as both Mr Ali and Mr Hextall took SPL immediately or soon after the birth, expressly referring to the purpose of statutory maternity leave in weeks three to 14 after childbirth. The CA listed several general differences between maternity leave and SPL, but it remains unclear whether it was saying that the full 52 weeks of leave is for special protection of women after giving birth.

This may be a political issue that only Parliament can resolve. Recognition of the special position of women after childbirth is important, but so is encouraging a more equal sharing of childcare between men and women. The introduction of SPL provided an opportunity to address this, such as by shortening maternity leave to a period more in line with the EU minimum and introducing a new right to additional leave for everyone, but instead the full period of maternity leave was retained.

We understand there is likely to be a further appeal on these issues, in which case the Supreme Court could feel more able to address contentions around gender equality and the purpose behind SPL. So the CA’s judgment may not be the end of the story.