Last year the Employment Tribunal upheld a complaint of direct sex discrimination from a male employee who was refused enhanced Shared Parental Pay (“SPP”) (Ali v Capita Customer Management Ltd). Capita successfully appealed to the Employment Appeal Tribunal and the judgment was handed down last week. We briefly explore this latest judgment and highlight considerations for employers below.

Shared parental leave/pay

Shared Parental Leave (“SPL”) was introduced in 2015 to enable parents to share a period of leave to look after a child. If an employee is eligible, they can take the remaining weeks from their partner’s maternity or adoption leave entitlement (50 weeks after the initial 2-week compulsory period) and split this between themselves. The employee taking SPL will also be entitled to be paid for up to 37 weeks’ pay minus any pay their partner has already received for adoption or maternity leave. The current statutory rate for Shared Parental Pay (“ShPP”) is £145.18 a week or 90% of an employee’s average weekly earnings, whichever is lower. Many employers will pay maternity pay at an enhanced rate, above the statutory rate.

Direct sex discrimination

Direct sex discrimination in employment occurs where an employee is treated less favourably than another employee who is not of the same sex but is in materially the same/similar circumstances.

Facts

Mr Ali wanted to take Shared Parental Leave (“SPL”) to care for his newborn daughter following his wife’s diagnosis of postnatal depression. He wanted his leave to begin two weeks after his daughter’s birth so as to follow on from his ordinary paternity leave (i.e. first 2 week’s following the birth during which he would receive normal pay). He asked Capita if he would receive an enhanced rate of pay, rather than just a statutory rate of Shared Parental Pay (“ShPP”), at the same level as female employees who were taking maternity leave. Capita paid at an enhanced rate for 12 weeks. However, Capita confirmed that he would only be entitled to the statutory rate of ShPP, which was lower and so he did not opt to take SPL.

Mr Ali argued that he had been deterred from taking SPL because of Capita’s refusal to pay him the enhanced rate that female employees would be entitled to for this 12 week period. As a result, Mr Ali said he had suffered direct sex discrimination: the option to pay him a lower rate of pay only, amounted to less favourable treatment, when compared to female employees’ pay entitlement under the maternity scheme. Mr Ali also emphasised that he was not comparing himself to a female employee for the first two week’s compulsory leave: he accepted that this was to aid physical recovery post-childbirth. However, he said that after this period he was in comparable circumstances and so should have been entitled to the same level of pay, as the purpose of leave from this point on was childcare – which he said could be taken up by the man or the woman and was a decision to be made autonomously between the parents.

The Tribunal agreed with Mr Ali’s arguments – in particular, that the purpose of leave following the compulsory 2-week period was childcare. It therefore upheld his claim for direct discrimination. A key observation by the Tribunal was that men are now being encouraged to take a greater role in caring for their babies and that the choice of which parent should take on this responsibility should be made free of any assumption that the mother is always best-placed to do so.

The EAT held that the Tribunal had incorrectly identified the purpose of maternity leave as (following the first 2 compulsory weeks) the provision of childcare. Instead, the EAT drew on European law – the Pregnant Workers Directive - which says that the purpose of maternity leave is to protect the health and wellbeing of the pregnant woman and birth mother and that all Member States must provide a minimum of 14 weeks’ maternity leave, paid at a minimum level.

However, European law on parental leave makes clear that the purpose is to enable childcare provision and also this law makes no provision for pay. Accordingly, the EAT said that the Tribunal, in basing its decision on provision of childcare, as the purpose for maternity leave and pay, was inconsistent with European law and therefore mistaken. Accordingly, Mr Ali could not compare himself to a female employee on maternity leave for the remaining 12-week period in question – as the circumstances of a female employee’s leave would be to aid her health and wellbeing post-birth. His period of leave was not for the same purpose and so his circumstances were materially different. Because his circumstances in seeking leave were different, Mr Ali could not be in a position to establish less favourable treatment. Accordingly, the EAT concluded that his claim for sex discrimination must fail.

The EAT’s ruling will be welcomed by employers, because it has clarified an area of doubt about whether an enhanced maternity pay policy is discriminatory where the SPL policy does not offer the same level of pay for male employees. However, this decision may be appealed again, so it is very much a case of “watch this space”. Employers should also be mindful that in the EAT’s judgment, it noted a suggestion from Working Families (who intervened in this appeal) that after 26 weeks’ post-birth, the purpose of maternity leave may change from the health of the mother to care for the child – from which point, male and female employees’ pay may be comparable as required for discrimination purposes. Although this decision gives encouragement to employers, there will undoubtedly be other challenges and there is at least one other appeal pending on this point.

To date, there has generally been a low take up of SPL and, as a result, a report by the Women and Equalities Committee has been published, recommending measures to encourage more men to take up caring responsibilities for children, including enhancing pay rates. Maria Miller, the Committee’s Chairperson, also stressed her view that employers have not “kept up with the social changes in people’s everyday lives”. This may strike a chord with progressive employers, seeking to attract and retain talent, who may want to operate policies that seek to equalise as far as possible, pay for paternity and shared parental leave with that of maternity leave entitlements.