On 1 December 2014 we are expecting legislation to come into force that will give effect to the new shared parental leave regime. The new regime will apply to employees in England, Scotland and Wales whose babies are due, or who will adopt a child, on or after 5 April 2015.
Employers need to familiarise themselves with leave notification arrangements and alter their HR processes, including family leave policies. The new regime is not a modification of a procedure with which HR professionals are already familiar, it is a completely new scheme which marks a bold move away from the current highly gender-based and inflexible approach to parental leave, giving parents much greater choice over how and when they take parental leave. An important consideration for employers is how they will implement and tailor the new rights in their own in house policies and arrangements.
In this article we examine some of the key features of the regime with which employers will need to be familiar.
The new regime will replace additional statutory paternity leave and pay but will otherwise operate alongside other forms of statutory family leave to which employees are already entitled ie maternity leave (52 weeks), adoption leave (also 52 weeks), ordinary paternity leave (2 weeks) and ‘ordinary’ unpaid parental leave (18 weeks).
When the new regime takes effect, the mother of a new baby will be able to convert part of her statutory maternity leave and statutory maternity pay entitlement into shared parental leave (ShPL) and shared parental pay (ShPP). ShPL and ShPP will also be available to adoptive parents and intended parents through surrogacy. It will be possible to convert up to 50 weeks of the full (52 week) maternity or adoption leave entitlement into ShPL and up to 37 weeks of the full (39 week) statutory maternity or adoption pay into ShPP.
ShPL and ShPP will be available for two parents to share, provided they both satisfy the eligibility tests. They will be able to decide how to split the leave and pay between themselves and whether they want to be off work together or at different times. The reason for taking leave must be to care for the child and it must be taken before the child’s first birthday or, in the case of adoption, before the first anniversary of the child being placed for adoption.
Period during which leave can be taken
If a mother ends her statutory maternity leave and pay after 14 weeks, the remaining 38 weeks of the total 52 week maternity leave entitlement will be available for ShPL and the remaining 25 weeks of the total 39 week maternity pay entitlement will be available for ShPP. The 38 weeks of ShPL and the 25 weeks of ShPP can be shared between the mother and father if they are both eligible.
A woman who has given birth cannot take ShPL until after her period of compulsory maternity leave ends. This means that the earliest she can take ShPL is 2 weeks after the birth (or 4 weeks in the case of factory workers). Similarly, an employee who takes adoption leave must take at least 2 weeks of such leave before he or she can switch to ShPL. In contrast, the Government intends that the other parent should be able to take ShPL from as soon as the child is born or placed for adoption, although the availability of paternity leave means that they are perhaps unlikely to do so.
Rate of ShPP
ShPP will be paid at a flat rate fixed annually by the government or 90% of the employee’s average weekly earnings, whichever is lower. The rate will be the same as basic rate statutory maternity pay and statutory paternity pay, currently £138.18 per week.
Qualifying for ShPL
To qualify for ShPL an individual must be in a qualifying relationship. This means that he or she must be either:
- the child’s mother
- the child’s father
- someone with whom a child is, or is expected to be, placed for adoption;
- married to or the civil partner of the child’s mother/the adopter; or
- living with the child and the child’s mother/the adopter in an enduring family relationship (excluding grandparents and other close blood/adoptive relations).
Together, the parents wishing to take ShPL must have the main responsibility for the care of the child.
To qualify for ShPL your employee must also satisfy the ‘continuity of employment test’ (which is explained below). In addition, for your employee to qualify for ShPL, the other parent must satisfy the 'employment and earnings test' (also explained below). Furthermore, if your employee is not the child’s mother or the person taking adoption leave in respect of a child, the other parent must be eligible for maternity or adoption leave or pay or maternity allowance.
Continuity of employment test
The individual must be continuously employed, as an employee, for at least 26 weeks ending with the 15th week before the week in which the baby is due and must remain continuously employed up to the date on which he/she takes ShPL.
Employment and earnings test
The individual must:
- have been an employed or self employed earner in at least 26 of the 66 weeks immediately before the expected week of childbirth; and
- have average weekly earnings, over 13 of those weeks, of not less than the lower earnings limit for National Insurance purposes (based on the lower earnings limit which applied in the tax year before the expected week of childbirth - £111 at present).
Qualifying for ShPP
Not all employees who qualify for ShPL will also be entitled to ShPP. To qualify for ShPL your employee must satisfy the ‘normal weekly earnings’ test. This is the same test as applies to eligibility for statutory maternity, adoption and paternity pay (as explained below). In addition, if your employee is not the child’s mother or the person taking adoption leave in respect of a child, the other parent must be eligible for statutory maternity or adoption pay or maternity allowance.
Normal weekly earnings test
The individual's average gross weekly earnings with the employer must be not less than the lower earnings limit for National Insurance purposes (based on the lower earnings limit in force at the end of the 'relevant week').
For these purposes, pay is averaged out over a period of at least 8 weeks ending with the employee's last normal pay day falling on or before the end of the 'relevant week'. The precise period over which the earnings are averaged out depends on when the employee's normal pay day falls. The 'relevant week' is the 15th week before the week in which the baby is due.
In order to opt into ShPL and to claim ShPP, your employee must provide you with a declaration, signed by the other parent, to confirm that they meet the qualifying criteria. You will not be expected to check that the declaration is accurate.
The procedure that employees must follow if they want to take ShPL and ShPP is not straightforward. We have found that it helps to think of the procedure in two stages:
- First stage: opting in to ShPL and claiming ShPP
- Second stage: booking ShPL to take some or all of the time off.
Stage 1: opting in to ShPL and claiming ShPP
There are two steps involved in opting in to ShPL:
- reducing (or ‘curtailing’) maternity or adoption leave entitlement; and
- giving a ‘notice of entitlement’.
An additional two steps are involved in claiming ShPP:
- reducing (or ‘curtailing’) maternity or adoption pay entitlement; and
- giving notice to take ShPP.
Reducing maternity/adoption leave
If the parents of a new baby want to take ShPL then the mother must reduce her maternity leave entitlement. Similarly, a parent who is taking adoption leave will have to reduce his or her adoption leave entitlement before ShPL can be taken.
To do this, the mother/person taking adoption leave will need to either:
- return to work (which will usually involve giving 8 weeks’ notice); or
- give her/his employer a binding notice of the date on which maternity/ adoption leave will come to an end (known as a ‘leave curtailment notice’); this notice must be given no less than 8 weeks before the first period of ShPL is due to start, whichever parent is planning to take the leave.
The government intends that the partner of a woman who has given birth or the person taking adoption leave will be able to take ShPL before the other parent’s maternity/adoption leave has actually come to an end, although the regulations themselves are not entirely clear on this point.
If the mother/adopter is not eligible for maternity/adoption leave but is eligible for statutory maternity/adoption pay or maternity allowance (as is the case with some agency workers) then she/he will have to give notice reducing (‘curtailing’) maternity/adoption pay or maternity allowance before the other parent will be able to take ShPL. As with curtailing leave, this must be done at least 8 weeks before ShPL is due to start.
At the same time as the mother/adopter gives her employer a curtailment notice, she/he must also give her/his employer either a notice of entitlement (see below) or a written declaration that the other parent has given a notice of entitlement to his/her employer and that the mother/adopter consents to the other parent taking the leave set out in that notice of entitlement.
Where a mother or adopter gives notice to reduce maternity or adoption leave in order to opt in to ShPL, they will only be able to change their mind (and opt back in to maternity/adoption leave) in certain limited circumstances. These include: if maternity/adoption leave has not ended and either the parents discover during the 8-week notice period that they do not qualify for ShPL; or if the other parent has died; or, in the case of a woman on maternity leave, if the notice was given before the birth and the mother revokes her notice to end maternity leave within 6 weeks of birth.
Giving notice of entitlement
A parent who wishes to take ShPL must provide his/her employer with a ‘notice of entitlement ’ at least 8 weeks before that employee intends to take ShPL.
The notice of entitlement of ShPL must be signed by both parents and include certain information and declarations including, amongst other things:
- the number of weeks of maternity or adoption leave that the mother/adopter took (or will have taken where notice has been given to end the leave on a future date);
- the maximum amount of leave available as ShPL;
- how it is intended to divide ShPL between the parents;
- a non-binding indication of when the employee plans to take their portion of the leave; and
- a declaration from the other parent stating that he or she meets the employment and earnings test and consents to the employee taking ShPL and to the employer processing information provided by them.
It is to be hoped that the government will, in due course, publish a standard form notice setting out all the information that must be provided by the employee.
After receiving this notice, an employer can, within 14 days, ask for the name and address of the other parent’s employer. The employee has 14 days within which to supply the information or a declaration signed by the other parent stating that they have no employer.
The employer can also, again within 14 days, ask their employee for a copy of their baby’s birth certificate or, where their employee is adopting a child, certain documents issued by the adoption agency confirming the name and address of the adoption agency, the date that the employee was notified of having been matched for adoption with the child and the date on which the adoption agency expects to place the child with the employee. The employee has 14 days to provide the information requested.
The parents can change the total amount of leave they wish to take at any time by giving a notice (signed by both of them) to their employers.
In order for either parent to claim ShPP, the mother/parent taking adoption pay will also need to reduce her/his entitlement to maternity/adoption pay or maternity allowance. To do this, she/he will need to give her/his employer a binding notice of the date on which maternity/ adoption pay will come to an end (known as a ‘pay curtailment notice’); this notice must be given no less than 8 weeks before the first period of ShPP is due to start, whichever parent is planning to take the pay. Where the mother is claiming maternity allowance rather than maternity pay, she will need to send a curtailment notice to her benefits office rather than her employer.
A parent who wishes to take ShPP must provide his/her employer with a notice at least 8 weeks before he or she intends to take ShPP, which is signed by both parents and contains:
- a declaration of eligibility to ShPP;
- the full amount of ShPP available;
- how ShPP will be split between the parents; and
- the period(s) during which the employee giving the notice intends to claim ShPP.
There seems to be no reason why these notices cannot be incorporated within the same document as the leave curtailment notice and notice of (leave) entitlement.
Parents will be able to change the total amount of ShPP they each will take by giving notice to that effect (which they must both sign). If an individual simply wants to change the dates on which he or she takes ShPP then he or she can do so by giving 8 weeks’ notice, which need not be signed by the other parent.
Stage 2: booking ShPL
An employee may take their leave all in one go or in separate blocks, although each period of leave must last no less than a week.
In order to take ShPL, an employee must give notice that he/she wishes to take a period of leave at least 8 weeks before the first period of leave set out in that notice is due to start. An employee can book more than one period of ShPL in one notice. However, there will be a cap of 3 notices to book or vary ShPL (with some exceptions) unless the employer agrees to more.
If the employee requests just one continuous period of leave in their notice then they can take that period of leave as of right.
If, on the other hand, the employee’s notice requests more than one period of ShPL, the employee cannot take their proposed pattern of leave as of right. Instead, a 2 week discussion period will follow (starting with the date of the request) and it will be up to each employee to discuss with their employer the proposed pattern of leave. During that period, the employer can agree or refuse the leave requested, propose alternative dates or indeed do nothing at all.
If, after the 2 week ‘discussion period’ the employer has not agreed the employee’s requested pattern of leave and the employer and employee have not agreed an alternative pattern that suits them both, then the employee has a choice: he/she can either withdraw the notice within the next 2 days (in which case it won’t count towards the cap of 3) or take the total amount of leave requested in a single block. The employee has a short period (5 days) in which to specify a start date for that block of leave; if he/she fails to do so then the leave will start on the first day of the first period of leave set out in the original notice requesting the leave.
An employer, therefore, is able to insist that the leave is taken in a continuous block by not agreeing to the leave pattern proposed in the notice. However, an employee will still be able to take leave in up to three discontinuous blocks even if their employer is not in agreement, simply by serving separate notices in respect of each discrete block of leave.
The 2 week discussion period is designed to ensure that the employer will have at least 6 weeks’ notice of the dates leave will be taken. In practice, difficulties could arise where a couple devise a pattern of leave that depends on the agreement of both employers. If one employer agrees the leave pattern but the other refuses, this could well disrupt the employees’ plans. Employees will be able to vary leave already booked but the scope for doing so is limited by the cap of 3 notices. (NB We shall be circulating a further briefing explaining the procedure for requesting variations to booked leave. At present the legislation on this point is unclear but it may be amended in due course).
In our recent survey, we asked employers how the right to take leave discontinuously or intermittently might impact on them. Only 5% thought that it would not be a problem and could be absorbed. 49% responded that they were concerned about the impact of this right on their business. 46% have not yet assessed the likely impact. Just under 70% of respondents indicated that they would encourage parents to share their leave plans as soon as possible and almost a quarter suggested that they may refuse requested leave.
Further, whilst 43% of respondents indicated that their organisation was likely to only permit 3 blocks of leave, almost 30% will use their discretion to allow greater flexibility on occasions. In reality, many employers may choose to adopt the statutory position at the outset but then adjust their policies and procedures as they better understand the new regime and the likely take up.
Rights during and after ShPL
Terms and conditions other than pay
During ShPL an employee will be entitled to the benefit of all of their existing terms and conditions of employment other than terms relating to pay. This is the same as for maternity, adoption and paternity leave. It effectively means that non-cash benefits must continue throughout any absence (including benefits provided through salary sacrifice arrangements) but salary can stop (subject to any entitlement to ShPP).
Special rules apply to pension benefits. In short, employer contributions (including employer contributions that arise due to a salary sacrifice arrangement) will have to continue to be made throughout any period of paid leave ie a period during which the employee is entitled to receive either ShPP or occupational shared parental leave pay. Those contributions will have to be based on the pay the individual would have been receiving if they were not on leave.
Subject to the requirement to pay statutory ShPP when it falls due, the new legislation does not require an employer to pay an employee when they take ShPL. Nevertheless, some employers will choose to pay more than the statutory minimum.
If an employer does not provide the same level of benefits for those taking ShPL as it does for women taking maternity leave, it is possible that male employees may bring employment tribunal proceedings complaining that this disparity in approach is discriminatory. For many employers, the risk of a claim succeeding will be very low but much will depend on the nature and purpose of the benefits provided to women on maternity leave and the terms upon which they are provided. In many cases the key question will be whether the employer can show that it enhances maternity pay in order to alleviate the pressure on women to return to work prematurely during the period when the mother may be recovering from childbirth and/or breastfeeding or that enhanced pay is otherwise designed to offset occupational disadvantages that are specific to women who have given birth. If it can, the employer will be well placed to defend any claims.
If an employer decides that it does wish to provide benefits equivalent to occupational maternity pay for those taking ShPL it will be necessary to consider how this will operate in practical terms. Because ShPL need not be taken in a single block it is unlikely to be possible to mirror occupational maternity pay precisely. Issues to consider include: whether pay will be maintained for a particular number of weeks of ShPL (whenever that leave is taken) or only in respect of ShPL taken within a certain period after birth; whether occupational pay should be limited so that it covers only the first period of absence on ShPL; whether any occupational maternity/adoption and/or paternity pay received (or to be received by way of a return to work bonus) should be offset against occupational pay for ShPL; whether availability of occupational pay will be limited to those who are receiving statutory pay; and whether any additional conditions as to remaining in employment/repayment will be imposed and how any of those conditions will interact with further absences on ShPL.
Both parents will be allowed up to 20 optional ‘keeping in touch’ days each during ShPL. Employees and employers will, therefore, be able to agree that the employee should work on up to 20 days without bringing to an end their shared parental leave or pay. This is in addition to the 10 KIT days allowed during maternity and adoption leave.
Our survey indicated that take up of KIT days had been good, with only 12% of respondents indicating that they have not been used at all.
The ShPL regulations will contain special rules governing redundancy situations. They will apply where, 'during a period in which an employee is taking shared parental leave, it is not practicable by reason of redundancy for the employer to continue to employ the employee under the existing contract of employment.' As is the case with maternity leave and adoption leave, in such circumstances, where there is a suitable available vacancy, the employee will be entitled to be offered alternative employment on terms and conditions 'not substantially less favourable' than those applying to the old job. The new contract must be for work which is both suitable in relation to the employee and appropriate for him/her to do in the circumstances; it must be offered before the employment under the existing contract ends and must take effect when the previous contract ends.
If the employer fails to comply with the above requirement, any dismissal by reason of redundancy will be regarded as automatically unfair (with no qualifying period of service needed).
The right to priority over vacancies gives rise to a number of tricky issues in the case of ShPL, particularly if an employee is in and out of the workplace at different times during the redundancy process. Whether someone is entitled to priority in a particular case is likely to depend on, amongst other things, the date on which the employee decided on the individual’s redundancy and when any potentially suitable vacancy actually arose. Identifying these dates with precision will not always be easy. The complexities are multiplied when more than one employee may be entitled to be offered a vacancy (whether under the ShPL legislation or the maternity or adoption regulations) but only one vacancy exists. In such cases it will be important, although not necessarily easy, to be able to establish with confidence whether each individual does have such a right to priority.
Return to work
Except where there is a redundancy situation, an employee will usually have the right to return to the same job when they return from ShPL. The exception is where the total amount of ‘relevant leave’ taken by the employee exceeds 26 weeks and it is not practicable for the employee to return to the same job. In that case the employee will be entitled to return to another job which is both suitable for the employee and appropriate for the employee to do in the circumstances, on terms and conditions that are no less favourable than the old job. For these purposes, relevant leave includes not only ShPL but also maternity, adoption and paternity leave.