Background

Since the Shared Parental Leave Regulations came into force on 5 April 2015 there has been a question around whether organisations that offer enhanced maternity pay to women, but only statutory shared parental leave pay to men, may be discriminating unlawfully on the grounds of sex. The Court of Appeal (the Court) may now have settled this issue in its well-considered judgment, which apparently closes down all avenues a man might take in bringing such a claim. The employees may still appeal to the Supreme Court and we will keep you updated on developments in this area. The Court's decision considers two cases: Ali v. Capita Customer Management Ltd and Hextall v. Chief Constable of Leicestershire Police as well as a cross-appeal by the Chief Constable against Mr Hextall.

Both Mr Ali and Mr Hextall took a period of shared parental leave. In Mr Ali's case this immediately followed a two-week period of paternity leave during which he had received full pay. During that period his partner was diagnosed with post-natal depression and curtailed her maternity leave so that Mr Ali could take a period of shared parental leave. This was paid at the statutory rate only. However, if he had been a woman on maternity leave he would have received 14 weeks' full pay. Mr Hextall's period of shared parental leave arose in different circumstances, but was also paid at the statutory rate when women on maternity leave would have been entitled to a period (18 weeks) at full pay. Mr Ali and Mr Hextall both brought claims against their employers. Mr Ali brought a claim for direct sex discrimination whilst Mr Hextall brought claims for both direct and indirect sex discrimination. The Chief Constable in Mr Hextall's case argued that the claim had not been correctly pleaded and should have been brought as a claim for equal terms under the equal pay provisions of the Equality Act 2010 (the Act).

Legislation

In reaching its decision the Court considered the European Union (EU) directives on both statutory maternity leave and shared parental leave, as well as the enabling regulations applicable in the UK. It also considered relevant provisions of the Act, including:

  • section 13(6)(b), which provides that, when conducting a comparison between A and B in a direct discrimination claim, where A is a man, no account is to be taken of special treatment afforded to a woman (B) in connection with pregnancy and childbirth;
  • section 23, which provides that a comparison between A and B for the purposes of either a direct or indirect discrimination can be made only if there is no material difference between their circumstances; and
  • part 5, which deals with equality of terms and implies a sex equality clause into all terms of work. The effect of this is that, where a term of A's is less favourable than a corresponding term of B's, A's term is modified so that it is no longer less favourable. Alternatively, if that term is not included in A's terms, A's terms are changed so as to include that term. However, the sex equality clause will not have this effect where the term of work affords special treatment to women in connection with pregnancy and childbirth. The Court found, taking all of this legislation into account, it was neither directly nor indirectly discriminatory on the grounds of sex, nor was it a breach of the implied sex equality clause, to pay a woman on maternity leave enhanced maternity pay but to pay statutory shared parental leave to a man taking shared parental leave.

Direct discrimination

The Court held that the correct comparator for Mr Ali's direct discrimination claim was not a female employee on maternity leave, but a female employee on shared parental leave. Mr Ali could not, said the Court, compare himself to a female employee on maternity leave because the purpose of the two types of leave was different. This was based on the EU legislation which lies behind the UK legislation. The purpose of statutory maternity leave, after the two-week compulsory period, is for the health and safety of pregnant workers and workers who have recently given birth or are breastfeeding. Under EU legislation the predominant purpose of maternity leave is not to care for the child.

In contrast, the purpose of shared parental leave is to care for the child. It was also noteworthy that the EU legislation on shared parental leave did not make any provision for pay. This was contrasted with the EU directive on maternity leave, which provides for at least 14 weeks' pay.

The Court also pointed to several other differences between maternity leave and shared parental leave, namely:

  1. statutory maternity leave is partly compulsory whereas shared parental leave is entirely optional;
  2. statutory maternity leave can begin before birth whereas shared parental leave cannot;
  3. statutory maternity leave is an immediate entitlement whereas shared parental leave is not;
  4. shared parental leave can only be taken with a partner's agreement whereas statutory maternity leave can be taken regardless of a partner's views or existence;
  5. statutory maternity leave is acquired through pregnancy and maternity, whereas shared parental leave is acquired by a mother choosing to give up statutory maternity leave; and
  6. a birth mother is entitled to statutory maternity leave even if there is no child to look after, whereas there must be a child to look after for shared parental leave to be taken.

For these reasons, said the Court, there is a material difference between Mr Ali and a female employee who is entitled to statutory maternity leave. On the facts, the correct comparator (being a woman entitled to enhanced pay for shared parental leave) was entitled to the same pay as a man, and so that claim would also fail.

In terms of the provisions of the Act stating that, for the purposes of a direct discrimination claim, no account should be taken of the special treatment afforded to women in connection with pregnancy or childbirth, the Court commented that this should not be interpreted as a general prohibition on men bringing sex discrimination claims in connection with women who were pregnant or on maternity leave, and that these would need to be considered on a case-by-case basis.

Equal terms

The Court accepted the Chief Constable's assertion that Mr Hextall's claim should have been brought as an equal terms claim. His claim, said the Court, was that his comparator's more favourable terms regarding her entitlement to take time off to care for her new baby were incorporated into his terms by operation of a sex equality clause. He would then rely on that clause to claim that he had been underpaid when he was on shared parental leave.

The Court held that that claim could not succeed because the Act expressly prevented a man from relying on a sex equality clause where his comparator's more favourable terms arose as a result of the special treatment afforded to her in connection with pregnancy or childbirth.

Indirect discrimination

The Court went on to look at Mr Hextall's indirect discrimination claim in any event. It found that this could not have been successful. This is because, where a claim could be categorised as an equal pay or equal terms claim, it could not ordinarily also be brought as a sex discrimination claim.

However, the Court still considered whether, if that claim could be brought, it might have been successful. It held that it was not the provision, criterion or practice (PCP) of paying only the statutory rate for those taking shared parental leave that caused men a particular disadvantage as compared to women, but rather the disadvantage was caused by the fact that only a birth mother was entitled to statutory and contractual maternity pay (which was not, itself, a PCP).

It also found that, under the Act, Mr Hextall could only compare himself to those who were not in a materially different position from his own. For the reasons set out in relation to Mr Ali's direct discrimination claim, the position of women taking maternity leave was materially different from Mr Hextall's. The Court therefore found that the PCP did not disadvantage Mr Hextall. It also found that, had Mr Hextall suffered a disadvantage, this would have been justified as a proportionate means of achieving the legitimate aim of affording special treatment to mothers in connection with pregnancy or childbirth.

Law versus policy

The legal reasoning behind the judgment is clear and it is difficult to argue that, legally, this was not the right decision. It will be welcome news to employers who do not, currently, enhance shared parental pay where they do enhance maternity pay. However, the decision does give rise to a question over how the issue should be addressed from a policy point of view.

There has been an ongoing conversation over recent years about trying to change the balance so that men and women share childcare responsibility more equally. Shared parental pay is one way to try to address the current gap here, but uptake has been very low with some reports suggesting only 2 per cent of eligible couples have taken advantage of the opportunity to take shared parental leave. The reasons for this are complex – but the fact that shared parental leave is, quite commonly, paid at the statutory rate means that many couples will be worse off if they take the leave than if they don't. The Court's decision, then, isn't going to help change the current outlook for shared parental leave, with the TUC suggesting the regulations are "dire" and in need of a complete overhaul.

However, this tells just part of the story. There are, now, an increasing number of large employers who are offering enhanced shared parental pay. KPMG, for example, publicises that it offers 18 weeks' shared parental leave at full pay, NHS staff taking shared parental leave are paid at the same enhanced level as those taking maternity or adoption leave, and O2 recently announced it would increase paid paternity leave (rather than shared parental leave) to 14 weeks.

Interestingly, men working for large employers in the US are increasingly being given paid leave following the birth of their child, with Bank of America, Investec, Diageo and Aviva all now offering at least four months' leave at full pay for both men and women. This is particularly significant in the US, where even mothers have no federal entitlement to paid or unpaid leave to care for a new child or recover from birth unless they work for a company with 50 or more employees (in which case they are entitled to 12 weeks' unpaid leave). Change may well be afoot.

It is also worth considering the other side of the coin. If the Court had found the other way this might not have been a policy solution but, conversely, may have led many employers who currently pay enhanced maternity pay to cease doing so to avoid discriminating against men taking shared parental leave. If the Court had decided otherwise this might well not have been a policy solution but have created a wider, more difficult, problem. It seems unlikely, based on the judgment, that leave to appeal will be granted and so, whilst this will not be the end of the story, it seems that this part of this difficult issue may now be resolved.