The Work and Families Act (WFA), which received Royal Assent on 21 June, 2006, has been the subject of considerable speculation and debate since the Department of Trade and Industry (DTI) outlined a range of proposals promoting family-friendly policies and practices at work in its February 2005 consultation paper.
Maternity rights and benefits
This article will focus on the impact of the WFA on maternity rights and benefits, including statutory maternity pay (SMP) and statutory maternity leave (SML). WFA also makes a number of equivalent changes to the rights of adoptive parents to take paid adoption leave.
As a result of the new law, mothers who give birth on or after 1 April, 2007, enjoy up to 52 weeks’ SML regardless of length of service, receive SMP for 39 weeks (increasing to 52 weeks) during SML and can work up to 10 days during SML without losing SMP.
So, how will the staged increase in SMP (initially increasing from 26 weeks to 39 weeks and eventually to 52 weeks) impact employers and employees?
While the increase in SMP has grabbed many of the headlines, the impact may be less significant than it first appears.
WFA does not extend the current six-week period during which higher-rate SMP (90% of average pay) is paid. Any additional weeks of SMP are paid at the statutory rate which is currently £112.75, with the result that many mothers may not be able to afford to exhaust their increased entitlement to SMP. Furthermore, employers will be able to recover 92% of the cost of SMP from HM Revenue & Customs, with some small employers able to claim back 104.5% of such costs.
However, those employers who provide enhanced maternity benefits linked to the period of SMP may find that their policy has become more generous than originally intended. Furthermore, employers may be obliged under the Social Security Act 1989 to continue certain “service-related benefit schemes” (including certain pension, life and permanent health insurance schemes) during the extended period of SMP, even though the obligation to maintain other contractual benefits ceases at the end of the 26-week ordinary maternity leave period.
Keeping in touch
In order to ensure that employees are able to attend work for short periods during maternity leave without losing their entitlement to SMP, the law introduces the concept of ‘keeping in touch’ days. Up to 10 such days may be taken during maternity leave, but not during the first two weeks after birth, without prejudicing the right to SMP.
The WFA does not make it clear whether employees should be paid for ‘keeping in touch’ days. However, the DTI guidance contemplates that an employee will be paid on a ‘keeping in touch’ day “for any activity which would ordinarily be classed as work” under her contract but goes on to state that the “rate of pay is a matter for agreement”. It may be a breach of contract and/or national minimum wage legislation to fail to make payment for work done on ‘keeping in touch’ days, as well as sex discrimination. ‘Keeping in touch’ days are no substitute for ongoing communication and employers must ensure that employees on maternity leave are not deprived of opportunities for promotion which arise in their absence. WFA permits employers to make “reasonable contact” with employees during maternity leave.
Employers are divided over how beneficial ‘keeping in touch’ days will be in practice. Some employers are concerned that they will amount to little more than an opportunity to show the baby off and catch up on gossip. However, employees may find ‘keeping in touch’ days useful when easing back into work after maternity leave.
Additional paternity leave
The most controversial provisions of the WFA concern the proposed rights for parents and adoptive parents to share paid leave, allowing the father or adoptive father to take additional paid paternity leave following the mother’s return to work during SML. The Government is expected to publish draft regulations detailing its proposals towards the end of this year, with the regulations expected to come into force for babies due on or after 5 April, 2009, at the earliest. The DTI issued a consultation paper on 14 May, 2007, inviting comments on its proposals that the administration of additional paternity leave and pay should be by means of self-certification by father and mother. It is important to note that a father would neither be able to take paid leave at the same time as the mother takes maternity or adoption leave, nor in any event during the first six months of maternity/adoption leave. Nevertheless, the government expects between 10,000 and 20,000 men will take advantage of the new right.
Employers will be required to continue to provide contractual benefits during additional paternity leave, as in the case of an employee taking ordinary maternity leave. Employers who provide enhanced maternity pay to mothers may face claims from fathers whose additional paternity pay is not also enhanced.
The WFA extends the rights of working parents, adoptive parents and carers in an attempt to achieve the Government’s stated aim of helping employees balance work and family commitments. The greatest impact of WFA will be felt in 2009 when the Government is expected to extend SMP to 52 weeks and introduces additional paid paternity leave.
James Cox is a partner and Daniel Pollard an associate in the labour and employment group at Gibson Dunn & Crutcher.