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Court of Appeal Ruling on Enhanced Maternity Pay and Shared Parental Leave

New Parents and Baby

In May of this year, the Court of Appeal delivered an important decision for employers who enhance maternity pay but do not mirror that enhancement for employees taking shared parental leave.

The current legal position is that it is up to employers to decide whether or not to enhance contractual pay to employees on shared parental leave, when they pay enhanced maternity pay. In making such a decision, employers must take into account the need to avoid discrimination in that if they make enhanced payments to employees on maternity leave but not to employees on shared parental leave, there is a risk of sex discrimination claims from male employees who take shared parental leave and consider that they are being treated less favourably than female employees on maternity leave.

This latter point was tested out in Capita v Ali and Hextall v Chief Constable of Leicestershire [2019] EWCA Civ 900, where Mr Ali and Mr Hextall argued that the failure by their respective employers to mirror enhanced maternity pay amounted to direct and/or indirect sex discrimination. Mr Ali argued that it was direct sex discrimination by his employers to allow a new father on shared parental leave only 2 weeks’ leave on full pay when female staff were allowed 14 weeks’ maternity leave on full pay. Mr Hextall argued that it was indirectly discriminatory for him to receive only statutory pay during shared parental leave, whereas a woman on maternity leave was entitled to full pay for the first 18 weeks of her maternity leave.

In both cases, the Court of Appeal held that there was neither direct nor indirect discrimination. As regards direct discrimination, the court found that the correct comparator for a man on shared parental leave is a woman on shared parental leave, not a woman on maternity leave. The court said it was necessary to consider the purposes of maternity leave and pay, which include enabling the mother to recover from the effects of the pregnancy and childbirth.

Similarly, the Court rejected the argument that a policy of enhancing maternity pay but not shared parental pay amounted to indirect sex discrimination against men.  It held that Mr Hextall’s claim was actually an equal pay claim (which was not upheld) rather than indirect discrimination.

Although this decision gives employers a degree of clarity in respect of enhanced maternity pay and shared parental leave, the government has expressed concern about the low take-up of shared parental leave and so it may be that there is a review of statutory pay during shared parental leave in the future.

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