Should an employer offer enhanced shared parental pay if it offers enhanced maternity pay? [2018 Update]

Maternity Leave

The Employment Appeal Tribunal (EAT) has now decided it is not direct sex discrimination to not match shared parental leave pay with enhanced maternity pay.

Background

Last year, we reported on the case of Capita Customer Management Ltd v Ali, where an Employment Tribunal (ET) decided it was direct sex discrimination for an employer to pay a female employee enhanced maternity pay, but not to pay a male employee enhanced shared parental pay. 

We reported that the employer, Capita, was planning to appeal. The appeal has now been heard, and the EAT has overturned the ET’s decision.

The crux of the EAT’s decision was about the correct ‘comparator’ in a discrimination claim. When bringing a claim of direct sex discrimination, a claimant must identify a comparator of the opposite sex, whose circumstances are the same or not materially different.

The EAT decided that Mr Ali, a man taking shared parental leave, could not compare himself to a woman taking maternity leave. In the EAT’s view, the comparison was not valid, because the purpose of each type of leave was different. The primary purpose of maternity leave is to protect the health and wellbeing of the mother after having a child, whereas the primary purpose of shared parental leave is to help parents care for their child.

The correct comparator in Mr Ali’s case was a woman taking shared parental leave who, like Mr Ali, would not have received enhanced shared parental pay either. So, there was no direct sex discrimination in this case.

So, is the position finally settled then?

Not necessarily …

In Ali, the employer paid women on maternity leave full pay for the first 14 weeks. This corresponded with the minimum 14-week maternity leave period granted by the European Pregnant Workers Directive. The EAT in Ali left open the possibility of whether, at some point after 14 weeks, the purpose of maternity leave changes to be more aligned with shared parental leave, being to care for the child. However, this would probably be a complex argument for a future claimant to run.

There is also the possibility of an indirect sex discrimination claim. Ali was a case of direct sex discrimination; the claimant did not raise indirect sex discrimination. Indirect discrimination was argued in a similar case; Hextall v Leicestershire Police. The EAT has recently decided in Hextall that it could potentially be indirectly discriminatory towards men not to mirror shared parental leave pay with maternity pay. The EAT has sent the case back to be reheard by a new ET, who will consdier that issue.

If the ET in Hextall finds indirect sex discrimination, it will be open to the employer to “objectively justify” the less favourable treatment, for example by encouraging retention rates among women returning from maternity leave. In a direct sex discrimination claim, an “objective justification” argument is not possible.

What should employers be doing?

Employers who offer enhanced maternity pay are now on safer ground when it comes to male employees arguing that not offering enhanced shared parental pay amounts to direct sex discrimination.

It is still the case that take-up of shared parental pay leave has been very low since it was first introduced, so many employers who offer enhanced maternity pay but not enhanced shared parental pay have decided to carry on doing so for now.

In terms of indirect sex discrimination, we will have to wait for future developments. If failing to enhance shared parental pay so that it matches enhanced maternity pay is indirectly discriminatory, it will come down to whether the employer in question is able to objectively justify the difference in treatment.

Please get in touch with our Employment team if you have any questions about how this might impact your business.

Jonathan Royle, Employment Senior Associate

Jonathan Royle

Senior Associate