A new system of Parental leave – “blocks” of leave on the horizon from 2015 (subject to “affordability”)

A new system of Parental leave “blocks” of leave on the horizon from 2015 (subject to “affordability”)

Section 14 of the Coalition agreement boldly declared that: “We will encourage shared parenting from the earliest stages of pregnancy – including the promotion of a system of flexible parental leave”.

Promoting this aim the Government has today launched a consultation on plans to introduce a new system of flexible leave from 2015, to assist in creating a “modern workplace”.

The “Modern Work Place” consultation launched by the Department for Business, Innovation and Skills (BIS) on 16 May 2011 is divided up into four sections: Flexible parental leave; Flexible working; Working Time Regulations; and Equal pay proposals.

Whilst it is the proposals for flexible parental leave that will make the headlines, it is the Equal Pay section that may be the most far-reaching, and could provide employment tribunals with a new stick to beat employers as it proposes new legislation that will require Employment Tribunals which have found an employer to have discriminated because of gender in relation to contractual terms or non contractual pay matters to order that employer to conduct a pay audit.

It is also proposed that those companies that fail to carry out such an audit could be subject to “sanctions”, and those sanctions could include:

• allowing a future tribunal to take the failure into account when considering a future claim (by drawing an inference as to the reason for that failure);

• making the failure to comply itself an act of unlawful discrimination;

• making the employer subject to a criminal fine; or

• applying a civil financial penalty.

Unintended consequences

The consultation acknowledges that there is a risk of “unintended consequences” of such new legislation, as being that an employer could simply settle a case and not run the risk of being made subject to an audit requirement which might result in further claims; and that fewer opportunities might arise for potentially discriminatory practices or issues of law to be exposed.

I consider it to be highly likely that employers will decide to dip into their pockets to settle such claims (with a valid compromise agreement) in an attempt to avoid the pay audit requirements at all costs; stoking the fears that this could lead to a flurry of unmeritorious claims from claimants who are chancing their hand at a claim.

1. Maternity and Paternity leave in blocks Flexible Parental Leave

• 18 weeks maternity leave and pay – in one continuous block around birth.

• Four weeks of parental leave and pay exclusive to each parent to be taken in the first year.

• 30 weeks of additional parental leave available to either parent – of which 17 weeks would be paid and can be broken in blocks between parents.

Under the new proposals once the early weeks of maternity and paternity leave have ended, parents will be able to share the overall leave allowance between them.

Unlike the current system this leave could be taken in a number of different “blocks” and both parents could take leave at the same time.

The impetus for this suggestion seems to come from looking at our European cousins:

• In Sweden, parental leave is provided in days, allowing parents to take their leave in smaller chunks as desired.

• In Germany, parents are able to claim parental pay even if they are working for up to 30 hours per week. Income from any part-time work is taken into consideration when calculating parental benefits.

• In the Netherlands, parental leave and pay are calculated on an hourly basis. With agreement of the employer, leave can be taken for more hours a week during a shorter period or for fewer hours a week over a longer period, and can also be taken in two or three blocks of time.

2. Flexible working Flexible Working

• Extending the right to request for all workers who have been with their employer for 26 weeks.

• The Government will consider publishing a statutory Code of Practice for businesses. It will propose that employers should be allowed to take into account employees individual circumstances when considering conflicting requests.

• There are no plans to alter the current 8 business reasons for a business to turn down a request. The Government recognizes that legislation is not the only answer to promoting flexible working practices.

The Consultation sets out a list of the Types of flexible working:

Part-time: employees are contracted to work less than normal full-time hours.

Flexi-time: employees work a standard core time, but can vary your start, finish and break times each day within agreed limits.

Compressed hours: employees work their total number of contracted weekly hours in fewer than the usual number of working days each week by working longer individual days.

Homeworking: employees work all or part of their contracted hours from home.

Annualised hours: employees average out working time across the year so they work a set number of hours per year rather than per week. Normally, they are split into core hours that are worked each week and unallocated hours that can be used for peaks in demand.

Term-time working: employees’ work follows school term patterns. They work as normal during term-time. During school holidays they do not go to work but are still employed.

Structured time off in lieu: employees work longer hours during busy periods and take an equivalent amount of time off (with pay) at a less busy time. There may be limits on the number of hours individuals can build up and when they can take time off.

Job-sharing: employees work part-time (which could be part-day, part-week or part-year) and share the duties and responsibilities of a full-time position with another worker.

Varied-hours working or time banking: prospective employees advertise which hours they are available to work for the day and employers employ them for short periods of time to manage specific pieces of work, such as covering a telephone help-line. For example, an individual might be employed between 6pm and 9pm on a Tuesday evening

New Flexible Working Code of Practice

The consultation wants employers to be able to adopt flexible working, in their workplace, as easily as possible. To do this the Government proposes to replace the existing statutory process for considering requests with a duty to consider requests ‘reasonably’ alongside a new Code of Practice to guide employers in considering request, to enable employers to use their own management systems to consider requests, so long as the request is considered within reasonable amounts of time, and conducted in a fair and reasonable manner. Importantly for business owners the Government do not intend to change the existing business reasons under which an employer may refuse a request.

3. Working Time Regulations (WTR)

The consultation sets out proposals to amend the UK’s Working Time Regulations (WTR) in order to ensure compliance with a number of judgments in the Court of Justice of the EU relating to the interaction of annual leave with sick leave, maternity leave and parental leave in the context of the European Working Time Directive (WTD).

The judgments established the principle that workers who have not had the opportunity to take their annual leave because of sickness absence, maternity or parental leave in the current leave year, must be able to carry it forward into the following leave year.

The principles established in respect of sickness and the annual leave entitlement under the Working Time Directive were:

i. Workers continue to accrue annual leave entitlement during sickness absence (Stringer);

ii. Workers can choose to take annual leave at the same time as being absent due to sickness (Stringer);

iii. Workers whose employment terminates in a year during which they have been away from work due to sickness are entitled to the same termination payment for untaken annual leave as any other worker (Stringer);

iv. Workers who fall sick during scheduled annual leave can reschedule the annual leave within the same leave year (Pereda); and

v. Workers who were unable to take annual leave due to sickness absence and who have not had the opportunity to take it again within the same leave year must be able to carry it forward into the next leave year (Pereda).

4. Equal Pay

– Pay audits for companies guilty of “pay discrimination

The consultation is looking at avoiding further cases of “pay discrimination” by proposing new legislation that will require Employment tribunals which have found an employer to have discriminated because of gender in relation to contractual terms or non-contractual pay matters to order that employer to conduct a pay audit.

What is a pay audit?

The consultation describes what is involved in a pay audit as comparing the pay of women and men doing equal work, investigating the causes of any potential discrepancies, and closing any gaps that cannot be satisfactorily explained on grounds other than sex. Who would this apply to? The consultation envisages that it might be possible to specify in legislation that the obligation to conduct an audit will apply to some employers but not others.

For example, it could apply only to those with over 50 employees. However, it may be that in some cases an audit would be very useful to a smaller company with a complex workforce, but not to a larger company which has clear, transparent pay structures. Alternatively, we could allow the tribunal to impose an audit only where it considers it is useful to do so, or we could require the tribunal to impose an audit except where it would not be productive. It would appear that they have not made up their mind as to who should be covered, but they have a relatively clear view as to who should not be covered:

Who will not be covered?

“We consider that a tribunal should not order that an audit be conducted where:

• An audit has already been conducted in the last three years.

• The employer has in-place another means, appropriate in the circumstances, of ensuring that the pay structure is non-discriminatory. This would take into account, for example, clearly transparent pay structures.

• The tribunal does not consider it would be productive to order an audit in the particular circumstances”. The last of these restrictions would give the tribunal discretion not to make an order in particular cases where it would serve no useful purpose, for example in the case of “micro-employers” or where the breach of the law is clearly not indicative of underlying structural pay inequality.

Requirement to publish results:

Where an employer is required to conduct a pay audit the consultation proposes that they should also be required to publish the results

Sanctions for failing to complete and publish results:

The consultation proposes that “so that the requirement cannot simply be ignored”, there be a sanction if the requirement is not met.

There is a range of possible Sanctions including:

• allowing a future tribunal to take the failure into account when considering a future claim (by drawing an inference as to the reason for that failure);

• making the failure to comply itself an act of unlawful discrimination;

• making the employer subject to a criminal fine; or

• applying a civil financial penalty.

The consultation highlights that “opting for a civil penalty would involve an authority monitoring performance of audits, pursuing employers who fail to do them, and taking the necessary enforcement action” –essentially creating another layer of bureaucracy, and thus less attractive.

What would be included in the pay audit?

The audit must deal with those issues likely to arise in a future case, such as:

• which jobs are alike, rated as equivalent, or of equal value (requiring that a job evaluation be done);

• whether justification of particular differences in pay or reward is required; and

• whether there is gender imbalance in particular parts of the workforce. The consultation propose that key elements of an audit would be:

• identifying jobs within that employment involving similar levels of skill, effort, decision-making, and knowledge (work of equal value);

• comparing the terms of women and men doing like work, work rated as equivalent, and work of equal value;

• determining the reasons for any inequalities in terms that are identified; and

• deciding what action, if any, is needed.

Press releases:

Business Secretary Vince Cable said:

“Our proposals will encourage greater choice by giving employees and their employers the flexibility to find arrangements to suit them both. “New parents should be able to choose their childcare arrangements for themselves, rather than being dictated to by rigid Government regulation as is currently the case. And employers should be encouraged to come to agreement with employees on how work and family responsibilities can be met simultaneously. “These measures are fairer for fathers and maintain the existing entitlements for mothers – but crucially give parents much greater choice over how to balance their work and family commitments. “Of course I’m mindful of the need to minimise the costs, bureaucracy and complexities on businesses. This has been at the forefront of my mind throughout the development of our proposals. So we will ensure that businesses will still be able to take into account their needs when agreeing how leave can be taken. But I’m also confident that we have a good case to make on the wider benefits to business – not least from a motivated and flexible workforce and we will be making this case to employers over the next few years before these changes are introduced.”

For more information follow this link to the BIS web site:

Philip Henson, Partner and Head of Employment Law @ Bargate Murray.

Bargate Murray.


1 Comment

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One response to “A new system of Parental leave – “blocks” of leave on the horizon from 2015 (subject to “affordability”)

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