· 3 min read · Features

Staying within the law on longer, fully-paid maternity leave and dealing with the cost implications

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Last month, the European Parliament agreed proposals to amend the Pregnant Workers Directive, including an increase in the minimum period of maternity leave across the EU to 20 weeks on full pay. Currently the UK gives new mothers up to a full year off, six weeks of it paid at 90% of the mother's average pay, followed by 33 weeks on 125 per week Statutory Maternity Pay (SMP).

Many are predicting that longer, fully-paid maternity leave will drive private businesses away from employing young women. The EU news website reports that MEPs are being warned that the proposals will ‘turn the clock back to the 1920s for female employment’. So what can businesses do to ensure they stay within the law and at the same time deal with the cost implications?

The British Chambers of Commerce puts the UK cost at 47% of the total projected EU cost of £121.18 billion over 19 years. They comment that: ‘On the day that the chancellor announces £83 billion worth of cuts to Government spending, it is outrageous that the UK Exchequer could be saddled with a bill for nearly £3 billion.’ The Federation of Small Businesses (FSB) calculates the cost to small businesses at £7,140 for an employee on an average wage of £25,428. It argues: ‘Small businesses are known to be flexible employers and it is unfortunate that maternity and paternity leave is one of the biggest barriers for them when looking to take on staff. In the present economic climate, we should be making it easier for people to gain employment, not placing obstacles in their way.’

The employment relations minister, Edward Davey, said: "This is a substantial increase at a time when economies across the EU can least afford it. In addition to the cost, these proposals will be regressive as most of the additional money will go to the highest paid women."

The counter-arguments assert that a better work-life balance would help keep more women in work. Supporters of the proposals calculate that: In the UK, costs will be covered if just 0.04% more women are able to carry on working as a result of these provisions'. The National Childbirth Trust told the BBC that: ‘Women having a baby should have the ability to be able to choose to be at home for a period of time that's going to enable them to feed and build a relationship with their baby. We shouldn't be letting a temporary financial crisis drive our policy on supporting new mothers and the next generation.’

Much of this is rhetoric. The European Parliament’s proposals are a long way from becoming law and they are subject to negotiation with all member states and co-decision with the council of EU ministers. The UK and German governments are reported to be resisting them and a range of employers' groups will lobby strenuously in their support. It does seem likely that, by the time UK employers need to apply the new rights, the proposals will be watered down considerably It should not be forgotten that the European Commission had originally proposed to extend maternity leave to 18 weeks and to allow individual member states to decide the level of pay.

The key issue for the UK will be 'who is going to pay for the increase’? The Government will have to decide whether the current rules allowing employers to recover a large part of SMP will apply to any increased maternity pay and, if not, how the cost should be split between taxpayer and employer.

This does not mean that UK employers should do nothing beyond joining the debate – everyone is currently updating equal opportunities policies in response to the Equality Act. It is worth remembering that much of discrimination risk management comes from good communication, procedures and training. This applies acutely to maternity leave, restructuring during maternity and increasingly during the recruitment process, which is already more prescribed under the Equality Act.

William Granger is partner in the Employment team at law firm Speechly Bircham

The EU proposed changes to maternity rights by comparison to the current UK position:

  • The six weeks maternity pay at 90% of average pay and 33 weeks at the flat rate of £125 a week SMP (55% higher than sick pay) in the UK increases to 20 weeks' full pay. 
  • The two weeks' compulsory leave after the birth in the UK will to six weeks. This also adds four weeks to those bonuses that can be reduced pro rate for maternity leave (ie those bonuses that are retroactive pay for work done, such as a performance bonus)
  • A new ‘ban’ on the dismissal of pregnant workers until six months after the end of their maternity leave.
  • The two weeks’ paternity leave paid at the rate of SPP will be increased by up to a further 26 weeks for fathers of children due on or after 3 April 2011 with full pay for the first two weeks.
  • Obligations to perform night work or overtime will be removed for: all pregnant workers during the last 10 weeks of pregnancy; pregnant workers with health problems during the remainder of the pregnancy; and breastfeeding mothers during the entire period of breastfeeding.