Only women receive enhanced maternity pay so is it discrimination?
The answer is no, based on this recent Court of Appeal decision. The case was actually a joined appeal of two cases: Ali v Capital Customer Management Ltd and The Chief Constable of Leicestershire Policy v Hextall, which we have reported on previous.
The conjoined appeals concerned various aspects of employment law:
Shared parental leave – Parents have the option of dividing leave after the birth of their child by taking shared parental leave (SPL). Essentially it allows the mother to give up her right to one year’s maternity leave so that she and her partner can share the leave or the partner can take all the leave instead (except for the first 2 weeks after childbirth which are compulsory for the mother to take).
Shared parental pay is paid to both men and women at a flat rate set by the government.
Direct sex discrimination occurs where, because of sex, a person (A) treats another (B) less favourably than A treats or would treat others (section 13 of the Equality Act 2010).
Indirect sex discrimination occurs where a person (A) applies to another (B) a provision, criterion or practice (“PCP”) which has the effect of disadvantaging persons of one sex over another and A cannot show the PCP to be a proportionate means of achieving a legitimate aim (section 19 of the Equality Act 2010).
Discrimination at work provisions: It is unlawful under the Equality Act 2010 for an employer to discriminate (directly or indirectly) against any of its employees in relation to an employee’s terms, access to any benefits, dismissal or by subjecting the employee to any other detriment.
Equal Pay Provisions– Women and men have a right to equal pay for equal work and this includes equality in pay and all other contractual terms. The law implies a sex equality clause automatically into all contracts of employment, ensuring that a woman’s contractual terms are no less favourable than a man’s where they carry out equal work (or vice versa). However, the legislation in this area specifically states that the “sex equality clause” does not have effect in relation to terms of work affording special treatment to women in connection with pregnancy or childbirth.
It can be difficult to distinguish what constitutes an equal pay claim and what constitutes a claim for sex discrimination, however the two are mutually exclusive. Generally speaking (and the law is complicated in this area), in respect of non-contractual or discretionary payments, or in relation to issues such as recruitment, training, promotion, dismissal or the allocation of benefits, the employee’s claim will be under the sex discrimination at work provisions mentioned above. However, in relation to the employee’s contractual pay and benefits package (including basic pay, non-discretionary bonuses, overtime rates and allowances and performance-related benefits to name a few) the equal pay provisions of the Equality Act 2010 will apply.
Case 1: Ali v Capita Customer Management Limited (Capita)
Mr Ali was employed by Capita and when his wife gave birth to a daughter in February 2016, he took 2 weeks paid paternity leave. After the birth, Mr Ali’s wife was diagnosed with post-natal depression and was advised that a return to work would aid her recovery. Mr Ali wanted to take Shared Parental Leave so that he could look after his daughter and argued that, because Capita paid full pay for the first 14 weeks of maternity leave, he should be entitled to the same enhanced rate of pay. Capita refused and said it would pay Mr Ali statutory parental pay only. Mr Ali brought a claim of direct sex discrimination in the Tribunal arguing he was entitled to the same higher rate of pay as a female employee on maternity leave.
Mr Ali won his claim for sex direct discrimination in the Employment Tribunal, where it was held that he could compare himself with a hypothetical female colleague who was taking on a child caring role. The Tribunal considered that the purpose of providing enhanced maternity pay on maternity leave was to assist female employees in that time to care for their new born child, and this was the same as what Mr Ali was going to do during his shared parental leave.
Capita appealed to the Employment Appeal Tribunal (EAT) who held that the Employment Tribunal had made an error in law by deciding it was direct sex discrimination to refuse to pay a father enhanced shared parental pay in line with enhanced maternity pay. The Appeal Tribunal said that the Tribunal was wrong to compare the father’s circumstances to a woman who had just given birth (on the basis that both were taking leave to care for their child) because this finding ignored the purpose of maternity leave and pay under statutory law which is for the health and well-being of expectant and new mothers.
Mr Ali appealed to the Court of Appeal.
Case 2: The Chief Constable of Leicestershire Police v Hextall
Mr Hextall is a serving police constable. The Leicestershire Police Force paid occupational maternity pay for 18 weeks of maternity leave at full pay. Mr Hextall took shared parental leave from 1 June to 6 September 2015 and over that 14 week period he was paid the statutory rate for shared parental leave. He brought a claim alleging that the policy of only paying shared parental leave at the statutory level caused particular disadvantage to men and was unlawful discrimination.
Mr Hextall claimed direct sex discrimination and also indirect sex discrimination. In his claim of indirect discrimination, the “provision, criterion or practice” (‘PCP’) Mr Hextall relied on was that he was paid only the statutory rate of pay for taking a period of shared parental leave in comparison to women who were paid 18 weeks full pay for 18 weeks of maternity leave. He said this put him at a particular disadvantage in comparison with women, in that he is proportionately less likely to be able to benefit from an equivalent rate of pay when taking leave to act as primary carer for his child, to that received by women on maternity leave.
The Tribunal rejected Mr Hextall’s direct discrimination claim for the same reasons as were given in Mr Ali’s case. The Tribunal also rejected the indirect discrimination claim for a number of reasons but ultimately said his only claim in law was that of direct discrimination (which had been rejected). Mr Hextall appealed to the Employment Appeal Tribunal against the rejection of his indirect discrimination claim. Leicestershire Police cross-appealed on the basis that they said the claim was one of equal pay not indirect discrimination.
The Appeal Tribunal held that the employment tribunal had erred in its approach in relation to Mr Hextall’s indirect discrimination claim and rejected the cross appeal, referring the case back to a different tribunal to decide.
The appeals (against the EAT’s decisions) in the claims of Mr Ali and Mr Hextall were heard jointly by the Court of Appeal.
The Court of Appeal roundly rejected the appeals of Mr Ali and Mr Hextall and held that they had not been discriminated against when their employers failed to pay enhanced shared parental pay equivalent to the maternity pay that a woman on maternity leave would have received for the same period.
In the case of Mr Ali’s direct discrimination claim, the Court of Appeal rejected his argument that the purpose of maternity leave is the same as shared parental leave, namely the facilitation of childcare. The Court of Appeal held that its purpose is to protect a woman in connection with the effects of pregnancy and motherhood. The proper comparator, the Court of Appeal said, was a female worker who is on shared parental leave and since there would be no difference between a man on shared parental leave and a woman on shared parental leave, Mr Ali’s appeal had to be rejected.
The Court of Appeal also held that both the tribunal and EAT were wrong to characterise the claim of Mr Hextall (upholding the cross appeal of Leicestershire Police Force) as indirect discrimination. The Court agreed that the claim was an equal pay claim. This was because they said his claim was in effect that he was entitled to the more favourable terms of work of a female employee as regards her entitlement to take time off to care for her new baby by operation of the “sex equality clause”. He was relying on this “sex equality clause” to claim that he had not received his contractual entitlement to pay over the period when he was absent from work to care for his new baby and suffered a reduction in pay consequently.
Having held that his claim was one of equal pay, the Court of Appeal went on to say that since the Equality Act excludes an equal pay claim in relation to terms that afford special treatment to women in connection with pregnancy or childbirth, the claim had to be rejected.
Points to note
The decision of the Court of Appeal will be welcome news to employers who pay enhanced maternity pay. It will also be welcome news to working mothers who, if the decision had gone the other way, could have seen their entitlement to enhanced maternity pay removed by employers so as to put them on an equal footing with their male counterparts.
It is likely, however, that as a result of the judgment, the low take up of shared parental leave by fathers will continue as many small to medium sized businesses will not want to voluntarily incur the cost of increasing pay and benefits for those on shared parental leave where there is no legal requirement to do so.
Action to take
The Court of Appeal’s decision is clear: there is no legal requirement to enhance shared parental leave in line with enhanced maternity pay in the first 14 weeks after childbirth.
Our advice to employers previously was to sit tight and wait until the decision had been decided by the Court of Appeal before making any changes to parental leave policies. Following this judgment, it is safe to say that employers do not need to change their policies to equalise payments between women on maternity leave and men on shared parental leave.
However, we continue to advise employers who pay enhanced maternity pay for a considerably longer period than 14 weeks after childbirth (particularly if they pay more than 26 weeks’ enhanced maternity pay) to act with caution as this is likely to be challenged in the future. If in doubt, seek legal advice.