What do you need to consider in respect of Parental & Family Leave
The government’s Coronavirus Job Retention Scheme is aimed at helping to avoid redundancies and keep people in pay during this time. However, what does the scheme mean for those who are on or about to go on maternity leave, paternity leave or other parental leave? Here we try to answer some questions that may arise, based on what we know so far.
1. Can we place a pregnant employee on furlough leave?
Yes, providing you follow a fair process and subject to your contractual obligations.
a) What do you mean by following a fair process?
A fair selection process is important where you have more than one employee carrying out the work that has reduced and you have enough work for some, but not enough for all the employees. You have to be mindful in this situation, when deciding who to designate as furloughed, of the risk of discrimination if selection is linked to any protected characteristic.
So, it goes without saying that you cannot select an employee to go on furlough leave because she is pregnant or about to go on maternity leave – regardless of your motives for doing so.
To minimise the risk of discrimination, we recommend you follow a similar process to one you would follow if it were a redundancy situation (although if you need to urgently furlough employees or make them redundant in order to continue to trade, a limited selection procedure is likely to be acceptable).
First, identify which employees are going to be affected (the “pool” of employees) and use objective criteria (such as performance and ability) to select which of those employees are going to be asked to go on “furlough” leave. Remember to include any employees who may be on maternity leave or other family leave in your pool.
Once you have identified who to designated as furloughed, you will need to contact the employee and tell them of your proposal and discuss your reasons for selecting them. You will also need to obtain their consent to be furloughed. (Please note, however, the discussion below about employees who are on maternity or other family leave)
b) Why do I need their consent?
You will need consent from your employee to put them on furlough leave because most employment contracts will not permit an employer to reduce an employee’s pay (if you do not propose to top up on the 80% of wages that the government is going to reimburse), provide them with no work, and change their employment status, without agreement. However, faced with the alternatives, which are likely to be unpaid leave, lay-off, or redundancy, the majority of affected employees are likely to agree to be placed on furlough leave.
2. Can we ask a pregnant employee if she would like to volunteer for furlough leave?
Yes, as long as you as long as you extend this invitation to all affected employees.
3. Will furlough leave affect an employee’s right to take maternity, paternity, adoption or shared parental leave?
No, if you put an employee on furlough leave, the employee will still be entitled to take maternity, paternity, adoption or shared parental leave (subject to the employee satisfying the normal qualifying conditions and complying with notice requirements). The government guidance published on 26 March 2020 states that furloughed employees have the same rights as they did previously.
4. Will furlough leave affect an employee’s eligibility for statutory maternity pay or other family -related statutory pay?
Yes – eligibility for and the amount of statutory pay for that family leave may be based upon their temporarily reduced rate of pay depending on the timing.
So, to go into more detail – if you put an employee on furlough during their ‘calculation period’ this could affect their eligibility for Statutory Maternity Pay (SMP), Statutory Paternity Pay (SPP), Statutory Adoption Pay (SAP) or Shared Parental Pay (ShPP).
For birth parents, the calculation period is the 8-week period (if the employee is paid weekly) or 2-month period (if the employee is paid monthly) leading up to the last payday in or before the 15th week before the expected week of childbirth. The employee must earn an average of at least £118 per week in this period (£120 from 6 April 2020) to qualify for SMP/SPP/ShPP.
For adoptive parents, the calculation period is the 8-week period (if they are paid weekly) or 2-month period (if they are paid monthly) leading up to last payday in or before the week in which they are matched with the child for adoption. The employee must earn an average of at least £118 per week (£120 from 6 April 2020) in this period to qualify for SAP/SPP/ShPP.
So, if, as a result of the furlough, an employee’s average earnings in the “calculation period” fall below the earnings threshold of £118 week (£120 from 6 April 2020) they will not be eligible for SMP/SAP/SPP/ShPP.
It is also important to remember that if a furloughed employee is paid 80% of their normal wages during their “calculation period”, this will affect the calculation of the higher rate of Statutory Maternity Pay (SMP) or Statutory Adoption Pay (SAP) that is payable in the first 6 weeks of statutory maternity or adoption leave. (SMP and SAP is paid at 90% of the employee’s average weekly earnings for the first six weeks, then at a flat rate per week or 90% of their earnings, whichever is the lower for 33 weeks.)
5. Can employee delay exercising their right to family leave because they will be entitled to more pay on furlough leave?
Yes, they can potentially do this. So, for example, an employee on furlough leave who is due to go on paternity leave, may decide not to assert their right to do so because they will be financially better off on 80% of pay than they would be on statutory paternity pay. However, the employee will still have to observe the relevant statutory notice requirements for taking the leave and for postponing the leave (where notice has already been given).
Furlough leave will not affect the two-week compulsory maternity period.
It won’t always make financial sense for an employee to delay leave though.
So, while there may be a short term financial benefit for an employee who is only entitled to SMP in taking only 6 weeks’ maternity leave (so they can benefit from the higher rate of SMP payable in the first 6 weeks) and then being on furlough leave, the Coronavirus Job Retention Scheme is currently only due to run for three months. An employee who cuts their maternity leave short on this basis could be required to return to work earlier than they anticipated.
6. We offer enhanced contractual pay to employees on maternity leave, can we claim these costs back under the scheme?
According to the government guidance, if you offer contractual enhanced maternity pay which is earnings related, you can recover these costs through the scheme. The same goes for any enhanced paternity/adoption/shared parental pay that you are contractually bound to pay your employees.
We do not know, however, if this applies to employees who are already on statutory maternity, adoption, paternity or shared parental leave and in receipt of contractual enhanced pay – because this seems contrary to normal employment law principles that an employee cannot be on maternity leave and another type of statutory leave (i.e. furlough leave) at the same time. We await further guidance or legislation on this point.
7. Can I furlough employees who are returning from maternity leave/other family leave?
Yes. However it is not clear how you would calculate their pay during the furlough period.
8. What do I tell employees returning from family leave?
Unfortunately, we cannot provide any definitive guidance at present. If an employee is due to return from maternity or other family leave and you need to furlough them, we recommend that you seek legal advice as soon as possible because you will need to inform the employee and consult with them about your proposals before their return date.
It is vital to consult with employees who are on family leave about any affect that the Coronavirus situation may have on their role to avoid any claims that they have been unfavourably treated or discriminated against because they are on family leave.
You must (a) observe the special protections afforded to women returning from maternity leave (see below) (b) carry out a fair selection process before you designate the employee as furloughed and (b) obtain their consent to being furloughed (as detailed above).
9. Are there special considerations we need to be aware of in this crisis as regards employees returning from maternity leave?
Yes. An employee who is on maternity leave has special protections including where there is a potential redundancy situation. We recommend taking legal advice at the earliest opportunity.
10. Where can I go for further advice?
The team at Real Employment Law Advice are highly experienced employment solicitors who advise on all aspects of employment law including family leave and parental rights.