The Court of Appeal has recently given judgment on the long-running claims in Ali v Capita Customer Management Ltd and Chief Constable of Leicestershire Police v Hextall, ruling that the employers’ failure to enhance pay for shared parental leave (SPL) to the same level as their enhanced maternity pay did not amount to discrimination against male employees taking SPL. Below, we take a look at the Court’s decision and its implications for employers.
Many employers operating policies of enhancing pay during maternity leave above the statutory minimum rate decided to continue doing so following the introduction of SPL in 2015, but only pay SPL at the statutory rate. However, there was concern that a failure to enhance statutory shared parental pay (ShPP) to the same level as any maternity pay enhancement exposed employers to claims of sex discrimination from male employees taking (or seeking to take) SPL – and indeed, claims to that effect soon came before the employment tribunals.
The employees in the Ali and Hextall cases are both men who decided to take SPL. Their employers offer enhanced maternity pay to women taking maternity leave but only offer the statutory rate of ShPP to employees taking SPL. The employees argued that the failure to pay them the equivalent of enhanced maternity pay amounted to direct sex discrimination. The employee in Hextall also claimed indirect sex discrimination.
The employment tribunal in Ali upheld the employee’s claim for direct discrimination but this was overturned by the EAT on appeal. The tribunal in Hextall rejected both the employee’s direct and indirect discrimination claims, but he successfully appealed to the EAT on indirect discrimination.
The appeals in Ali and Hextall were heard jointly by the Court of Appeal.
Court of Appeal decision
The Court of Appeal confirmed that a failure to enhance pay for SPL to the same level as pay for maternity leave does not amount to direct sex discrimination. The Court reasoned that a man on SPL could not compare himself with a woman on maternity leave for the purposes of a direct sex discrimination claim, as the two types of leave had distinct and different purposes. The right to statutory maternity leave in the UK implements (and exceeds) the requirement under the EU Pregnant Workers Directive (EU PWD) to provide a minimum of 14 weeks’ maternity leave for the purpose of protecting the biological health and wellbeing of a birth mother and the special relationship between a woman and her child. SPL, on the other hand, is a purely a domestic legislative entitlement, the purpose of which is to provide childcare. On this basis, the Court found that the correct direct discrimination comparator for a man on SPL would be a woman on SPL. If such a woman would be treated the same as a man, (i.e. receive no enhancement of ShPP), there could be no direct sex discrimination.
Turning to indirect discrimination, the Court of Appeal agreed with the employer in the Hextall case that the employee’s claim should have been brought as an equal pay claim rather than an indirect discrimination claim (and the Equality Act prohibits bringing both claims together). The Court found that although all employees were provided with standard terms and conditions which included terms governing maternity leave and pay, those terms clearly did not apply to male employees. Accordingly, the Equality Act provisions on equal pay would ordinarily operate to imply an equivalent term into male employees’ contracts (effectively, this would have required the payment of equal enhanced pay for equivalent family leave). However, there is a specific exception from this ‘corresponding term rule’ in relation to terms that afford special treatment to women in connection with pregnancy or childbirth, so the equal pay claim was bound to fail.
The Court also commented that, if it was wrong to characterise the claim as an equal pay claim, it would have held that the tribunal had correctly rejected the employee’s indirect discrimination claim because there was no valid PCP on which to base it; the employee’s proper claims were for direct discrimination and unequal pay, both of which the Court had rejected, as described above.
It is possible that these cases will be appealed further to the Supreme Court, in view of the importance of the issues involved. At least for the time being, however, the Court of Appeal’s decision confirms that there is no legal requirement to enhance ShPP to match enhanced maternity pay.
Given the potential costs of such enhancement, this will come as a relief to employers, especially in male-dominated industries such as manufacturing. That said, we have recently seen an increase in the number of employers considering enhancing ShPP. Some may have been primarily concerned to reduce the risk of discrimination claims, but others are motivated by a desire to create a family-friendly workplace – and this remains a relevant factor that employers may wish to take into account when evaluating their family leave policies.
How we can help
Make UK members who have subscribed to our HR & Legal services can access our comprehensive advice and guidance on the legal requirements concerning family leave and pay, as well as other areas of employment law. For further details, click here. We can also help you conduct a review of your family leave policies on a consultancy basis – please contact Sharon Broughton, Head of HR Consultancy, for further information.