Shared Parental Leave: Nine Months and Counting Understanding employee attitudes to shared parental leave

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1 Shared Parental Leave: Nine Months and Counting Understanding employee attitudes to shared parental leave * This PDF is best viewed and printed in landscape

2 Introduction About the survey This report is based on an online survey of 125 male and 125 female employees across a spread of FTSE 100 companies in the UK. All respondents have had a baby in the last two years or are going to become parents in the next six months. Of those surveyed, 30% are employed at management level or above and 70% are operational and support staff. The survey was conducted in September Shared parental leave (SPL) is a completely new type of family leave available to parents of babies due or children placed for adoption from 5 April Expected to give new parents greater flexibility, it allows for up to a combined maximum of 50 weeks of leave and 37 weeks of statutory pay to be shared by the parents who can choose to take this leave together or independently of one another. It is perhaps the biggest change to the structure of family leave that has ever been seen in this country, reflecting wider social objectives of encouraging the engagement of women in the workplace and challenging the gender stereotypes of the involvement of mothers and fathers in childcare. The concept may be simple but the detail of the new regime is not. This, alongside the practical issues and cultural change required for successful implementation, presents a totally new challenge for employers. Linklaters has been exploring the key questions and issues surrounding the introduction of the leave (which will be in force from 1 December 2014 but will apply only to babies due, or children adopted, after 5 April 2015) in a series of monthly briefings. As employers prepare for the change, understanding employee attitudes to shared parental leave is key in assessing the likely impact of the new regime on their organisation. To address this, we commissioned research looking at the attitude of employees of FTSE 100 employers. In this report we set out our key findings in relation to employee attitudes to shared parental leave alongside practical details of how the new right will work in practice, and our insight into how our findings are likely to inform employer decisions in relation to shared parental pay, including the all important question of enhanced pay. 250 This report is based on an online survey of equal numbers of males and females employed by FTSE 100 companies.

3 New rights, key findings For the first time in England and Wales, eligible new parents will have the opportunity to take leave in the first year of their child s life in a fully flexible way. Overview of new entitlement > > Shared leave and pay: Mothers who have given birth must take two weeks of compulsory maternity leave and pay, the remaining 50 weeks of leave and 37 weeks of statutory pay is available to the parents to take as shared parental leave and share between them, subject to eligibility. > > Pattern of leave: Parents can both take SPL at the same time or they can each take a period of SPL independently of the other. > > Maternity leave still available: SPL is an alternative to traditional maternity leave. > > Additional paternity leave: APL will be abolished. > > Sacrifice of maternity rights: For either parent to take SPL, the mother must give up her rights to maternity leave and pay. These cannot usually be reinstated. > > Benefit to working families: Only employees are entitled to SPL and parents who are not employed must satisfy a test of minimum economic activity for their co-parent to be eligible. > > Interdependent entitlement: Each parent must personally meet the requirements for SPL, and their co-parent must also meet specified requirements, even if the co-parent is not themselves entitled to take SPL. For more information on who is eligible to take SPL, please see our August briefing. > > Notice requirements: Mothers must give notice to end maternity leave and pay, notice of entitlement and intention to take SPL and a period of leave notice. Fathers must also give notice of entitlement and intention to take SPL and a period of leave notice. > > Discontinuous blocks: SPL can be taken in one block or several discontinuous blocks. Employees can give up to three notices of an intention to take SPL and each notice can specify one or more blocks of leave. An employer must agree to a request for a single period of SPL, given in one notice (even if previous blocks of SPL have been taken), but can refuse a request for multiple blocks of SPL specified in a single notice. Key findings The employees surveyed indicated clearly that shared parental leave is of interest, and provides attractive advantages. In practice, the offer of additional pay by employers (beyond the statutory entitlement) is a key factor that would influence the decision of an employee interested in SPL to take it. The absence of enhanced pay is a key factor that would influence an employee interested in SPL not to take it. Employers concerned about the cost of any potential offer of additional pay to employees on shared parental leave may take comfort from the findings that single periods of SPL appear to be of greater interest than multiple discontinuous periods of SPL.

4 Employee interest and value Employee interest in shared parental leave informs likely take-up rates of the new right as well as the value that employees attribute to this right. Our research results show that there is a high level of interest in SPL amongst employees. The relationship between interest and take-up rates is important to employers when costing any planned enhancements to pay for those on shared parental leave. It is also relevant to planning how practical arrangements such as cover might be dealt with. The government s estimate is that between 2% and 6% of those eligible will take up SPL. One of the reasons for this relatively low predicted rate is that the take-up rates for additional paternity leave (an existing right entitling women to transfer untaken maternity leave to the child s father after the first 26 weeks), with which SPL is commonly compared, have been very low. However, many commentators believe that the uptake of SPL is likely to be considerably higher. Our survey further reinforces this possibility of a higher uptake with 63% of those surveyed saying that they would be interested in taking up SPL. Likely reasons for this include greater flexibility (particularly in enabling men to take extra leave during the first six months of a child s life and alongside the mother), the high level of publicity surrounding SPL, and the objective of increasing retention of female talent in the workforce, which has become an increasingly high profile boardroom issue for employers. Employee interest in shared parental leave is also a strong indicator of the perceived value to employees of the new right. Our research shows that only 3% of female and 5% of male employees believe that SPL would not offer any advantages to them. This suggests that employers who invest in enabling employees to take SPL and encouraging them to do so are likely to reap the benefits in terms of employee loyalty and retention. The top three factors chosen by both male and female employees combined as being the most attractive advantages of SPL were: 1. Opportunity for father to spend more time with the child; 2. Opportunity for child s father to share childcare responsibilities enabling the mother to return to work during the child s first year; and 3. Opportunity to share childcare responsibilities by taking leave at the same time. However this is not the whole story. Whether employees who are interested in taking up SPL actually do so will depend on a number of factors, including financial, personal and practical considerations. As well as looking at levels of employee interest, our research considered the factors most likely to influence employees to take or not to take SPL. Our research results show that there is a high level of interest in SPL amongst employees. Interested or Very interested 63% Not sure how interested they would be 22% Not interested 16% Men and women showed roughly equal levels of interest in SPL. 63% Levels of interest in SPL 62%

5 The question of enhanced pay how money matters Our research results show that the availability of additional pay will influence whether employees who are interested in taking up SPL actually do so. 76% of both men and women who are interested or very interested in taking SPL said that entitlement to additional pay during SPL (in excess of the statutory entitlement) would be relevant or very relevant to them deciding to take-up SPL compared to 66% of women and 61% of men overall. 76% Interested/ very interested Overall 66% Entitlement to additional pay during SPL being relevant to take-up 61% 76% Men and women who are interested or very interested in taking SPL said that no or insufficient entitlement to additional pay being available to them when taking SPL would be relevant or very relevant to them deciding NOT to take SPL. 71% No/insufficient additional pay being relevant in not taking SPL 73% Do take-up rates matter? Unless employees can and do take SPL, the value of the right will be diminished. Some employers will want to ensure that employees understand and are able to exercise their rights to SPL while others will be keen to promote the new rights and actively endorse take-up, perhaps through publicity and offering pay enhancements. For the latter, low rates of take-up are likely to be a negative in terms of publicity, recruitment and retention, as well as the promotion of a diverse workforce and, in particular, furthering the agenda of women in the workforce, particularly in senior positions. Entitlement to statutory pay during SPL Parents are entitled to share a maximum total of 37 weeks of statutory pay (currently per week). There is no statutory obligation to offer any additional pay on top of this. Mother s 39 week period of entitlement to statutory maternity pay Statutory pay for two-week period of compulsory maternity leave Any weeks of statutory maternity pay the mother has taken Total amount of statutory pay available to the parents to take during SPL

6 Entitlement of employee s co-parent to pay Our research shows that the entitlement of an employee s co-parent to enhanced pay during SPL will influence whether or not the employee takes SPL and the pattern of leave they choose. This is an unpredictable factor, that is outside of an employer s control, but one which will affect take-up rates. For example, a mother who is entitled to enhanced pay during maternity leave but not during SPL is unlikely to sacrifice any of her paid maternity leave to take SPL (although she may sacrifice an unpaid part). If the child s father is entitled to enhanced pay during SPL, a mother is likely to be more willing to sacrifice some maternity leave to enable him to take SPL, and this may include some paid maternity leave, depending on the relative earnings of the parents. If at least one parent is entitled to enhanced pay during SPL the parents are both more likely to take SPL than if neither is entitled. One parent can take SPL and receive enhanced pay and their co-parent can be working and earning or both parents could take SPL at the same time whilst still retaining one income. These perspectives are backed-up by our research. > > More than half of both male and female employees felt that the entitlement of their co-parent to additional pay during SPL would also be relevant or very relevant to whether or not that employee (rather than the co-parent) takes up SPL. The reason most frequently cited by women as being relevant or very relevant to them taking SPL was entitlement to additional pay during SPL. The entitlement of the child s mother to SPL was also the reason most cited by men as being relevant or very relevant to the father taking SPL. > > 59% of women and 62% of men said that no or insufficient pay being available to their co-parent would be relevant or very relevant to them deciding NOT to take up SPL. > > Slightly more men (62%) than women (58%) said that no or insufficient additional pay being available to them during SPL would be relevant or very relevant to them deciding NOT to take up SPL. Enhancing pay key considerations Why might employers want to enhance SPL payments, even though there is no statutory obligation to do so? > > Publicity/employee expectations: Given the publicity around SPL, it seems likely that employees are and will be more aware of this right and may have expectations that it will be seen as a simple transfer of maternity rights between parents. Employees may therefore expect enhancements to be available. This issue of employee expectations, particularly the expectations of mothers, is likely to increase the pressure on employers to provide the same enhancements for SPL as for maternity leave. > > Supporting women s careers: SPL may be a way for mothers to take shorter periods of leave and reduce any risk of career interruption. This strand of thought reflects the increase in pressure on companies to ensure diverse senior employee representation, particularly at board level, and SPL is perceived as a tool to achieve these diversity objectives. > > Employer branding: Enhancements to SPL may be seen as an employer branding issue and present an opportunity for employers to present themselves as an employer of choice in family friendly and diversity issues. > > Possible loss of enhanced maternity benefits: Women who want to share some of their maternity leave with their partner will need to end their own maternity leave early and either return to work or take SPL themselves. A woman taking a period of SPL which appears to her to be in all respects identical to maternity leave may in fact lose the contractual enhancements that her employer offers to those on maternity leave. > > To reduce risk of actual/perceived discrimination issues: There is a risk that men who feel that they are not being treated fairly in relation to women in the workforce will bring discrimination claims. There is some scope for such claims to be successful. The extent of this feeling and the likelihood of claims may vary according to whether any enhancements at all are offered. For more information on considerations relating to enhanced pay, including discrimination, please see our October briefing.

7 Cultural change The availability or not of enhanced pay is relevant to the attractiveness of SPL to employees and therefore influences takeup rate. Other factors were also cited by employees as being relevant or very relevant to take-up, including how taking SPL is perceived by the employer and other employees. > > 62% of both men and women said that concerns about how SPL could be perceived by management or damage to their career prospects were relevant factors that would influence them not to take SPL. This suggests that whilst relatively long periods of absence on maternity leave are commonplace, employees are concerned that taking SPL may not be accepted in the same way. Employers can address this by training management about employees entitlements and how best to approach requests, as well as making sure the rest of the workforce understand what SPL is. > > Perception is particularly important for employers wanting to encourage healthy take-up rates, given that 50% of men said that other men in their organisation opting not to take SPL would influence them not to take SPL. > > Challenging stereotypes of women as principal caregivers is also likely to be key to take-up rates. Men can only take SPL if the child s mother agrees to sacrifice some of her maternity leave, and women need to feel confident about doing this. More than 50% of women said that a desire to take a long period of leave to care for their child and not to share this with the child s father would be a relevant or very relevant factor influencing them not to take or share SPL. The same is true for men in respect of caring for a child during SPL. 55% of men said that a personal preference not to take SPL would be a relevant or very relevant factor influencing them not to take SPL. 50% of men said that other men in their organisation opting not to take SPL would influence them not to take SPL. 62% 62% of both men and women said that concerns about how SPL could be perceived by management or damage to their career prospects were relevant factors that would influence them not to take SPL.

8 How much leave and when the effect of patterns of leave The new regime allows parents significant flexibility in the way in which leave is taken during a child s first year, including the possibility of discontinuous periods of SPL. Our research shows that taking a single period of SPL is likely to be more popular than taking one or more discontinuous periods. Men are also more likely to prefer taking SPL during the first six months of their child s first year. This is noteworthy in terms of potential likely take-up, given that under the current additional paternity regime, men can only take leave in the second six months of a child s life. > > Both men and women showed a significant preference for taking one period of SPL rather than multiple periods of SPL. > > Men overwhelmingly showed a preference to take SPL at the same time as their co-parent rather than independently of their co-parent. > > Men expressed a preference to take SPL at the same time as their co-parent in the first six months of the child s life. How and when would men prefer to take SPL? One period at the same time as co-parent 36% 22% One period independently of co-parent 24% 16% More than one period at the same time as co-parent 7% 9% More than one period independently of co-parent 6% First 6 months of a child s life Second 6 months of a child s life 6% How much leave can be taken and when? Parents are entitled to share a maximum of 50 weeks of leave. Mother s 52 week period of statutory maternity/ adoption leave Two-week period of compulsory maternity leave Amount of leave that can be taken as SPL Any weeks of statutory maternity/ adoption leave the mother has taken SPL can be taken at any time during a child s first year of life (other than the first two weeks after birth when the mother must take compulsory maternity leave). It can be taken by either parent at different times (subject to eligibility) or by both parents at the same time and either as one continuous block or several discontinuous blocks. Mothers can take SPL immediately after maternity leave or after returning to work. For more information on what leave can be taken and when, see our September briefing. Possible patterns of leave Parents can take and share SPL in many different ways to suit their family circumstances. For example: > > Only father takes SPL: A mother could take 37 weeks of maternity leave and pay, and the father could take two weeks of ordinary paternity leave, followed by two weeks of SPL and pay at the same time as the child s mother. > > Maternity leave/spl for the mother, SPL for the father: A mother could take 12 weeks of maternity leave and pay, return to work for 12 weeks and then take a further 12 weeks of SPL and pay. The child s father could take 20 weeks of SPL, some at the same time as the mother and some after she has returned to work. He would be entitled to pay for 15 weeks of SPL as this is all the pay remaining from the total of 39 weeks available to the parents combined. > > Mother takes maternity leave and SPL: A mother could take 26 weeks of maternity pay and leave, return to work and then take a further 13 weeks of SPL and pay at the end of the child s first year. The father could take ordinary paternity leave and no SPL.

9 Conclusions Employees expecting a baby or adopting a child after 5 April 2015 will be legally entitled to take SPL. Our research shows that for many of these parents SPL will be a valuable right, offering far more flexibility to parents than current regimes. Take-up is therefore likely to be significantly higher than has been the case for the current right to APL, although our research indicates that single brief periods of SPL are likely to be more popular with parents than long blocks of SPL. The issue of take-up is a big one, not just for employees but for employers too, many of whom are looking at ways to actively promote their diversity agenda, and to increase flexibility and familyfriendly working. These issues are increasingly important to branding as well as workforce retention and recruitment. SPL provides employers with a new and potentially far-reaching opportunity to further these objectives and enabling employees to take SPL in practice is an important element of this. The availability of enhanced pay or otherwise is a significant factor that will influence the decision of both mothers and fathers to take or not to take SPL, and it is a key way for employers to endorse the decision of employees who do choose to take it. But it is not the only factor that will contribute to employees decisions about SPL. Assessing the role that enhanced pay has to play in an organisation s overall approach to SPL is therefore important. For many, offering paid leave during SPL is a way of demonstrating support for the new right, and the value to employees may far outweigh the financial cost of doing so. With such a new type of leave, enhanced pay should not sit alone as a motivator and employers looking to leverage off the benefits of the introduction of SPL need also to ensure that employees are actively encouraged and supported in taking SPL. What employers should be doing now > > Develop a policy on SPL and a series of forms for employees to complete in order to take advantage of SPL. > > Consider whether to enhance pay for employees taking SPL and, if so, by how much and for how long as well as the interaction with current maternity pay entitlements. > > Train management on the right to SPL and how to approach requests for it. > > Inform the workforce about the right to SPL and how to take it. > > Consider how the work of employees taking leave will be covered. > > Decide how requests for multiple periods of SPL will be approached (the employer does not have to agree to these if they are made in the same period of leave notice, but must agree each request made in a single notice even if more than one notice is given by the employee). For more information on shared parental leave, click on the monthly bulletins below. SPL overview (Jul 2014) Eligibility to SPL and pay (Aug 2014) SPL leave provisions (Sept 2014) The question of enhanced pay (Oct 2014) The availability of enhanced pay or otherwise is a significant factor that will influence the decision to take SPL. The issue of take-up is a big one, not just for employees but for employers too.

10 Key contacts For more information about the report or to discuss the potential impact of shared parental leave on your business, please get in touch with your regular Linklaters contact or one of the following: Simon Kerr-Davis Managing Associate Tel: (+44) Gemma Parker Senior PSL Tel: Nicola Rabson Head of Employment & Incentives London Tel: (+44) linklaters.com This publication is intended merely to highlight issues and not to be comprehensive, nor to provide legal advice. Should you have any questions on issues reported here or on other areas of law, please contact one of your regular contacts, or contact the editors. Linklaters LLP. All Rights reserved 2014 Linklaters LLP is a limited liability partnership registered in England and Wales with registered number OC It is a law firm authorised and regulated by the Solicitors Regulation Authority. The term partner in relation to Linklaters LLP is used to refer to a member of Linklaters LLP or an employee or consultant of Linklaters LLP or any of its affiliated firms or entities with equivalent standing and qualifications. A list of the names of the members of Linklaters LLP together with a list of those non-members who are designated as partners and their professional qualifications is open to inspection at its registered office, One Silk Street, London EC2Y 8HQ or on and such persons are either solicitors, registered foreign lawyers or European lawyers. Please refer to for important information on our regulatory position. 7088_F/11.14