With leave and pay considerations at the forefront of employers’ minds, Deirdre Crowley and Denise Moran of Matheson consider the highly anticipated UK Supreme Court decision in Hextall v Chief Constable of Leicestershire Police (Hextall) which found that there is no discrimination, direct or indirect, where an employer pays enhanced maternity benefit to a woman but does not pay enhanced parental leave pay to men.  In this article, they also consider the Irish position regarding “topping up” maternity leave pay where paternity leave pay is not enhanced and offer their insight into current market practice and client trends in this area.

No discrimination where pay rates differ for maternity and parental leave: UK Court of Appeal Shared Parental Leave decision stands

Covid-19 has presented many and varied challenges for employers in Ireland, not least is the closure of childcare facilities and schools which has left many parents juggling their childminding obligations (which suddenly incorporated home-schooling!) with work commitments. Parental leave in Ireland is the obvious choice of leave for employees to avail of in such circumstances but because this type of leave is unpaid under Irish law, it often presents as an unattractive option. With leave and pay considerations at the forefront of employers’ minds, Deirdre Crowley and Denise Moran of Matheson consider the highly anticipated UK Supreme Court decision in Hextall v Chief Constable of Leicestershire Police (Hextall) which found that there is no discrimination, direct or indirect, where an employer pays enhanced maternity benefit to a woman but does not pay enhanced parental leave pay to men. This important decision went largely under the radar due to the extensive Covid-19 coverage.

The effect of this decision means that the law in the UK stands as per the Court of Appeal’s 2019 judgment in the combined cases of Hextall and Capita Customer Management Limited v Ali (Capita) which found that a failure to enhance pay for shared parental leave for men, while providing enhanced maternity pay to women, was not direct or indirect discrimination nor did it constitute a breach of equal pay rights. The net effect of this decision is that in the UK, it is lawful to pay enhanced maternity pay to women while not paying enhanced pay to men to take parental leave. It is important to note at the outset that there is no shared parental leave entitlement under Irish law, like that which exists in the UK.

In this article, we also consider the Irish position regarding “topping up” maternity leave pay where paternity leave pay is not enhanced and offer our insight into current market practice and client trends in this area.

What did the UK Court of Appeal decide?

In 2015, the UK introduced a statutory system of shared parental leave (SPL) which allows parents to share the statutory leave between them through a mother shortening her maternity leave, and thus affording parents the flexibility to share the child caring responsibilities. Parents are not obliged to take SPL and mothers continue to be able to take their full maternity leave entitlement.

The Court of Appeal delivered its judgment in the combined cases of Hextall and Capita and confirmed that different rates of pay for mothers on maternity leave and new parents availing of SPL does not constitute direct or indirect discrimination, nor does it breach the equal pay requirements.

Leicestershire Police operated a policy of paying 18 weeks of enhanced maternity pay to mothers on maternity leave but only paid statutory pay to parents taking SPL. Mr. Hextall took 14 weeks’ SPL in the period that, if he had been a woman on maternity leave, would have entitled him to full pay. Mr Hextall posited that the policy of providing enhanced maternity pay to mothers on maternity leave but only statutory pay to parents on SPL amounted to indirect discrimination. The Court of Appeal held that the claim should properly have been brought as an equal pay claim and, as such, failed due to the legislative provision permitting more favourable treatment in connection with pregnancy and childbirth.

Mr Ali argued that Capital Customer Management’s policy of not providing enhanced pay for SPL amounted to direct discrimination in circumstances where enhanced maternity pay was provided. The Court of Appeal held that the proper comparator for the purposes of a direct discrimination claim would be a female employee on SPL, and as there was no difference between such an employee and Mr Ali, the claim failed.

What is the relevance of this judgment for Ireland?

Although the UK Court of Appeal’s decision is not authoritative in Ireland, it is a useful consideration on the law of this sensitive area.

The Shared Maternity Leave and Benefit Bill 2018, a Private Members Bill, was proposed in 2018 to permit mothers to share their maternity leave entitlements with the child’s other parent. The Bill has since lapsed but it is unlikely that this is the last we will see of such a proposal given the recent measures taken to encourage the participation and retention of women in the workplace and to afford more flexibility for parents to share the child caring responsibilities.

Under Irish law, parents can currently take up to 22 weeks’ parental leave per child until the child is aged 12, and from September of this year, this entitlement will increase to 26 weeks of leave. Parents of children with disabilities (or chronic conditions) are entitled to take parental leave until the child reaches 16. Both parents have an equal and separate entitlement to parental leave. Where both parents are employed by the same employer, 14 weeks of the leave can be transferred from one parent to another.

In what came as a surprising decision in 2017, the WRC held in the case of a Complainant v a Respondent (ADJ-00006382),that the policy of topping up a mother’s maternity state benefit to meet her basic salary during her 26 week maternity leave did not constitute less favourable treatment in circumstance where fathers’ state paternity benefit was only topped up for three days out of their 10 day state entitlement to paternity leave.

The Adjudication Officer (AO) referred to the case of Hoffman v Barmer Ersatzkasse and the ruling of the then ECJ which provided that the reasons for maternity leave are twofold. Firstly, to ensure “the protection of a woman’s biological condition during pregnancy and thereafter”. Secondly, “it is legitimate to protect the special relationship between a woman and her child” over the time that follows pregnancy and childbirth. The AO acknowledged that the second reasoning could be an argument for both male and females but, given the fact that males cannot carry or give birth to a child, they cannot be deemed proper comparators in law.

Further, Irish law provides an exception to the general rules governing gender discrimination. The AO referred to Section 26 of the Employment Equality Acts 1998-2015 which makes it “clear that nothing in the Act shall make it unlawful for an employer to arrange for or provide treatment which confers benefits on women in connection with pregnancy and maternity”. The AO held that this matter falls squarely within that legislative exception and on that basis, together with a lack of an appropriate comparator in law, found that the claim failed.

Employers will be able to rely on this 2017 decision to defend any challenge to a policy which provides enhanced pay to mothers during maternity leave without any corresponding “top up” benefits to employees taking paternity leave.

Market practice and current trends in Ireland

Prior to the pandemic, there was a lot discussion amongst larger organisations, particularly those in the tech sector, around benefits and entitlements they could provide to increase, create, attract and retain a more diverse and equal workforce. Many employers considered extending the same benefits afforded to those on maternity leave to those availing of paternity leave, parents leave, and in some cases, parental leave. Considerations arose as to how targets and bonuses (performance related bonuses and / or loyalty bonuses like a Christmas bonus, for example) would be treated in such circumstances, i.e. should they also be reduced on a pro-rata basis and what are the commercial, employee relations and legal risks of adopting this position.

The impact caused by Covid-19 has been sudden and severe and the effect has been that it, in practical terms, paused many HR and wider organisational targets and commitments. However, we are seeing clients beginning to re-focus their efforts of pre-virus initiatives and priorities and time will tell if organisations will be in a position to maintain / introduce such benefits.

Lastly, it is worth noting that the Irish Government has made no further advancement in respect of introducing the requirement on Irish companies to publish information regarding their Gender Pay Gap. We had anticipated that effecting legislation might be introduced in late 2020. Given the political priority of establishing a new Government and the priority of stabilising the economy following the economic disruption of Covid-19, it is now likely that this date will be pushed out. However, we note that the Programme for Government recently agreed by the leaders of Fine Gael, Fianna Fail and the Green Party and currently under consideration by those parties’ memberships includes a commitment to legislate to require publication of the gender pay gap in large companies. We will continue to keep you updated in this regard.