With Labour being voted in for its third term, a new legislative programme for the first parliamentary session was set out in the Queen’s Speech on 17 May 2005. This proposes no less than 45 new Bills. Importantly for HR advisors and employers, the Parental Rights Bill proposes that Statutory Maternity Pay (“SMP”) will increase from 26 to 39 weeks with effect from April 2007. The Government’s stated intention is for this to increase to 52 weeks by the end of the next Parliament. Maternity Allowance and Statutory Adoption Pay are expected similarly to increase. The maximum total period of maternity leave is expected to remain at 52 weeks.

Under current legislation, all women are entitled to take 26 weeks Ordinary Maternity Leave. SMP is paid to employees who have a qualifying period of employment with their employer (26 weeks’ employment by the 15th week before the expected date of the birth of their child). SMP is paid at the rate of 90% of the employee’s average weekly earnings for the first six weeks of leave, followed by 20 weeks at the lesser of SMP lower rate (currently £106) or 90% of the woman’s average weekly earnings. Most employees who do not qualify for SMP will receive a Maternity Allowance for 26 weeks, subject to certain qualifying conditions. Employees who have a qualifying period of employment are entitled to take an additional period of 26 weeks Additional Maternity Leave following the period of Ordinary Maternity Leave, meaning that the total maximum maternity leave period would be 52 weeks. Additional Maternity Leave is currently unpaid (although some employers provide benefits through separate contractual schemes).

The new proposals would therefore increase the period of SMP to nine months. It is not yet clear how this will be achieved (since there would be an inconsistency if SMP was paid for 9 months, but the period of Ordinary Maternity Leave remains 6 months). The DTI’s consultation paper suggests three ways of achieving this : (i) the requirement that employees have a qualifying period of employment for Additional Maternity Leave will be removed; or (ii) Additional Maternity Leave will be abolished and all employees would be entitled to a period of 12 months Ordinary Maternity Leave; or (iii) the period of Ordinary Maternity Leave will be extended, but the rights on return to work will depend upon the period of leave taken. Whichever option is adopted, the Government estimates that the changes will be worth approximately an additional £1,400 to new mothers. Small businesses have been reported as saying that the proposals will be too much to bear for some small firms, whilst the proposals have been welcomed by unions.

A further, arguably more radical, change proposed in the new Bill is that women will have the right to transfer some of their maternity pay and maternity leave to fathers, so that the responsibility for caring for the child in the first few months can be shared. Fathers at the moment are of course only entitled to be paid Statutory Paternity Pay for two weeks (if they have qualifying service). It is unclear how the new proposals would work in practice, and clearly it has the potential to cause logistical difficulties for employers. The intention appears to be that a father’s period of “maternity leave and pay” would immediately follow the mother’s, and that the duration of the father’s leave would be determined by the mother. Again, the DTI Consultation document has three proposals – either any leave and pay can be transferred (i) after 6 weeks following the start of maternity leave (or 2 weeks after the birth of the child if later); or (ii) after 6 months following the start of maternity leave; or (iii) after 3 months following the start of maternity leave. It is unclear which of these proposals will be adopted by the Government. Responses to the DTI’s consultation close on 25 May 2005.

Changes are also proposed to current legislation on flexible working, meaning that employees would have the right to make a flexible working request to care for elderly or sick relatives, rather than just to care for children under 6 (or under 18 if the child is disabled).

Clearly these proposed changes, if implemented, will bring about big changes to the way in which maternity leave will be taken. Watch this space to see how these proposed changes develop into the draft Bill!

What else is new?

Also on the subject of maternity leave, employers should be aware that in the case of Alabaster v Woolwich Building Society, the European Court has ruled that a woman who receives a pay rise at any time before the end of her maternity leave must receive the benefit of this in the earnings related part of her maternity pay. Failure to do so is a breach of the equal pay provisions of European law. This change will be effective immediately.

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