The government has just announced its new family friendly proposals, following extensive consultation. They will appear in the Work and Families Bill. The new / changed laws will be introduced in April 2007. The proposal includes extending Statutory Maternity Pay and Maternity Allowance to nine months from April 2007, and implementing a power to introduce paternity leave for fathers, enabling them to benefit from leave and statutory pay if the mother returns to work after six months, but before the end of her maternity leave period.

The current position:

At present new fathers are only legally allowed two weeks leave. During that time they are entitled to £106 a week in paternity pay which is paid by the employer and recouped from the government, although according to The Times about half of companies continue with full pay for the fortnight. They are also entitled to up to 13 weeks’ unpaid parental leave before a child’s sixth birthday.

The proposed changes:

The statutory right to paid maternity leave will increase from six to nine months from April 2007 with a further three months’ unpaid leave on top. Fathers, in addition to the right to two weeks’ paid paternity leave they already enjoy, will gain the right to take up to three months’ paid and three months’ unpaid leave during the second half of the child’s first year. This extra leave will be a direct trade-off for leave sacrificed by the mother – if she opts to take seven months paid leave only, for example, the father will be able to take a maximum of two months’ paid and three months’ unpaid leave after she has returned to work. Potentially 440 000 employed fathers could take extra leave each year. However the DTI estimates that initially only between 9 000 and 16 000 will do so. Therefore the estimated cost to employers of the new fathers’ rights is “only” £10.5m to £31.4m a year. The reason for the difference in potential and actual numbers of fathers who will take extra leave is because of the lower pay. Payments to fathers will be capped at £106 a week throughout the paternity leave.

Some experts predict that the paternity rights could prove to be largely cosmetic. This assumption is based on the fact that just 4% of parents take up the current unpaid parental leave available to both parents in their child’s first year. Therefore considering that the pay will be the capped at the same amount going forward, experts believe that the new unpaid paternity leave will be just as ineffective. Take-up would increase if the new rights persuade those employers who already pay mothers more than the statutory minimum that they should now extend this additional payment to men. The uncertainty over the impact of the new rights will only be fully understood over time.

Reaction in the market to the proposed changes:

Employers reacted angrily to the plans to give fathers the right to three months’ paid paternity leave, warning of an “administrative nightmare” that would impose significant cost pressures on companies. In particular businesses have been asking who would police and administer the new system. Alan Johnson, the Trade and Industry Secretary, promised the measures would be “small business friendly, as well as family friendly”. The British Chambers of Commerce warned that small businesses were being swamped with the unprecedented pace and extent of new employment laws. The pressure on small businesses from losing key staff for long periods would be exacerbated by the potential “administrative nightmare” of coping with the new rights. There are additional concerns from employers that men will use the statutory rights as a lever to get the same occupational package offered voluntarily by their employer to female staff. Some commentators have said that companies which do not offer men the same parental rights as woman during the second six months of the child’s life could end up at the employment tribunal. That seems a stretch in the current scope of discrimination and Equal Pay laws, but no business would want to be the test case.

What can you do in advance of the changes?

• Review how many male employees are taking unpaid parental leave

• Estimate how many employees are planning on starting a family

• Calculate, as a matter of policy, how much is to be paid?

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