Select Committee on Social Security Appendices to the Minutes of Evidence


APPENDIX 15

Memorandum submitted by the Equal Opportunities Commission (EOC) (PL 15)

Summary

    —  The EOC strongly supports the introduction of parental leave and believes that the UK should learn from the experience of other EU member states in shaping the new right.(paras 1—7)

    —  Of the 14 EU states which have introduced parental leave, 9 countries have paid leave. A majority have a flat-rate pay scheme, but 3 countries have earnings-related schemes; all are financed by the State.(paras 8—10 and annex one)

    —  Very few employers offer parental leave as a contractual right, and the UK is relatively unfamiliar with the concept of parental leave. The challenges for companies employing mainly men, and for smaller companies, are particularly acute. (paras 11—14)

    —  There are strong and persuasive reasons for paying employees while they are on parental leave. Doing so would help mothers and fathers at all income levels to take parental leave by:

—  encouraging a more permissive, family friendly climate in employment;

—  establishing parental leave as a right which most parents choose to use;

—  promoting shared parental responsibility for the care of young children;

—  promoting parental choice;

—  giving an unambiguous message of the Government's determination to foster a more family friendly employment culture in the UK. (paras15—23).

    —  Four possible options for paying parental leave are looked at. These are (1) a flat rate benefit (2) an earnings related benefit (3) a top up benefit to the WFTC (4) an individual savings or loan scheme.

EOC recommendations

  i.  Parental leave should be paid;

  ii.  the chosen method of payment should be consistent with the principles enshrined in the Parental Leave Directive;

  iii.  employees taking parental leave should have the right to the same job after parental leave, mirroring the current rights of women taking ordinary maternity leave;

  iv.  ten days' paid paternity leave should be for fathers to take time off at the time of the birth of their child;

  v.  responsibility for overseeing the implementation of parental leave and providing advice and support for employers should be given to an independent body—the EOC believes it is best placed to meet this need.(para 30).

EOC Submission to Social Security Select Committee Parental Leave Inquiry

INTRODUCTION

  1.  The EOC welcomes the opportunity to give evidence to the Inquiry into the Social Security Implications of Parental Leave. The EOC strongly supports the introduction of parental leave in the UK, which will for the first time give fathers a statutory right to time off work to care for their children. It will also benefit working mothers by providing an additional period of leave on top of their right to maternity leave. It will make it easier for both women and men to combine work and family responsibilities.

  2.  The EOC was set up under the Sex Discrimination Act 1975 to enforce the Sex Discrimination and Equal Pay Acts, to promote equality of opportunity generally between women and men, and to monitor the effectiveness of the legislation. Because pregnancy and childbirth are unique to women they have a major impact on women's capacity to achieve equality at work. But fathers also have an important role to play. While childbearing is uniquely female, child rearing can be the responsibility of either sex. The EOC considers that a more equal sharing of the day to day care of children would make a major contribution to the achievement of equality between the sexes.

  3.  Following the Government's decision in 1997 to implement the Parental Leave Directive in the UK, the EOC launched a campaign to raise awareness of the implications of the Directive. A leaflet explaining the framework of the Directive was published; two EOC Equality Exchange conferences focussed on parental leave; we have also contributed regularly to meetings and seminars on the subject. We responded to the DTI White Paper Fairness at Work, have been involved in consultation meetings with the DTI and are monitoring the progress of the Employment Relations Bill.

  4.  The EOC also included questions about parental rights in its consultation on amendments to the Sex Discrimination Act. Responses to these questions were received from 118 organisations, and resulted in the EOC making recommendations for the introduction of paid paternity leave and improvements to maternity rights in its Proposals to the Secretary of State for Education and Employment to amend the Sex Discrimination Act.

  5.  Before addressing the specific questions on which the Select Committee is seeking evidence, we would like to set out the context in which parental leave is being introduced, including the aims of the Directive, the position in other European States, the current position in Britain, and the challenges facing Government and employers in Britain.

The aims of the Parental Leave Directive

  6.  The Parental Leave Directive has the following objectives:

    —  balancing work and family life

    —  promoting equal opportunities for women and men

    —  improving women's participation in the workplace

    —  encouraging men to assume a more equal share of family responsibilities

  7.  We hope that the Select Committee will bear in mind these objectives as it considers the evidence on the pros and cons of paying for parental leave, and the possible methods of payment. Whatever conclusions are reached by the Committee should be consistent with the spirit and intentions of the Directive.

The experience of other European Union states

  8.  The Directive was intended to set a minimum standard across the whole of the EU and while it is open to the Government to introduce the minimum, the opportunity could also be taken to place the UK at the forefront of social policy by learning from the experience of those member states who have already introduced parental leave.

  9.  Most European Union member states already had statutory parental leave schemes in place before the Parental Leave Directive was introduced, and the Directive was designed to reflect and accommodate the diversity of approaches to parental leave. Annex One contains a table summarising the main parental leave provisions in different member states. Of the 14 member states which have introduced parental leave, nine countries have introduced paid leave. Only five member states do not have any pay for parental leave.

  10.  The annex includes information about take-up rates of parental leave for countries in which data is available. It can be seen that take-up is very much higher for women than men. Indeed take-up generally by men is low. The strongest influences on men's propensity to take leave are:

    —  whether or not parental leave is paid

    —  whether there is an individual right or family right to parental leave

    —  the level at which leave is paid

    —  the degree of flexibility in how parental leave can be taken.

  Countries which offer paid leave at levels close to previous earnings, with the opportunity for leave to be taken flexibly ie in more than one block, or part-time, and where at least part of the paid leave must be taken by each parent have higher proportions of men taking parental leave.

The UK context

  11.  The UK is one of only three countries faced with introducing statutory parental leave for the first time to comply with the Directive, the others being Luxembourg and Ireland. Elsewhere, while parental leave schemes may have required amendment to implement the Directive, the principles are already well established.

  12.  Very few employers offer parental leave as a contractual employment right. Demos[55] estimates that only 3 per cent of companies have policies equivalent to parental leave. Some companies have career break schemes, but these tend to be for much longer periods of leave than the three months parental leave currently proposed. Eligibility for career break schemes is often restrictive, opportunities to return to the same or equivalent job may be heavily circumscribed, and take-up tends to be low. More companies are now introducing paternity leave as a contractual right, but in most cases for a short period of time—varying between two or three days, up to two weeks ie far shorter than the three months' parental leave. The EOC does not underestimate the difficulty of assimilating the new rights into a culture unfamiliar with the concept of parental leave.

  13.  Companies employing women will have experience of handling maternity leave and maternity pay, on which they can draw when introducing parental leave. But because of widespread gender segregation in employment, male-dominated companies are less likely to have experience of managing absences of this nature. The challenges for small companies are particularly acute, and advice and support will be needed to assist them as they learn how to manage employee absences on parental leave.

  14.  A further dimension is that the Directive is the first based on a Social Partners Framework Agreement. The Framework Agreement is couched in permissive terms to encourage implementation through consultation between social partners to ensure that business needs and the needs of workers are accommodated. There is a strong emphasis on reaching agreements which meet the spirit and intention of the Directive. Such an approach is relatively new to the UK, which traditionally has had a different approach to industrial relations and employment rights. It is difficult to implement the Directive in an industrial relations culture relatively unused to the social partnership approach.

The case for paid parental leave

  15.  Having examined the variety of approaches to parental leave elsewhere in Europe the EOC has concluded that there are strong and persuasive arguments that parental leave should be paid. Paid leave will increase take-up levels for both women and men. Without pay, take-up by men is likely to be extremely low. When a child is born, family resources are usually fully stretched, and men's hours of work tend to rise to increase family income. In these circumstances few men are likely to opt for a period of unpaid leave. If men are unable to take parental leave, responsibility for children will continue to be carried mainly by women. The objective of increasing equality of opportunity between the sexes by encouraging a more equal sharing of family responsibilities between women and men will not be achieved.

  16.  Payment during parental leave is also important to women. Where extended maternity leave is paid by employers, women are more likely to take the full length of leave. Lack of pay in extended maternity absence means many women return to work earlier than they would like to, and before they are ready to do so. A new right to three months' unpaid parental leave is unlikely to be of help to these women.

  17.  Paid parental leave could encourage women to return to employment after giving birth. Although women who were working before giving birth are returning to work in ever greater numbers, about one third of women choose not to return to work. For some it may simply be their preference. For others, returning to work may be out of the question because of the difficulty of managing without pay during additional maternity leave, followed by the high costs of childcare on their return to work. They may consider that giving up work is a better option, particularly if they are able to claim state benefits. If parental leave is paid, some women who would otherwise choose to stay at home may decide they can return to work after taking a combination of paid maternity and parental leave. The introduction of the Childcare Tax Credit within the Working Families Tax Credit scheme will help families meet childcare costs.

  18.  Introducing paid leave would spread responsibility for financing parental leave from parents alone to the community as a whole. Without pay, the financing of parental leave will be borne primarily by employees taking leave, and their partners. Some may be fortunate enough to work for an enlightened employer who will have a contractual parental pay scheme, but this is likely to be a small minority. The experience of maternity leave suggests that most employers will not choose to pay employees on parental leave, unless the state takes the lead.

  19.  Paid parental leave would help mothers and fathers at all income levels to take parental leave by:

    —  encouraging a more permissive, family friendly climate in employment;

    —  establishing parental leave in the workplace as something which most parents can choose to use;

    —  promoting a culture of shared parental responsibility for the care of young children;

    —  promoting parental choice—at present it is very difficult for fathers to choose to take primary responsibility for child rearing because there are virtually no employment provisions to enable them to do so.

    —  giving an unambiguous message of the Government's determination to foster a more family friendly employment culture in the UK. The current position in which it is expected that parental leave will be unpaid and take-up low is a half-hearted approach to family friendly employment.

The case against paid parental leave

  20.  In the context of the low level of experience of parental leave in the UK, there are arguments against introducing paid leave at the present time:

    —  the lead-in time is short. Parental leave is due to be introduced by December 1999, which gives an exceptionally short timescale for developing and consulting upon a pay scheme for parental leave;

    —  it would add to the many changes already being dealt with by employers;

    —  if payment were to be administered by employers along the lines of other statutory employment benefits such as SMP or WFTC, it would increase employers' costs.

  21.  However, while it is often argued that introducing paid parental leave would increase the costs of parental leave the reality is that if it is unpaid, it is parents who will bear the costs.

EOC support for paid parental leave

  22.  The EOC concludes that the arguments for introducing paid leave far outweigh the disadvantages. The disadvantages are mostly connected with the short timescale for implementation, and the fears from employers about the impact on their businesses arising from their lack of experience of parental leave. The EOC is confident that employers' apprehensions will reduce over time as they gain experience of managing parental leave in practice.

  23.  However, the introduction of parental leave, whether paid or unpaid, will need to be accompanied by an awareness raising campaign to highlight the business benefits of giving leave, and by support and advice services to assist employers manage parental leave. Help will be needed by many employers, especially small and medium-sized companies, and individuals seeking to exercise their rights may need assistance. The EOC has already begun the task of raising awareness with employers. We believe there is merit in having an independent body to oversee the introduction of statutory parental leave, and provide advice and support for employers and individuals. The EOC believes it is ideally based to meet this need, based on our long experience of assisting individuals and advising on compliance with the Sex Discrimination Act.

Statutory paid paternity leave

  24.  While the subject of the Inquiry is parental leave, it is relevant to mention here the issue of paternity leave. The EOC was disappointed at the lack of any specific proposal in relation to statutory paternity leave in the Government's proposals in Fairness at Work. A man who uses part of his parental leave allowance to take time off at or around the birth of a child will in effect be reducing his parental leave allowance. In contrast, the child's mother will not have to reduce her parental leave allowance because she is already provided with a statutory right to paid time off work. We see parental leave as something quite separate from either maternity or paternity leave.

  25.  In our consultation on proposed amendments to the Sex Discrimination Act Equality in the 21st Century, we asked whether there should be a period of statutory paternity leave, how long it should last and whether it should be paid or unpaid. There was unanimous support on the part of our respondents for the introduction of a period of statutory paternity leave paid for by the state. The suggested duration of the leave varied between one week and six months, with the majority of respondents opting for one to two weeks. Where respondents did refer to the potential burden on business—especially on small firms—the benefits to men, to infants, to the family and to society generally were felt to outweigh the disadvantages. As a result of the consultation, the EOC recommended the introduction of 10 days' state funded statutory paternity leave, paid at the same rate as statutory maternity pay.

Possible options for introducing paid parental leave

  26.  The EOC has looked at four possible methods of paying employees on parental leave. The options are: (1) a flat-rate benefit; (2) an earnings-related benefit financed by Government, but paid by employers; (3) a top-up benefit to the forthcoming Working Families Tax Credit (WFTC) scheme, for lower income earners; (4) an individual savings/loans scheme.

  27.  The EOC has used the following criteria to evaluate the suitability of each of the options:

    —  effectiveness in promoting equality of opportunity between women and men;

    —  whether take-up by women and men will be encouraged;

    —  whether the option will allow for flexibility in the way parental leave is taken;

    —  the overall costs and ease of administration for employers;

    —  the costs to the state.

      Table Two in Annex Two sets out each option against these criteria; our views on the pros and cons of each option are set out below.

28.   Option One: a flat rate benefitPROS

    —  Will encourage take up by women and men although low level of pay will have less impactthan higher level of pay;

    —  Equality between the sexes because individual entitlement, and paid direct to leave taker;

    —  Should enable flexible options eg part-time or more than one block of leave;

    —  Reasonably straight forward to administer;

    —  In line with other employment-related pay schemes for absences from work eg Statutory Maternity Pay (SMP) and Statutory Sick Pay (SSP).

CONS

    —  Less incentive for higher paid to take leave than with earnings-related scheme;

    —  Men's take-up likely to be lower than under earnings-related scheme;

    —  Costly to Government—ranging from an estimated £105 million to £450 million depending on level of benefit and take-up rates;

    —  If modelled on SMP and SSP would exclude employees whose earnings are below the Lower Earnings Limit (LEL)—more women than are affected by the LEL.

  This option would meet the objectives of the Parental Leave Directive. The option would be improved by including working parents with earnings below the LEL within the scope of the scheme.

29.   Option Two: an earnings related benefitPROS

    —  Would encourage male and female take-up;

    —  Likely to be the most effective option in encouraging take-up by men;

    —  Equality between the sexes because individual entitlement, and paid direct to leave taker;

    —  May enable flexible options eg part-time or more than one block of leave—but more difficult than under flat-rate scheme;

    —  In line with payment of higher rate of SMP.

CONS

    —  Would be most expensive option for the State ranging from an estimated £1,035 to £3,440 million depending on percentage of earnings and levels of take-up;

    —  Administration more complex than under flat-rate scheme;

    —  Will direct more resources to the higher paid, and least to the lower paid.

  This option would meet the objectives of the Parental Leave Directive. The option would be improved by including working parents with earnings below the LEL within the scope of the scheme.

30.   Option Three: a top up to the WFTCPROS

    —  Would direct resources to families most in need ie low income two parent families and lone parents.

Cons

    —  Would provide no pay at all for middle and higher income parents;

    —  Would not promote equality between the sexes; it would not be an individual right but a means-tested benefit; in two parent families it may not be the partner who takes the leave who is entitled to the WFTC;

    —  Would only encourage take-up by men in low income families;

    —  Would represent a major shift in the way in which entitlement to statutory employment benefits are determined;

    —  Likely to be complex and difficult to administer.

  Option Three does not fully meet the objectives of the Directive. It would set a new precedent of means-testing on the basis of household income for the payment of employment-related benefits.

31.   Option Four: an individual savings schemePROS

    —  Would enable self-employed to participate as well as employees;

    —  Low cost to the Government—though Government could give tax relief to encourage saving;

    —  Take-up by those who have saved is likely to be high—but many will not save;

CONS

    —  Does not promote equality between the sexes;

    —  Leaves main responsibility of financing parental leave on parents;

    —  Unlikely to help lower income families and young parents who lack the opportunity to save;

    —  Unlikely to promote take-up generally by women and men.

  Option Four does not meet the objectives of the Directive.

The EOC recommends that

  32.   i.  Parental leave should be paid;

  ii.  the chosen method of payment should be consistent with the principles enshrined in the Parental Leave Directive ie equality between women and men, helping employees balance work and family life, and encouraging a more equal sharing of responsibility for the care of children between parents;

  iii.  employees taking parental leave should have the right to the same job after parental leave, mirroring the current rights of women taking ordinary maternity leave;

  iv.  ten days' paid paternity leave should be for fathers to take time off at the time of the birth of their child. There was strong support from respondents to the EOC's consultation on amendments to the Sex Discrimination Act for the introduction of statutory, paid paternity leave. The EOC believes this should be introduced in addition to paid parental leave, in line with several other European countries;

  v.  responsibility for overseeing the implementation of parental leave and providing advice and support for employers should be given to an independent body—the EOC believes it is best placed to meet this need.

June 1999


55   Time Out: the costs and benefits of paid parental leave by H. Wilkinson et al, Demos 1997 Back


 
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