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
17)
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 810 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 1114)
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. (paras1523).
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 bodythe 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 timevarying 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 choiceat
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 businessespecially on small firmsthe
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 Governmentranging
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 leavebut 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 Governmentthough
Government could give tax relief to encourage saving;
Take-up by those who have saved is
likely to be highbut 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 bodythe 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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