APPENDIX 22
Memorandum submitted by the Engineering
Employers' Federation (PL 21)
SUMMARY
1. The EEF (Engineering Employers' Federation)
is the representative voice of engineering in the UK. It is a
nationwide federation of 13 regional Associations and ECIA, the
Engineering Construction Industry Association. It has a growing
membership of over 5,600 companies of all sizes, employing over
900,000 people from every sector of engineering, manufacturing,
engineering construction and technology-based industries.
2. The attached paper is based on two consultations
with the EEF's regional Associations and member companies on the
implementation of the Parental Leave Directive. It addresses the
issue of pay for parental leave, as well as providing some background
information on the EEF's views on other issues relating to the
implementation of the Parental Leave Directive.
3. The EEF is opposed to employers being
made responsible for payments for parental leave either from their
own resources or as agents/administrators of the Government as
this would impose additional financial and administrative burdens
on employers in the engineering industry.
4. It also considers that the Parental Leave
Directive should be implemented in the UK in a way that does not
involve any "gold-plating" of the provisions that are
set out in the original Directive.
5. The EEF believes that these views are
consistent with both the Prime Minister's stated position on payment
for parental leave and the Department of Trade & Industry's
views on the need to avoid burdensome record keeping obligations
for employers and its recent initiative to reduce "red-tape"
for business.
INTRODUCTION
1. The EEF has recently carried out two
consultations with its regional Associations and member companies
on the implementation of the Parental Leave Directive ("the
Directive"). The first was a general consultation and the
second was specifically related to the DTI proposals, circulated
in March 1999, on four possible fallback options to implement
the Directive where agreement cannot be reached between the workforce
and the employer (copy attached). These consultations addressed
the issue of pay during parental leave, but also dealt with many
other issues.
2. This paper sets out the EEF's views on
payment for parental leave, arising out of these consultations.
It also addresses some of the other issues relating to the implementation
of the parental leave provisions of the Directive, by way of background
for the Committee.
Pay
3. The EEF considers that employers should
not be responsible for making any payments for parental leave,
either from their own resources or as agents or administrators
of Government benefits or tax credits; to do so would place additional
financial and administrative burdens on business.
4. The EEF's view that employers should
not be obliged to pay workers from their own resources whilst
they are on parental leave is also consistent with the well-publicised
views of the Government that parental leave should be unpaid.
Indeed, in his Foreword to the "Fairness at Work" White
Paper, the Prime Minister stated that `it cannot be just to deny
British Citizens basic canons of fairness—rights to claim
unfair dismissal, rights against discrimination for making a free
choice of being a union member, rights to unpaid parental leave'
[emphasis added].
5. Furthermore, there is no requirement
in the Parental Leave Directive for parental leave to be paid
and therefore to do so would amount to a significant "gold-plating"
of this Directive.
6. It is also the EEF's view that employers
should not be made responsible for administering the payment of
any Government benefit or the operation of any tax credits whilst
workers are on parental leave. This would place an unacceptable
administrative burden on employers.
7. It would inevitably result in employers
being obliged to keep detailed records of the parental leave that
has been taken by workers which would then need to be passed between
employers and to the relevant Government agency. These records
would need to be very complicated if they were to be accurate
as they would have to distinguish between statutory entitlement
to parental leave and any additional contractual leave taken,
given that some employers might permit workers to take parental
leave when they were not entitled to statutory parental leave.
They would also have to take into account leave taken part-time,
leave taken with former or other concurrent employers and, potentially,
the transferring of the right to parental leave between parents
(see 31 below). To further complicate matters, the ways in which
workers take parental leave are likely to vary greatly, particularly
as the EEF understands that the Government wishes to encourage
workers and employers to agree on how leave is taken. It is therefore
difficult to envisage how, in practice, a simple record keeping
system could be devised to deal with all of these factors.
8. The EEF is opposed to any statutory record-keeping
obligations for employers in relation to unpaid parental leave,
let alone any obligation to keep extremely complex records. Employers
are already overburdened with time-consuming and expensive administrative
obligations, particularly in relation to the Working Time Regulations
1998. However, if employers were made responsible for paying for
parental leave out of their own resources, the EEF would want
to review its position on record keeping requirements.
9. The Secretary of State for Trade &
Industry now appears to have recognised the pressures of excessive
regulation on employers and has recently launched an initiative
to reduce the burden of "red tape" and regulation on
business which the EEF actively supports.
10. The DTI's fallback options also recognise
the benefits of avoiding all record-keeping obligations. One of
the DTI's proposals in its fallback options was for employers
to have the right to demand a declaration from workers of the
amount of parental leave that they had taken in the past. However,
we do not believe that such a system would be sufficient for the
purpose of maintaining records relating to the payment of benefits.
11. Any entitlement to State benefits whilst
a worker is on parental leave also raises the issue of potential
fraud within the benefits system. It will be extremely difficult
for employers to determine whether a worker has exhausted his
or her entitlement to parental leave given the complexity of many
family relationships which may make it difficult to establish
whether an individual has the right to take parental leave (see
18 and 25 below), the frequency with which workers move between
jobs, the number of workers who have more than one job and problems
arising when workers are given contractual parental leave although
they are not entitled to statutory parental leave. If employers
are given the task of administering Government benefits or tax
credits, they should not be put in the invidious position of having
to police potential fraud on behalf of the Government. Not only
will it be an almost impossible task but investigations into workers'
personal relationships and arrangements are likely to cause employee
relations problems.
12. If employers are made responsible for
making payments for parental leave on behalf of the Government,
it is likely that many employees will perceive these payments
as payments that are being made by their employer rather than
by the Government. This could therefore also create employee relations
problems if an employer refuses legitimately to make a payment
or, as is more likely, there are any disparities in the level
of payments made to individuals under a means based or tax-credit
based system.
13. The EEF is also concerned that, if employers
are given the responsibility for administering Government benefits
for parental leave, they will in the future gradually be made
responsible for meeting the payments themselves from their own
resources as has happened in the past with other employment related
benefits, such as statutory redundancy payments.
BACKGROUND INFORMATION
Fall-Back Provisions
14. The EEF understands that the Government
is keen, wherever possible, to encourage employers to agree with
their workforce how to implement the Directive, with Regulations
prescribing fallback options where no agreement has been possible.
15. The EEF's consultation on the DTI's
four proposed fallback options resulted in a divergence of views
amongst the EEF's member companies with the preferred fallback
option seeming to depend very much on the type and size of business.
However, the predominant preference was either for Option 1, with
workers being obliged to take a continuous three-month period
of leave by the time the child is aged two or three, or for Option
2, with the worker being entitled to take one month's parental
leave per year for each of three consecutive years before the
child is five years old. Under Option 2, if a worker did not take
advantage of the right to leave in any one year, the worker would
lose the entitlement to that month of leave. The EEF has a marginal
preference for Option 2.
16. The EEF considers Options 3 and 4 to
be too complex. The fallback provisions should be clear and should
provide certainty to both parties. If employers and workers wish
to operate parental leave in a more complicated or flexible manner,
this should be a matter for agreement. Furthermore, the fallback
provisions should not entitle workers to take leave on a part-time
basis (see 20 below).
Qualifying Period
17. Workers should not have the right to
parental leave until they have had one year's continuous service.
Continuous service should be defined in the same way as in the
Employment Rights Act 1996.
Who Should be Entitled to Take Parental Leave?
18. The legislation should clearly define
who is entitled to take parental leave. Employers need to have
certainty about this and should not be put in the position of
having to decide whether or not a particular relationship is sufficiently
close to entitle an individual to parental leave. We believe that
there should be strict eligibility requirements. It will then
be open for employers to exercise their discretion to grant leave
to those who are ineligible. We understand that the DTI favours
an approach whereby only natural parents and those who have parental
responsibility for a child, as defined in the Children Act, will
be permitted to take parental leave. We support such an approach.
Multiple Births
19. Just as for maternity leave, there should
not be a right to three months' parental leave for each child
where there are multiple births. For instance, an individual should
only be entitled to a total of three months' parental leave for
twins.
The Position of Part-time Workers.
20. Whilst recognising that employers should
consider permitting workers to take parental leave on a part-time
basis, the EEF strongly objects to workers having a statutory
entitlement to take parental leave by working part-time. The right
to work reduced hours should not form part of the fallback provisions
and should be a matter for agreement only.
21. The EEF does not believe that it would
be possible to devise a fallback provision relating to reduced
hours of work that would avoid significant burdens on business
and enormous complexity. Such provisions may also be unsatisfactory
to workers, given the variations in their specific needs. Any
such fall-back provision would have to deal with exactly how a
worker would be entitled to take the part-time leave. Regulations
would have to include provisions to settle matters such as whether
a worker could leave early for three days a week or could work
from Monday to Wednesday rather than from Wednesday to Friday.
This is not a viable proposition given the varying circumstances
and requirements of employers and workers.
22. Part-time workers should be entitled
to pro rata amounts of parental leave. A procedure similar to
that used in relation to the entitlement to statutory leave in
the Working Time Regulations 1998 would be appropriate. Therefore,
if workers are entitled to 13 weeks of parental leave, a week
for a full-time employee would normally amount to five days and
a week for someone who works three days a week would amount to
three days.
23. The period of leave equivalent to a
week of leave would be dependent upon the hours worked by the
worker at the time the leave was taken. For example, if a full-time
worker takes the first four weeks of his or her entitlement to
parental leave and then starts to work a three day week, his or
her remaining entitlement to parental leave would be nine weeks'
leave, with each week consisting of three days.
24. The legislation should also specify
what happens where individuals work varying hours each week. This
issue was not dealt with satisfactorily in relation to statutory
annual leave in the Working Time Regulations 1998.
Purpose of the Leave
25. The legislation should reflect the wording
of the Directive and specify that parental leave must be taken
in order to care for the child.
Notice of Parental Leave and Postponement
26. Employers will need time to plan for
absences due to parental leave. In our view, the amount of notice
that employers will require from workers who wish to take parental
leave will depend upon the circumstances in which the Regulations
permit employers to postpone leave. The more difficult it is for
employers to postpone leave, the more notice they will require
from workers.
27. Subject to this and provided that the
position in relation to employers is not made too difficult, notice
equivalent to that required to take annual leave under the Working
Time Regulations 1998 would seem to be appropriate in most cases.
As a result, workers would be required to give twice as much notice
as the periods of parental leave that they wish to take. This
also has the advantage of consistency in obligations between the
Regulations dealing with parental leave and the Working Time Regulations
1998.
28. Employers will have the right to postpone
parental leave in certain circumstances. Assuming that they will
exercise this right by serving a counter notice on the worker,
again in our view periods of notice equivalent to those required
in relation to statutory annual leave in the Working time Regulations
1998 would be appropriate. Employers should therefore be able
to postpone parental leave by giving the worker as much notice
as the period of leave requested.
29. The EEF is concerned that the Government
may move away from the wording of the Directive which permits
postponement for "justifiable reasons related to the operation
of the undertaking" and introduce the need for an employer
to balance the needs of the business against the need of the employee
to take the leave at a particular time. The EEF believes that
it is important for the Regulations to follow the wording of the
Directive in this respect and that any "gold-plating"
of the Directive should be avoided. It seems to us to be impossible
for an employer to make a value judgment of its needs as compared
to the totally different, and often subjective, needs of the employee.
Furthermore, it will be difficult for an employer to satisfy itself
of the genuineness of a worker's need, especially given that the
same set of circumstances may be perceived by one worker as serious
but not so by another worker. Any disparity in treatment of employees
could lead to claims of discrimination and/or detriment.
30. Employers may encounter difficulties
where entitlement to parental leave relates to a parental leave
year and the request for leave is made at the end of a leave year.
The employer should be permitted to postpone leave until the end
of the current parental leave year or by six months, whichever
is the longer period. This would then take into account the fact
that the end of one parental leave year and the beginning of the
next may coincide with a time when it is especially difficult
for an employer to cope with any absence.
Transferable Rights
31. The Employment Relations Bill opens
the possibility of the Regulations permitting leave to be transferred
between those who have "responsibility" for a child.
The EEF considers that, as the Directive states, the right to
parental leave should not be transferable. In other words, the
father of a child should not be permitted to transfer his entitlement
to leave for that child to its mother. Transferring rights would
also complicate any record-keeping obligations that were imposed
and would have an impact on the payment of any benefits or tax
credits.
Transitional Provisions
32. The right to parental leave should only
apply to children born or adopted on or after the date when the
legislation is enacted as the Directive refers to leave being
taken on the grounds of the birth of a child. If parental leave
was to be available in respect of children who were born or adopted
before the legislation is enacted, employers would inevitably
be faced with large numbers of workers attempting to take parental
leave within a very short period of time.
Status of the Employment Contract during Parental
Leave
33. Given the problems that have been encountered
with maternity leave, the legislation should be very specific
about the status of the contract during parental leave.
34. The EEF does not agree with the suggestion
in the Employment Relations Bill that the contract (to the exclusion
of the remuneration provisions) should continue in place during
the period of parental leave. In Halfpenny—v—IGE
Medical Systems Ltd (1998), the Court of Appeal held that
the contract of employment is effectively suspended during maternity
leave. It is revived once a woman correctly exercises her right
to return. The same principles should apply to parental leave
so that the contract of employment should effectively be suspended
during parental leave, although continuity of employment should
be preserved.
The Right to Return
35. The right to return to the same or a
similar job (with no diminution of status or terms and conditions)
should be the same as for that at the end of extended maternity
leave.
36. However, unlike for extended maternity
leave (described as additional maternity leave in the Employment
Relations Bill), the date of return should be fixed prior to the
commencement of parental leave to enable employers to make proper
arrangements. Employers should also be entitled to ask for confirmation
of return to work at a specified time during the parental leave.
This will be particularly important if a worker takes parental
leave at the end of their maternity leave. If a worker and employer
agree that a worker may take less than three months' parental
leave at one time and the worker were to decide that he or she
wanted to stay on parental leave after the expiry of the agreed
period, he or she would have to give notice that he or she wished
to take additional parental leave, in the same way as when asking
for the initial period of parental leave. Similarly, the employer
would have to treat the request in the same way as the original
request; it would be able to refuse the request for a justifiable
reason.
37. If the worker wished to return earlier
than agreed, he or she should be obliged to give a minimum period
of notice, such as a week. However, just as when a woman returns
early from maternity leave, he or she would lose his or her entitlement
to the remainder of the period of leave that had been agreed.
For instance, a worker agrees with his employer that he or she
will take four weeks' parental leave. If at the end of the first
two week period of the parental leave, the worker gives notice
to the employer that he or she wants to return, the employer would
be obliged to permit the worker to return at the end of the third
week of the parental leave period. The worker would not then be
permitted to take the remaining week of that period of parental
leave later on. However, if the worker and the employer had agreed
at the outset that the worker would take three weeks' parental
leave and the worker returned at the end of the period of three
weeks, that worker would not be precluded from taking the fourth
week (as well as any other remaining entitlement to parental leave)
in the future.
38. If a worker does not return on the date
agreed or the date for which he or she gave notice to return,
the EEF considers that he or she should lose the right to return,
although there should also be specific provisions as to what happens
if a worker is unable to return on the specified day because of
illness.
Small Employers
39. Small employers with fewer than 20 workers
should be given the maximum amount of flexibility in relation
to each and every part of the Directive.
Workforce Agreements
40. The EEF is concerned about the operation
of workforce agreements in respect of the implementation of the
Parental Leave Directive. Many employers have only just gone through
the process of electing workforce representatives for the purpose
of the Working Time Regulations 1998 and will find it burdensome
to have to undertake a similar process again after such a short
period.
41. Furthermore, the Employment Relations
Bill provides that workforce agreements will only be effective
in modifying the Regulations where the terms of the agreement
are incorporated into each worker's contract. Workforce agreements
are not automatically incorporated into workers' contracts of
employment. Therefore, employers would have to obtain express
agreement from each employee to incorporate the terms of the workforce
agreement into his or her contract. Existing employees may be
reluctant to agree to this, particularly given that individual
workers' preferences in relation to parental leave will inevitably
vary widely. The EEF believes that there is no need for the terms
of workforce agreements to be expressly incorporated into workers'
contracts in order for the terms of a workforce agreement to be
enforceable. This view is reinforced by the fact that there is
no such provision in the Working Time Regulations 1998.
3 June 1999
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