Clause 15: Repeals

70.     Clause 15 gives effect to the repeals set out in Schedule 2.

Clause 17: Corresponding provision for Northern Ireland

71.     Clause 17 provides that an Order in Council made for Northern Ireland under paragraph 1(1) of the Schedule to the Northern Ireland Act 2000, which states that it is made only for purposes corresponding to those contained in the Bill, is not to be subject to the affirmative procedure of Parliamentary scrutiny, but is instead to be subject to the negative procedure. This will make it easier for changes to Northern Ireland legislation to be timed to coincide with the changes to legislation for Great Britain.

Clause 18: Financial provisions

72.     This clause provides for increased expenditure attributable to the provisions of the Bill to be paid out of money provided by Parliament.

COMMENTARY ON SCHEDULES

Schedule 1 - Leave and pay related to birth or adoption: further amendments

73.     Many of the paragraphs of Schedule 1 make amendments to other legislation to rename "paternity leave" as "ordinary paternity leave" and "statutory paternity pay" as "ordinary statutory paternity pay". This is to avoid any potential confusion over terminology once employees become entitled to additional statutory paternity pay and additional paternity leave. Other paragraphs make amendments to ensure that, where appropriate, statutory provisions which currently apply in relation to paternity leave or statutory paternity pay will also apply in relation to additional paternity leave or additional statutory paternity pay. In general these Notes do not deal further with those amendments.

74.     Schedule 1 also contains a number of amendments intended to make changes to maternity allowance, statutory maternity Pay, statutory adoption pay and statutory paternity pay to ease administration for employers and to assist the returning employee's reintegration into the workforce.

75.     Paragraph 1 amends paragraph 5A of Schedule 5 to the Social Security Act 1989 which makes provision about unfair paternity leave provisions in employment-related schemes for pensions and other benefits. The amendments ensure that references in paragraph 5A to a period of paid paternity leave include references to a period during which a person is being paid additional statutory paternity pay.

76.     Paragraph 5 will add additional statutory paternity pay to the list of statutory payments set out in section 4C(11) of the Social Security Contributions and Benefits Act 1992. Section 4C is inserted into that Act by the current National Insurance Contributions Bill to allow regulations to be made to take account of regulations made under section 4B (of the 1992 Act) altering earnings which are subject to National Insurance Contributions liability for a past period.

77.     Paragraph 6 amends section 35(3)(a) of the Social Security Contributions and Benefits Act 1992 (SSCBA 1992).

78.     Currently a woman loses maternity allowance for any day on which she works as an employed or self-employed earner. There is no discretion and any work will result in the loss of maternity allowance for the appropriate day. The amendment made by paragraph 6 will allow regulations to be made to prescribe cases in which a woman is not disqualified from receiving maternity allowance when she works in the maternity allowance period as an employed or self-employed earner. This will enable a woman to undertake the occasional day of training, appraisal or work without losing her maternity allowance for the day in question. The object is to allow better contact and communication between the woman and her employer during her maternity absence and to ease the woman's eventual return to work.

79.     Paragraph 7 amends section 165 of SSCBA 1992.

80.     Sub-paragraph (2) substitutes a new section 165(2) to provide for the maternity pay period to begin with the 11^th week before the expected week of confinement. Section 165(3) is also substituted so that, in prescribed cases, the first day of the maternity pay period is to be a prescribed day after the beginning of the 11^th week before the expected date of confinement. This allows the maternity pay period to begin on any day of the week and for it to be aligned with the maternity leave period.

81.     Sub-paragraph (3) amends section 165(4) to provide a power to prescribe cases in which a woman may work during a part of a week without being disqualified from receiving statutory maternity pay for that week. It is intended that this power will be exercised so as to allow a limited number of days' work under her contract with the employer during the maternity pay period.

82.      Sub-paragraph (4) inserts a new section 165(8) to define a "week" as "any period of 7 days beginning with the day of the week on which the maternity pay period begins". This allows for maternity pay to be paid for a specified number of weeks beginning on any day.

83.     Paragraph 8 amends section 166 of SSCBA 1992, which relates to the rate of statutory maternity pay.

84.     Sub-paragraph (2) inserts a new subsection (1A) to define a "week" as any period of 7 days.

85.     Statutory maternity pay is paid on the basis of a weekly rate for a total of 26 weeks (to be extended to 39 weeks). Many women are paid their contractual pay in periods which are not divisible into exact numbers of weeks. In particular many are paid by the calendar month and this leads to employers having to pay statutory maternity pay in patterns of weeks which do not relate to the woman's normal pay period.

86.     To help resolve this difficulty sub-paragraph (3) inserts a new section 166(4) to provide for the calculation of statutory maternity pay to be made at one seventh of the weekly rate.

87.     Paragraph 9 amends section 171 of SSCBA 1992 by inserting a new definition of week for the purposes of Part 12 of that Act. "Week" generally means "a period of 7 days beginning with Sunday or such other period as may be prescribed in relation to any particular case or class of case" but it has a different meaning in section 165(1), (4) and (6), section 166(1) and paragraph 3(2) of Schedule 13.

88.     Paragraph 16 amends section 171ZE of SSCBA 1992 to allow the calculation of ordinary statutory paternity pay to be made at a daily rate, for the same reasons as are set out above in relation to statutory maternity pay (see paragraphs 85 and 86).

89.     Paragraph 21 amends section 171ZN of SSCBA 1992 which deals with the rate and period of statutory adoption pay. Sub-paragraph (2) inserts an amendment which would enable an occasional day's work to be performed in prescribed cases without resulting in the loss of any statutory adoption pay, in the same way as the amendment set out in paragraph 7(3) of the Schedule for statutory maternity pay.

90.     Sub-paragraph (3) inserts a new subsection which allows the calculation of statutory adoption pay to be made at a daily rate that is to be taken as one seventh of the weekly rate. This is for the same reasons as set out above at paragraphs 85 and 86 in relation to statutory maternity pay.

91.     Paragraph 22 amends section 176 of SSCBA 1992 to provide for regulations made under the new inserted sections 171ZEA to 171ZEE (dealing with additional statutory paternity pay) to be subject to the affirmative procedure.

92.     Paragraph 23 inserts a new sub-paragraph (2A) in paragraph 3 of Schedule 13 to SSCBA 1992 to define a "week" as a "period of seven days beginning with the day of the week on which the maternity pay period begins".

93.     Paragraph 26 amends section 150 of the Social Security Administration Act 1992 which deals with the uprating of benefits so that it applies in relation to additional statutory paternity pay.

94.     Paragraph 31 amends section 71 of the Employment Rights Act 1996 (ERA 1996) to provide powers to make regulations which will enable a woman to undertake a few days' training or work for her employer without ending her ordinary maternity leave. The reference to 26 weeks' ordinary maternity leave reflects the current prescribed period of ordinary maternity leave.

95.     Paragraph 32 amends section 73 of ERA 1996 in a similar way to the amendment set out above to provide powers to allow a woman to undertake a few days' training or work for her employer without ending her additional maternity leave.

96.     Paragraph 33 amends section 75A of ERA 1996 in a similar way to provide powers to allow an adopter to undertake a few days' training or work for her employer without ending her ordinary adoption leave.

97.     Paragraph 34 amends section 75B of ERA 1996 to achieve the same effect in respect of additional adoption leave.

98.     Paragraph 38 makes amendments to section 80E of ERA 1996 to take account of new sections 80AA and 80BB inserted by the Bill. The amendment made by sub-paragraph (3) provides for the Secretary of State to make regulations requiring an employee taking additional paternity leave, the mother or adopter or the child and the employers of any such persons to record or provide information in connection with paternity leave or additional paternity leave.

99.     Paragraph 43 provides for regulations made under new sections 80AA and 80BB of ERA 1996 (dealing with additional paternity leave) to be made under the affirmative procedure.

100.     Paragraph 48 provides for provisions in the Finance Act 1999 about electronic communications to apply to additional statutory paternity pay.

101.     Paragraph 60 adds additional statutory paternity pay to the list of former Inland Revenue matters in Schedule 1 to the Commissioners for Revenue and Customs Act 2005. This ensures that, for the purposes of various statutory provisions which refer to that Schedule, additional statutory paternity pay is treated as if (like the other forms of statutory pay) it were a former Inland Revenue matter.

Schedule 2 - Repeals

102.     Schedule 2 lists the repeals made by the Bill.

PUBLIC SECTOR FINANCIAL COST AND PUBLIC SECTOR MANPOWER EFFECTS

103.     The Bill will involve new expenditure from public funds. The Regulatory Impact Assessment estimates that the costs to the Exchequer of extending statutory maternity pay, maternity allowance and statutory adoption pay from 26 weeks to 39 weeks from April 2007 will be £369 million a year from April 2007. The potential cost of any further extension of the pay periods to 52 weeks would depend on when the extension was made by regulations. The RIA estimates the additional exchequer costs arising as a result of some fathers receiving additional statutory paternity pay - with effect from a point in time to be decided following further consultation - to be £12.1 - £21 million per year. A proportion of the employer costs of the new provisions will fall to the public sector as an employer.

104.     The administration of additional paternity leave and additional statutory paternity pay, once the details have been prescribed in regulations following further consultation, is likely to involve a very small additional cost to public funds. These are likely to arise as a result of any need for Her Majesty's Revenue and Customs to: devise and supply a form or forms to enable mothers, fathers and their employers to operate the scheme; police the employers' / employees' role by compliance checks in a sample of cases; process (in-year) more claims for advance funding for statutory maternity pay etc (from fathers' employers); process more End of Year Returns (new ones from fathers' employers) with a record of statutory maternity pay etc recovered by employers and a record of advance funding received. Given the need for further consultation on these administrative details it is not yet possible to estimate the cost involved.

105.     In relation to companies that have become insolvent or are unable to pay the Government meets the costs of redundancy payments through the National Insurance Fund. The overall cost estimates are summarised below at paragraph 112.

106.     The annual leave provisions will not have public sector financial costs.

107.     The provisions in the Bill as a whole are not expected to have any public sector manpower effects.

SUMMARY OF THE REGULATORY IMPACT ASSESSMENT

108.     A Regulatory Impact Assessment has been produced covering the provisions in this Bill. Currently 317,000 women qualify for statutory maternity pay and 61,000 for maternity allowance. All these women will be able to benefit from the extension of statutory maternity pay and maternity allowance to 39 weeks. The majority of costs for extending these payments fall to the Exchequer, and this is estimated in the Regulatory Impact Assessment at £369 million a year. The on-going costs of the extension for employers are estimated at between £42 million to £56 million per year. The direct costs of the extension fall to larger employers, though there are indirect costs for smaller employers in managing absences. Set against this are the benefits to very young children who can be cared for by a parent for longer in the first year and for mothers who have more choice about when to return to work from maternity leave. It is also estimated that employers will benefit from the estimated reduction in recruitment costs as a result of increasing the number of mothers staying on after return to work. This benefit is estimated at £13.2 million a year.

109.     Given the relatively small number of adoptions each year, the costs and benefits are negligible. However, there will be benefits for adoptive families from greater support for adopters to stay at home and care for their child in the first year of the child's placement.

110.     The Regulatory Impact Assessment estimates that between 380,000 to 442,000 employed fathers would be eligible for additional paternity leave and between 238,000 to 277,000 for additional paternity pay depending on what length of service criteria are adopted (options costed in the RIA are 60 and 26 weeks' qualifying service respectively). The costs of additional paternity pay to the Exchequer will be £12.1m to £21m per year. The costs to employers are estimated at £10.5m to £31.4m per year, plus estimated administration costs of £1.3m per year.

111.     The Regulatory Impact Assessment estimates that around 1.3 million employees would benefit from the extension in the right to request flexible working to carers of dependent adults. The on-going costs to employers is estimated at between £22 million to £120 million for the first year and between £35 to £196 million in the second year, depending on how a carer is defined. The benefits to employers are estimated at between £18 million to £100 million in the first year and between £36 million to £196 million in the second year, resulting from savings in recruitment and absence costs and increased productivity and profits.

112.     A Partial Regulatory Impact Assessment published in July 2005 as part of the 'Coming of Age' consultation set out a range of estimates of the costs of changes to statutory redundancy pay. If, for example, the weekly limit were increased from the present £280/week to £290/week and the multiplier set at (a) 1.0 or (b) 1.5, the cost to employers could either (a) fall by £120 million or (b) increase by £290 million. The Regulatory Impact Assessment is available at

www.dti.gov.uk/er/equality/statutoryredundancypay.pdf.

113.     In relation to the extension to annual leave entitlement, due to the wide range of working patterns that presently exist in the United Kingdom, it is difficult to obtain accurate figures on how many people are contractually entitled to four weeks' paid leave and time off in respect of bank and public holidays. The DTI plans to seek further data and consult with stakeholders in order to develop more robust cost estimates and investigate how the commitment could be implemented.

114.     The Regulatory Impact Assessments are available at: www.dti.gov.uk/er.

COMPATIBILITY WITH THE EUROPEAN CONVENTION OF HUMAN RIGHTS

115.     The Convention Rights most relevant to the Bill are Article 14 (prohibition on discrimination), taken with Article 8 (right to respect for private and family life) or Article 1 of Protocol 1 (right to peaceful enjoyment of possessions). The Minister considered whether the provisions of the Bill relating to paternity leave and pay contravened these rights but concluded that the provisions were compatible with the Convention Rights, as they did not constitute unlawful discrimination on the ground of sex or on any other ground. As there is no unlawful discrimination, Article 14 does not apply and there is no breach of the Convention Rights.

116.     The Minister also considered whether there could be a separate contravention of Article 1 of Protocol 1 but concluded that there was no such contravention as a new right to paternity pay is not an acquired economic interest amounting to a possession within the meaning of Article 1 of Protocol 1.

117.     Section 19 of the Human Rights Act 1998 requires the Minister in charge of a Bill in either House of Parliament to make a statement about the compatibility of the provisions of the Bill with the Convention rights (as defined by Section 1 of that Act). The statement has to be made before Second Reading. Alan Johnson, Secretary of State for Trade and Industry, has made the following statement:

In my view, the provisions of the Work and Families Bill are compatible with the Convention Rights.

COMMENCEMENT

118.     Clause 19 deals with commencement. Certain supplementary provisions (the interpretation clause (clause 16), the clause relating to Northern Ireland (clause 17) and clauses 18 to 20) come into effect on Royal Assent. Otherwise there is a power for the Secretary of State to bring the provisions of the Act into force on such day as the Secretary of State may by order appoint. Different days may be appointed for different purposes.