The Minister for Employment Relations and Postal Affairs (Mr. Pat McFadden): I beg to move,

It is a pleasure to serve under your chairmanship today, Mr. Taylor. The regulations will provide employers and employees with clarity regarding their respective obligations and rights during additional maternity leave and additional adoption leave—that is, the second six months of the 52 weeks’ leave available to new parents. The amendments have become necessary following changes to the Sex Discrimination Act 1975 in April this year. I will say more about that in a moment. I shall first set out some of the context of the changes and what we have achieved for families in recent years.

We know that families face real challenges in balancing home and work life. Parents, of course, want to give their children the best start in life, but they also want to balance their parental responsibilities with their work responsibilities and careers. As time goes by, it is likely that we will see an increasing number of men and women wishing to take time out of the labour market to care for children, elderly relatives or both. At the same time, business knows that to succeed it must find, develop and keep the best people possible. Employers recognise that helping employees to strike the right balance between work and family life can enhance business performance.

The Government have a strong record in supporting working families. Our extensions to maternity pay and leave, for example, are worth an extra £3,000, compared with the system in 1997, to a mother taking advantage of those rights. In addition, since 1997 we have doubled the number of child care places and opened more than 2,900 Sure Start children’s centres, such as St. Martin’s in Bradley, in my constituency, where Lynne Law and her staff are working with local parents to give children the best possible start in life. I am sure that Members have examples of excellent Sure Start children’s centres in their constituencies.

Working parents have benefited from improved maternity leave and pay, new rights to paternity and adoption leave and the right to request flexible working. We have also introduced measures to help employers manage those relationships. As part of the Work and Families Act 2006, we extended notice periods, giving employers more opportunity to plan ahead if an employee takes such leave; introduced “keeping in touch” days; and clarified that employers can make reasonable contact with employees during maternity and adoption leave, which helps communication and eases the return to work.

The regulations before us clarify the non-pay contractual benefits that women on additional maternity leave are entitled to and extend the rights to adopters taking adoption leave. They have become necessary following amendments to the 1975 Act in April. The amendments mean that employers will no longer be able to treat employees taking additional maternity leave less favourably than women on ordinary maternity leave in respect of non-pay contractual benefits.

The regulations will come into force in October this year, given our commitment to common commencement dates for new employment legislation. They will apply to parents for whom the expected week of childbirth, or placement in the case of adoption, is on or after 5 October 2008. The 1975 Act amendments already made will also apply to women whose babies are due from 5 October 2008. The timing of the regulations matches that of the 1975 Act changes.

The regulations reflect a new requirement of the 1975 Act. They explicitly extend into the period of additional maternity leave an employee’s entitlement to benefit from the non-pay terms and conditions of her employment during ordinary maternity leave. The contractual benefits covered include the accrual of contractual annual leave and the provision of a company car or mobile phone. Of course, such benefits would be included only if they were already provided for in the employee’s contract.

Taken with the changes to the 1975 Act, the regulations require that the full 52 weeks of maternity and adoption leave must be counted when assessing how long an employee has worked for an employer. That can have an impact on various benefits and rights. For example, an employer cannot ignore the second 26 weeks of leave when calculating when a pay rise is due or when an employee is entitled to additional contractual annual leave. Now that the period for statutory maternity pay and statutory adoption pay has been extended to 39 weeks, more employees are taking at least some additional maternity or adoption leave.

Adoption leave is an important reform that was introduced some years ago, and it is available to 4,000 adoptive parents a year. It is a valuable way of allowing newly adopted children and adoptive parents to settle into their new circumstances. Under the regulations, adopters and new mothers taking advantage of the longer period of pay will no longer have to wait longer than other colleagues to receive pay rises or contractual non-pay benefits that may stop after 26 weeks.

In line with our commitment to providing clear and helpful guidance to accompany new legislation, we updated our maternity guidance in April this year. Our “Pregnancy and Work” leaflet is distributed to all pregnant women through a popular system of “bounty packs”. That helpful publication includes a tear-off portion for the woman’s employer so that both parties have a shared understanding of the rights and responsibilities in such situations. We have worked with other Departments to update guidance on the Directgov and Business Link websites to provide high-quality guidance for employees and employers.

The regulations bring the relevant maternity leave legislation into line with the requirements of sex discrimination law and provide employees and employers with the clarity that they need. That is important from both points of view: employees must know what they are entitled to, and employers must know what is expected of them so that they can avoid expensive and time-consuming tribunal cases. The regulations also ensure that adoption leave legislation retains consistency with maternity leave legislation. I commend the regulations to the Committee.

Mr. Jonathan Djanogly (Huntingdon) (Con): As hon. Members will appreciate, the regulations are not straightforward. Regulations 4 to 7 amend the Maternity and Parental Leave etc. Regulations 1999 to extend the non-pay terms and conditions to which a woman is entitled during ordinary maternity leave, which I shall call OML, to the period of additional maternity leave, which I shall call AML. Regulations 8 to 10 amend the Paternity and Adoption Leave Regulations 2002 to extend the non-pay terms and conditions to which a woman is entitled during ordinary adoption leave, OAL, to the period of additional adoption leave, AAL. Although the regulations will come into force the day after they are made, the provisions will apply to the parents of children expected to be born or placed for adoption on or after 5 October 2008.

As the law stands, ordinary maternity leave lasts 26 weeks and additional maternity leave lasts a further 26 weeks. All women can take both OML and AML regardless of their length of service with their current employer. During the ordinary period, their contractual rights—any rights that apply to their workplace, such as a company car or pension—continue as if they are still at work, except for their normal pay. In contrast, during the additional part, the employee continues to be an employee, but the only contractual rights and obligations that persist are the notice period in the contract of employment if either the employee or the employer wishes to terminate the employment, redundancy pay, disciplinary and grievance procedures, and exclusive retainer clauses, which constitute a contractual obligation not to work for any other business.

It may, however, be possible for the employee to negotiate with the employer for other contractual rights to continue, but those are undertakings outside the basic legislative framework and they do not affect the employee’s statutory rights. All employees are entitled to 20 days’ paid annual leave. Furthermore, an employer must not discriminate by failing to consider an employee on maternity leave for opportunities such as promotion.

Adoption leave allows one member of an adoptive couple to take paid time off work when their new child starts to live with them. Paternity leave and pay may be available for the other member of the couple or the adopter’s partner. Adoption leave and paternity leave are available whether the child is adopted from within the UK or from overseas.

The High Court order in Equal Opportunities Commission v. Secretary of State for Trade and Industry in 2007 ruled that the Employment Equality (Sex Discrimination Regulations) 2005 did not comply with the requirements of European law. Consequently, the Sex Discrimination Act 1975 was amended by the Sex Discrimination Act 1975 (Amendment) Regulations 2008. Those regulations included amendments on claims of discrimination on grounds of maternity, which eliminate any distinction between the types of claim that a woman can bring in relation to the ordinary and the additional bits.

One result of those recent amendments is that the 1975 Act now allows an employee on AML to bring claims for discrimination in relation to any of the terms and conditions of her employment, except those relating to pay. Thus a woman may have a claim if she is not afforded the same benefits of the terms and conditions of employment—except those relating to pay—during AML as she is during OML. The instrument therefore aims to clarify the law with regard to terms and conditions of employment that must continue during the additional bit, so that the position is consistent with the 1975 Act, as amended.

Whether advertently or inadvertently—I would be interested to hear the Minister’s views on this—it seems as though the Government have created a ratchet effect in relation to the extra rights. Corresponding changes are made in relation to any additional adoption leave so that the adoption leave regime is consistent with the maternity leave regime. As with the 1975 Act, the amended Act has no impact on entitlement to terms and conditions relating to pay, as defined by European Community law. Employers are therefore not obliged to go beyond the obligations of the Social Security Act 1989, which provides that pension contributions must continue during periods of paid family leave.

The regulations do not change that provision or extend pension rights during unpaid additional maternity or adoption leave. The explanatory notes state:

Given that it is recommended practice that at least one adoptive parent is able to spend time at home with the child during the first few months of placement, it is assumed that all will benefit from the extension of entitlements during additional adoption leave. At present, relatively few employees take additional maternity or adoption leave, but with the recent extension of statutory pay to 39 weeks, leaving the last 13 weeks of maternity or adoption leave unpaid, it is anticipated that more women will take at least some additional maternity or adoption leave. Data from the 2005 maternity and paternity rights survey show that in 2005 74 per cent. of women returned to and remained in work.

All employers in the public, private and voluntary sectors could be significantly affected by the changes. They will all need to be aware of the changes, familiarise themselves with them and make any adjustments necessary to comply with the legislation. Will the Minister please confirm how employers are to be informed of the new requirements? The British Chambers of Commerce estimates that Government regulation has cost UK business more than £65 billion since 1998. There have been 14 new regulations every working day under Labour. Are these another example of such regulations, and how do they tie in with the Secretary of State’s recent claim that further employment laws will not be needed?

According to the Department for Business, Enterprise and Regulatory Reform impact assessment, the regulations will impose costs of over £162 million, for no financial benefit to the companies. Does the Minister believe that, at a time of rapidly increasing economic difficulty, it is right to add yet more regulations and costs to businesses?

It is often claimed that the bulk of the regulation under which UK business struggles is derived from Europe. The Government, however, are well known for their zealous application of European regulations—the so-called gold-plating effect. Will the Minister please explain why the regulations are not another example of that?

Many small businesses cannot afford to employ an extra member of staff. How, therefore, does the Minister believe that such businesses will be able to afford to maintain the benefits and privileges due to a member of staff on additional maternity leave, and hire another member of staff to cover that job?

Lastly, but importantly, we need to remember that many of the positions left empty through maternity leave will be taken up by temporary and agency workers. Have the Government reviewed their impact assessment of the regulations in the light of the recent and sudden policy U-turn on agency worker equalisation terms?

Lorely Burt (Solihull) (LD): I also welcome you to the Chair, Mr. Taylor, for our important discussion this afternoon.

The hon. Member for Huntingdon said that the regulations are not straightforward. After the exposition that he has just made, I can begin to understand that. However, I do understand the intention of the statutory instrument, which to my mind is pretty straightforward—the statutory non-pay rights of women on ordinary maternity or adoption leave are to be extended to the optional, additional 26 weeks that they are entitled to under extended maternity leave rules. Similar rules, as we heard, exist for adoption leave.

Many women elect not to take that extended leave, and for good reasons. First, unless they have a generous employer, for the first 26 weeks they will be paid the statutory minimum wage of only £117.18 a week—less than the national minimum wage, which we discussed so thoroughly when debating the Employment Bill yesterday on the Floor of the House of Commons. Secondly, taking time off in that way is unpopular with employers, who have to cope with the absence of a woman on maternity or adoption leave. A year away from the workplace is a long time to hold her job open. Often, by the time she gets back, things will have moved on—her chances on the promotion ladder in subsequent years will be less than for her colleagues who remained in the workplace.

Thirdly, getting work in the first place is harder for women of child-bearing age. Employers, particularly those in small businesses, often look twice. Yesterday, the Recruitment and Employment Confederation said that 78 per cent. of recruiters had been asked by employers not to put forward women of child-bearing age. The whole workplace culture discriminates against such a woman. I can understand the REC being reluctant to shop its own members—while leading them into the path of enlightenment—but what does the Minister intend to do to stop that blatant flouting of the law?

The cost to business of implementing the non-pay benefits is estimated in the impact assessment at £131.43 million for maternity pay and £5.51 million for adoption pay. That goes up a little more when length of service is taken into account. That is not an inconsiderable amount of money, particularly, as the hon. Member for Huntingdon said, in the current difficult economic climate that business finds itself in. However, in relation to the wage bill of many billions, the amount is quite small. The key cost has already been met in the loss of a valued employee. I do not underestimate the cost to businesses, but they should not be allowed to flout the law in the way that seems to be happening at the moment.

I turn to the equality impact assessment. I am worried about equality for men, as well as for women. Men have only two weeks paternity leave compared with, potentially, 52 weeks for women. The rules are rigid. Men have to take either one or two weeks off. They cannot take off odd days—only days together. They must give 28 days’ notice when they want paternity pay to start and hope that the baby comes on time, or have a crystal ball with which to predict the exact day, at which point they will receive the princely sum of £117.18—less than the minimum wage—unless their employer is willing to be more generous. It is therefore little wonder that only one fifth of men actually take their statutory two weeks’ paternity leave entitlement.

Only yesterday, we heard Nicola Brewer of the Equality and Human Rights Commission say that changes to maternity law meant that the mother had become the parent who pays the career penalty for having the child. However, the father pays a huge and unfair penalty, too. He has to shoulder the economic burden for the family. He sees less of his child because he is working hard to maintain the family economically. Britain has the most unequal treatment between men and women in Europe. Will the Government consider seriously greater equality between men and women? Can maternity and paternity pay be given the generic title of parental leave? Can the parents of the child decide between them who takes on the caring responsibility?

I believe that the Government want equality between men and women, and the most positive action that they could take right now is to equalise the maternity and paternity legislation, as I have suggested. Will the Minister at least agree to consider the matter?