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Documents considered by the Committee on 29 November 2017 Contents

1Parental and Carers’ Leave Directive

Committee’s assessment

Legally and politically important

Committee’s decision

(a) Not cleared from scrutiny; further information requested; drawn to the attention of the Business, Energy & Industrial Strategy Committee, the Work & Pensions Committee and the Women & Equalities Committee; (b) Cleared from scrutiny

Document details

(a) Proposal for a Directive on work-life balance for parents and carers, and repealing Council Directive 2010/18/EU; (b) Commission Communication: An initiative to support work-life balance for working parents and carers

Legal base

(a) Article 153(1)(i) and (2)(b) TFEU; ordinary legislative procedure; QMV; (b)—

Department

Business, Energy and Industrial Strategy

Document Numbers

(a) (38689), 8633/17 + ADD1–3, COM(17) 253 ; (b) (38688), 8631/17, COM(17) 252

Summary and Committee’s conclusions

1.1In April 2017, the European Commission published a proposal for a Directive on paid leave for working parents and carers. Its aim is to “improve access to work-life balance arrangements such as leave and flexible working arrangements” and in particular to “increase take-up of family-related leave and flexible working arrangements by men”.1 The legislative proposal was accompanied by a policy paper setting out further non-legislative initiatives to support parents and carers’ work-life balance.2

1.2The Directive would establish minimum statutory entitlements to paid paternity, parental and carers’ leave for workers3 throughout the EU as listed below. For each of these, the minimum income that must be provided by the employer would have to be at least equivalent to the national sick pay, but individual Member States could legislate for higher pay:4

1.3The Minister for Small Business (Margot Parker) submitted an Explanatory Memorandum on the proposal on 6 July.6 She notes that the entitlement to paid carers’ leave would be a “completely new entitlement in the UK”, and also create a new category of paid parental leave. While acknowledging the Directive would give workers the “additional choice of being able to take leave in order to spend time with a child or dependent person, and receive compensation in the form of statutory pay”, she estimates the cost of the proposal to both the Exchequer and businesses to exceed hundreds of millions of pounds annually.

1.4The Minister’s Memorandum does not make clear what the UK Government position on the proposal will be in the Council. Nor has the Minister provided an initial assessment of the Directive’s potential merits. She also does not place its provisions on carers in the context of the Government’s manifesto, which promised to create a “new statutory entitlement to carer’s leave, as enjoyed in other countries”.

1.5It is unclear if these considerations are lacking from the Memorandum because the transposition date of the Directive would fall after March 2019, the likely date of the UK’s exit. However, the Prime Minister has explicitly called for an interim period immediately following Brexit during which the “existing structure of EU rules and regulations” (including EU employment law) would continue to apply.7 That might be the case for this new Directive, if it is agreed in 2018 and becomes applicable during this transitional period.

1.6Neither the Council nor the European Parliament have formally adopted their position on the Directive. A progress report8 published by the Estonian Presidency of the Council ahead of the EPSCO Council on 7 December 2017 showed that there is broad consensus among the Member States on the paternity leave entitlement, but that there has been strong opposition to the proposals on carers’ leave and parental leave.9 It remains uncertain when formal adoption of the Directive would take place.

1.7We have taken note of the Minister’s comments on the Directive. These make clear that the legislation, if adopted as proposed by the Commission, would make substantial changes to the current entitlements to leave for working parents and carers in the UK. We are disappointed that the Minister did not provide an assessment of the merits of the Commission proposal, nor make explicit the Government’s position on it. We ask her to do so without delay, given that scrutiny of the proposal within the Council is now underway. Given the focus on achieving equality of opportunity between women and men, we were also surprised that the Government Equalities Office does not appear to have been consulted in the preparation of the Minister’s Memorandum.10

1.8The Committee also considers that the proposal deserves detailed scrutiny despite the UK’s withdrawal from the EU. Although the Directive’s transposition date is likely to be after Brexit, there is a possibility that parts of the EU acquis—including in particular the Single Market legislation, and flanking measures such as employment law—may apply in the UK beyond March 2019 during a transitional arrangement to a new UK-EU trading relationship. The EU is also expected to argue for some level of continued regulatory convergence, including in the area of social policy, in return for preferential access to the Single Market under a comprehensive UK-EU free trade agreement.

1.9In light of this, we ask the Minister to answer the following questions:

1.10In the absence of clarity about the Government’s position on the above, and not having been provided with an assessment of the merits of the Directive, we retain the proposal under scrutiny. We expect to be kept informed of progress in the deliberations within the Council and, in due course, in the negotiations with the Parliament. We also draw the proposal for a Directive to the particular attention of the Women & Equalities Committee, in the context of its inquiry into “fathers and the workplace”. It may also be of interest to the Work & Pensions Committee and the Business, Energy & Industrial Strategy Committee.

1.11With respect to the non-legislative initiatives announced in the Commission’s Communication, we consider that there are no direct legal or financial consequences for the UK and are content to clear the document from scrutiny. However, we again express our disappointment that the Minister made no attempt to assess the merits of the actions proposed by the Commission.

Full details of the documents

(a) Proposal for a Directive on work-life balance for parents and carers, and repealing Council Directive 2010/18/EU: (38689), 8633/17 + ADD1–3, COM(17) 253 ; (b) Commission Communication: An initiative to support work-life balance for working parents and carers: (38688), 8631/17, COM(17) 252.

Background

1.12In 2015, European Commission President Jean-Claude Juncker announced that the Commission was preparing a raft of policy initiatives under the umbrella of a “European Pillar of Social Rights”, which were intended collectively to reinforce social cohesion in the EU, and especially in the Eurozone.11 The full package of measures under the Pillar of Social Rights was eventually published on 26 April 2017, including a proposal for a Directive on the work-life balance of parents and carers.12

Work-life balance of parents and carers

1.13Employment levels for women and men continue to vary greatly across the EU, with the employment rate for women trailing that for men by more than 10 percentage points in 2015 (standing at 64.3% and 75.9% respectively). According to the Commission, this is partially because women are more likely to care for children and dependent relatives, which in turn “contributes substantially to the gender pay gap” and the risk of female poverty if women have to leave the labour market to carry out these care responsibilities.

1.14In assessing the potential impact EU legislation has had to narrow the gender employment gap, the Commission said:

“The current legal framework at Union and Member States’ level provides limited provisions for men to assume an equal share of caring responsibilities with women. For instance, there is currently no EU legislation providing for paternity leave or to take care of ill or dependant relatives, with exception of absence for force majeure.”13

1.15The last attempt at EU-level to amend the rules relating to paid leave for parents took place in 2008, when the European Commission proposed amendments to the Maternity Leave Directive14 to increase the duration of minimum paid maternity leave in the EU from 14 to 18 weeks.15 The Member States and the European Parliament never reached agreement on the proposal, and it was formally withdrawn in July 2015.16 At the time, the Commission stated that it would focus its efforts on a “broader initiative [to] provide minimum protection (…) [for] working parents and carers.”17

1.16This new proposal on parental and carers’ leave is the culmination of that work. In line with the requirements under Article 154 of the Treaty, the Commission in late 2015 held a preliminary consultation exercise with the European social partners to gauge their views.18 It subsequently concluded that further EU legislation was needed, arguing that the existing framework was “not adequate [or] complete”.19 In July 2016 the Commission asked the EU social partners if they wanted to negotiate an agreement among themselves on parental and carers’ leave entitlements, but no talks took place because the positions of the trade unions and employers’ organisations were too far apart.20

Parental and Carers’ Leave Directive

1.17Following the failure of the social partners to reach an agreement, the Commission took over the initiative and began preparing a legislative proposal on improving the work-life balance of parents and carers. These efforts led to the publication of this proposed Directive on statutory entitlements to parental and carers’ leave,21 accompanied by a policy paper setting out a number of additional non-legislative initiatives to improve the work-life balance of working parents and carers (see paragraphs 1.28 to 1.30).22

1.18The draft legislation aims to balance the views of both social partners by introducing new entitlements for paternity and carers’ leave, but leaving the current EU minimum requirements for maternity leave unamended.23 In the explanatory document accompanying its proposal, the Commission says the Directive aims to “improve access to work-life balance arrangements such as leave and flexible working arrangements” and in particular to “increase take-up of family-related leave and flexible working arrangements by men”.24

1.19The Directive would establish the following minimum statutory requirements for paid paternity, parental and carers’ leave for workers with an employment contract:25

1.20The proposal would require that workers who take leave under any of the above entitlements “receive a payment or an adequate allowance at least equivalent to what the worker concerned would receive in case of sick leave”. This leaves individual Member States free to legislate for higher pay during periods of leave under the Directive, for example by linking it to a worker’s normal salary. The Commission is also proposing that workers with caring responsibilities and parents of children under the age of 12 will have the right to request flexible working arrangements (although there would be no obligation for their employer to accommodate such a request).

1.21The Minister for Small Business (Margot James) submitted an Explanatory Memorandum on the proposal on 6 July.26 After summarising the Commission’s proposal for a Directive, she notes that the entitlement to paid carers’ leave would be a “completely new entitlement in the UK”. She did not refer to the Government’s manifesto commitment to create a “new statutory entitlement to carer’s leave, as enjoyed in other countries”.27

1.22The Minister goes on to say that the provisions of the proposed Directive dealing with paternity leave and pay, parental leave and the right to request flexible working would cut across existing domestic legislation to a lesser or greater extent:

1.23In the separate regulatory checklist prepared for the proposal,29 the Government argues that the full cost of the new Directive to the Exchequer (which would be responsible for statutory paternity, parental and carers’ pay) and to businesses are difficult to predict because it would be “highly sensitive” to the level of take-up among eligible parents and carers. Overall, the Minister estimates that the annual cost to the Exchequer and businesses of accommodating employees’ new leave entitlements, and providing the compensatory pay, would run into hundreds of millions of pounds annually.

1.24With respect to the potential impact on workers, she notes that individuals who are eligible for the new entitlements “will benefit from the additional choice of being able to take leave in order to spend time with a child or dependent person, and receive compensation in the form of statutory pay”. Similarly, there would be “positive impacts to children or dependents who have greater access to parents or carers”.

1.25The Minister notes that there has been a “negative reaction” to the Directive from business organisations and from some Member States, particularly regarding the effect the proposals could have on “existing, well-developed national rights in this area”.30

1.26Neither the Council nor the European Parliament have formally adopted their position on the Directive. A progress report31 published by the Estonian Presidency of the Council ahead of the EPSCO Council on 7 December 2017 showed that there is broad consensus among the Member States on the paternity leave entitlement, but that there has been strong opposition to legislating at EU-level for paid carers’ leave and the increase in statutory non-transferable parental leave.32 The Parliament’s Employment & Social Affairs Committee is not expected to adopt a Report on the proposal until spring 2018 at the earliest.

1.27It is unclear what the UK Government position on the proposal is. Neither the Minister’s Memorandum nor the accompanying regulatory checklist makes explicitly clear whether or not the Government is supportive, in principle, of the new Directive. She states only that “consultation is not deemed necessary at this stage” and that “the UK will assess the impact of the legislative proposals as appropriate”. This may be because the expected date of transposition for the Directive is after March 2019, the likely date of the UK’s exit from the EU.

Policy paper on the work-life balance of parents and carers

1.28In addition to the legislative proposal on paid leave entitlements, the Commission also issued a policy paper on non-legislative measures it will pursue in support of parents and carers in employment.33 These measures are primarily aimed at collection and reporting of data, improving adherence to existing EU minimum standards on work-life balance, and funding projects from the EU budget to improve parents’ and carers’ access to employment. They are grouped under three headings:

1.29Some notable examples of initiatives the Commission is considering include a study on dismissal protection for, and unfavourable treatment of, women in the workplace in Europe; improved collection and reporting of statistical data on family-related leave, employment opportunities for second earners and childcare affordability; and funding social infrastructure, such as out-of-school and long-term care services using, the European Structural and Investment Funds.34

1.30The Minister’s Explanatory Memorandum on the Communication makes no assessment of any of the non-legislative initiatives announced by the Commission.

Our assessment

1.31We have taken note of the Minister’s comments on the proposed Directive, which explains that the leave entitlements suggested by the Commission would create an entirely new entitlement to paid carers’ leave in the UK. It would also entitle working parents who take parental leave to compensation, while such leave is currently unpaid. The proposal for a Directive, if adopted in its current form, would therefore make substantial changes to the current entitlements to leave for working parents and carers in the UK.

1.32We also consider that the proposal deserves detailed scrutiny despite the UK’s withdrawal from the EU. Although it is unlikely that this new Directive will need to be transposed by the Member States prior to “Brexit Day” (expected to be in March 2019), we consider it prudent for the Government to participate fully in the deliberations of the Council on this proposal. We consider there is a possibility that some elements of EU law may apply in the UK even after Brexit. We set out our reasons for this in more detail below in paragraphs 0.36 to 0.47.

1.33Given the potential implications of the proposal, both substantively and in the context of Brexit, we are very disappointed that the Minister in her Memorandum did not state explicitly whether the Government supports or opposes the principle of further EU-wide minimum standards related to carers’ and parental leave. We have asked her to write to us without delay with an assessment of the merits of the Commission proposal, and the Government’s position on it.

1.34In the meantime, we retain the proposal for a Directive under scrutiny. We expect to be kept informed of progress in the deliberations within the Council and, in due course, in the negotiations with the Parliament. We also draw the proposal for a Directive to the attention of the Women & Equalities Committee, the Work & Pensions Committee and the Business, Energy & Industrial Strategy Committee.

1.35With respect to the non-legislative initiatives announced in the Commission’s Communication, we consider that there are no direct legal or financial consequences for the UK and are content to clear the document from scrutiny. Any commitments from the EU budget towards the initiatives listed by the Commission, made while the UK is still a Member State, will have to be approved by the technical committees on which the Government is represented in the usual way. However, we again express our disappointment that the Minister made no attempt to assess the merits of the thrust of the Commission’s actions. We ask her to provide such an assessment at the earliest opportunity.

The status of EU employment law in the UK after Brexit

1.36Finally, we wish to place the eventual adoption of this Directive in the context of Brexit. Following its notification under Article 50 TEU on 29 March 2017, the UK is expected to withdraw from the EU—including, according to Cabinet Ministers, the Single Market35—by March 2019. It seems likely that the proposal will not be formally adopted by this date, which its date of application likely to fall in 2021 or later.

1.37We have taken note of the Government’s European Union (Withdrawal) Bill36 and the accompanying factsheet on workers’ rights,37 which provides further detail on the Prime Minister’s pledge to “protect and enhance” EU-derived employment legislation.38 The Withdrawal Bill, in its current form, only “preserves” EU law contained in Directives insofar as it has been transposed domestically on “exit day”. This is unlikely to be the case for the proposal on parental and carer’s leave.39

1.38The factsheet on workers’ rights contains a question on whether the Government commits to staying in line with changes to EU employment legislation post-Brexit. The document goes on to avoid directly answering this question, stating instead:

“We do not need to be part of the EU, nor bound by EU legislation, to have strong protections for workers. (…) The UK already goes beyond EU minimum standards in a number of areas, such as entitlement to annual leave and provisions for shared parental leave and flexible working.”

1.39This statement is highly ambiguous, and we cannot reasonably conclude from it that the Government has ruled out implementing future changes to EU employment legislation. We note that the some of the entitlements proposed by the European Commission in this new Directive go beyond what is currently available under UK law. More importantly, there are indications that the UK could continue to be under a legal obligation to implement future changes to EU employment legislation as part of the post-Brexit framework for UK-EU relations.

1.40Firstly, the Government has previously said—in relation to new EU legislation on waste and recycling—that there was an “expectation” that the UK would apply the new measures, even though their entry into force falls after the UK’s presumed date of withdrawal.40 It is unclear with whom this expectation originates; whether the Government agrees with it; and whether it applies horizontally to EU legislation currently under consideration across different policy areas.

1.41Secondly, the Prime Minister herself has called for an “implementation period” following Brexit, during which the UK would continue to have access to the Single Market on the same terms it does now while a new UK-EU economic partnership is negotiated.41 It is unlikely the other Member States would agree to such an arrangement unless the UK continues to apply EU law as it does now for the duration of that period.42 Moreover, as the other Member States would not want to be at a competitive disadvantage to the UK while it was still effectively in the Single Market, we can only conclude that such an arrangement would also require the Government to continue implementing new EU law which enters into force during the transitional period.43 However, the Government has not explicitly made clear the envisaged terms of its transitional mechanism, nor whether it accepts its proposal may see the UK continuing to apply EU legislation after March 2019.

1.42Thirdly, the EU is also expected to argue for long-term regulatory convergence as part of any post-Brexit free trade agreement with the UK in return for preferential access to the Single Market. The European Council guidelines state that “any free trade agreement [with the UK] (…) must ensure a level playing field, notably in terms of (…) social, environmental and regulatory measures and practices”.44 We expect the Government to provide more clarity about the degree of continued regulatory convergence with the EU the Government would be willing to countenance before negotiations on the future UK-EU relationship commence.

1.43Given the above, we are unable to come to any firm conclusions about the possible impact of the Parental and Carer’s Leave Directive in the UK post-Brexit. Depending on the Minister’s clarification of the Government’s Brexit proposals, this Directive could have direct implications for UK workers and employers. We therefore consider that the Government should fully participate in the negotiations on this proposal within the Council. We may be able to adjust our conclusions on this point as the Article 50 negotiations progress, especially once the parameters of any transitional and final post-Brexit agreement become clearer.

Previous Committee Reports

None in respect of these documents. However, for more information on our consideration of the unsuccessful 2008 proposal for a new Maternity Leave Directive see: (30022) 13983/08, COM (2008) 637: Sixteenth Report HC 19–xiv (2008–09), chapter 2 (22 April 2009).

1 The new legislation, if adopted, would repeal in its entirety the 2010 Parental Leave Directive, which was agreed by European employees’ and employer’s organisations under Article 154 TFEU. The 2010 Directive contains minimum entitlements to parental leave, but does not require employers to financially support their employees during periods of such leave.

2 See COM(2017) 253.

3 The Directive only applies to workers with an employment contract, and not to the self-employed. The European Commission is consulting separately on social protection for people with atypical working arrangements.

4 See Article 8 of the proposed Directive.

5 In this context, a “carer” is defined as “a worker providing personal care or support in case of a serious illness or dependency of a relative”.

6 Explanatory Memorandum submitted by the Department for Business, Energy & Industrial Strategy on 6 July 2017.

7 Prime Minister, “A new era of cooperation and partnership between the UK and the EU“ (22 September 2017).

8 See Council document 14280/17.

9 See Council document 14280/17.

10 See paragraph 8 of the Memorandum.

11 Jean-Claude Juncker, “State of the Union“ (9 September 2015).

12 We have considered the other elements of the Pillar of Social Rights (including the contents of the Pillar itself and new guidance on the Working Time Directive) separately in the other chapters of this Report.

13 See COM(2017) 253.

14 Council Directive 92/85/EEC on safety and health at work of pregnant workers.

15 European Commission (COM(2008) 637), “Proposal for a Directive amending Directive 92/85/EEC on the safety and health at work of pregnant workers“ (8 October 2008).

16 The procedure to amend the Pregnant Workers Directive to increase minimum paid maternity leave from 14 to 18 weeks was suspended after the European Parliament insisted on a statutory entitlement to 20 weeks maternity leave on full pay, which the Member States refused to consider as a starting point for negotiations. For more information, please refer to our Report of 22 April 2009.

17 European Commission, “Commission withdraws stalled maternity leave proposal and paves the way for a fresh approach“ (1 July 2015).

18 European Commission, “Work-Life Balance: Commission launches consultation of EU social partner organisations“ (11 November 2015).

19 European Commission, “Second phase consultation of Social Partners under Article 154 TFEU on possible action addressing the challenges of work-life balance faced by working parents and caregivers“ (12 July 2016).

20 In the executive summary of its impact assessment for the proposal, the Commission noted that trade unions wanted “EU-level legislation on paternity leave and carers’ leave; increasing the length, pay and dismissal protection for maternity leave; a right to request flexible working arrangements; and amending the parental leave directive to extend the length and non-transferability as well as introduce payment for the leave”, while employers’ organisations “were not supportive of further EU legislative action, but supported non-legislative measures for the development of formal care services”.

21 The full text of the proposal for a Directive is available here.

22 The full text of the policy paper is available here.

23 UK domestic law on maternity leave is in any case more generous than the minimum EU requirement. The Pregnant Workers Directive provides for a minimum of 14 weeks of maternity leave, with an allowance at least equivalent to sick pay. By contrast, in most circumstances, pregnant workers in the UK are entitled to 39 weeks of paid maternity leave. For the first 6 weeks the pay must be at least 90% of their average weekly earnings before tax; for the remaining 33 weeks the minimum maternity pay is currently £141 per week.

24 The new legislation, if adopted, would repeal in its entirety the 2010 Parental Leave Directive, which was agreed by European employees’ and employer’s organisations under Article 154 TFEU. The 2010 Directive contains minimum entitlements to parental leave, but does not require employers to financially support their employees during periods of such leave.

25 Article 2 of the proposed Directive restricts the scope of the legislation “to all workers, men and women, who have an employment contract or employment relationship”. The self-employed are therefore exempted from its scope. However, the European Commission has launched a consultation of the European social partners on a possible legislative initiative on “access to social protection” for the self-employed.

26 Explanatory Memorandum submitted by the Department for Business, Energy & Industrial Strategy on 6 July 2017.

27 See https://s3.eu-west-2.amazonaws.com/manifesto2017/Manifesto2017.pdf#page=67. We understand this manifesto commitment is being taken forward through a Department of Health consultation and is seen as something targeted at longer periods of care than envisaged by the Commission proposals.

28 Where a father or mother’s partner works part-time, the entitlement to 10 days leave under the Commission proposal could increase their entitlement compared to the current situation in the UK. At present, under domestic law, the entitlement to two weeks’ paid paternity leave is applied on a pro-rata basis.

29 Impact Assessment Checklist (July 2016).

30 Before the deadline for submissions by national Parliaments under Protocol 2 expired on 28 June, both chambers of the Dutch and Polish parliaments submitted reasoned opinions claiming the proposal violated the subsidiarity principle. The Danish, Italian and Romanian parliaments also initiated a political dialogue with the Commission with respect to the Directive.

31 See Council document 14280/17.

32 See Council document 14280/17.

33 European Commission Communication (COM (2017) 252), “An initiative to support for work-life balance for working parents and carers“ (26 April 2017).

34 The full list of non-legislative initiatives planned by the European Commission is available on p. 11–15 of its Communication.

35 The Sunday Telegraph, “Britain will not stay in EU by the back door, Philip Hammond and Liam Fox jointly declare“ (13 August 2017).

36 http://services.parliament.uk/bills/2017–19/europeanunionwithdrawal/documents.html.

37 DExEU, “Factsheet 7: Workers’ rights“ (June 2017).

38 Prime Minister Theresa May, “The government’s negotiating objectives for exiting the EU“ (17 January 2017).

39 Section 2 of the European Union (Withdrawal) Bill.

40 See: Letter from Dr Thérése Coffey to the Chair of the European Scrutiny Committee (5 July 2017).

41 Prime Minister, “A new era of cooperation and partnership between the UK and the EU“ (22 September 2017).

42 The European Council Guidelines on Brexit state: “To the extent necessary and legally possible, the negotiations may also seek to determine transitional arrangements which are in the interest of the Union and, as appropriate, to provide for bridges towards the foreseeable framework for the future relationship in the light of the progress made. Any such transitional arrangements must be clearly defined, limited in time, and subject to effective enforcement mechanisms. Should a time-limited prolongation of Union acquis be considered, this would require existing Union regulatory, budgetary, supervisory, judiciary and enforcement instruments and structures to apply.” (Our emphasis).

43 By way of reference, EUR-lex currently lists 33 pieces of EU legislation which have already been adopted but which do only become applicable during the envisaged transitional period (March 2019—March 2021). This list will undoubtedly grow in the remaining 17 months under the Article 50 process, including (potentially) this new Parental and Carers’ Leave Directive.

44 From the EU’s current agreements with third countries, it is clear that a higher degree of access to the Single Market (such as that enjoyed by Norway or Ukraine) has traditionally been made conditional continued adherence to EU employment law. See for example Annex XVIII of the EEA Agreement or Annex XL to chapter 21 of the EU-Ukraine Association Agreement.



1 December 2017