Introduction of Shared Parental Leave and Other Family Leave Changes

In 2015 there will be significant changes to leave entitlements for new parents who have babies due (or to be placed for adoption) on or after 5 April 2015 – the new Shared Parental Leave will be available.  For babies who are due (or placed for adoption) on or after this date, additional paternity leave will no longer be available, and instead, provided they meet certain criteria, both the mother and the parents will be able to opt into the new Shared Parental Leave arrangements.  This provides considerable flexibility for parents to share up to 50 weeks of the mother’s maternity leave entitlement and up to 37 weeks’ statutory pay entitlement. Under the new arrangements, parents will be able to take their leave in up to 3 separate blocks over the 52 week period after the child is born, including being able to take leave consecutively or for both parents to take leave at the same time.

Whilst the partner of the mother may be entitled to both shared parental leave and ordinary paternity leave (up to 2 weeks’ leave), if the partner does not take their ordinary paternity leave before they start their shared parental leave, they will lose any entitlement to any untaken ordinary paternity leave, so policies should be updated to reflect this.

From 5 April 2015, employees who wish to take adoption leave will no longer need 26 weeks’ service, and adopters’ rights will be increased so that they will be very similar to those of birth parents (e.g. rights to take time off to attend adoption appointments and protection against detriment or dismissal for taking leave will be introduced).

The rights to parental leave, adoption leave and shared parental leave are extended to the intended parents of a child born to a surrogate mother, provided the parents intend to apply for a parental order. The existing rights for surrogates to claim maternity leave as birth mothers are not affected.

Ordinary Paternity Leave

Eligible employees will still be able to take either one or two full weeks of consecutive leave between the birth of their child/date that they are placed for adoption and 56 days of their birth.  If they take shared parental leave then ordinary paternity leave must be taken before any shared parental leave starts.  As before, statutory paternity pay is payable for ordinary paternity leave.  Employers may also have provisions for enhancing pay during ordinary paternity leave.

Parental Leave

After one year’s employment each parent is entitled to 18 weeks’ unpaid parental leave per child.  This can be taken between the child’s birth and their 5^th birthday (from April 2015 this will be extended until the child’s 18^th birthday).  Under the statutory scheme no more than 4 weeks leave can be taken in any one year and leave must be taken in one week blocks.  Employers may agree to more flexible arrangements and/or may offer paid leave.  This leave will remain as before despite the changes to shared parental leave.

Maternity Leave

If a mother wishes to take maternity leave and does not wish to share this with the father of the child/her partner then she can continue to take up to 52 weeks maternity leave during which the first 39 weeks she will be entitled to receive statutory maternity pay or enhanced maternity pay if offered by the employer.  If the mother does not wish to share any leave with the father/partner then she will continue to take maternity leave in the same way as the current provisions provide.

Additional Paternity Leave

For babies with a due date of 5 April 2015 or later or who are placed for adoption from 5 April 2015 or later, additional paternity leave will no longer apply.  Instead the partner of the mother/the father will be entitled to shared parental leave as set out below. For babies due before 5 April 2015, the existing additional paternity leave provisions will continue to apply.

Shared Parental Leave

Where babies due dates are on or after 5 April 2015 or babies are placed for adoption on or after 5 April 2015, where parents meet certain criteria, they will be able to share up to 50 weeks of shared parental leave and up to 37 weeks of shared statutory pay.

The criteria are that:

1. the parent wishing to take shared parental leave must have at least 26 weeks continuous employment by the end of the 15th week before the baby is due/due to be placed for adoption (the “EWC”) and still be employed by the employer in the week before the leave is to be taken;
2. the other parent must have worked (in an employed or self-employed capacity) in at least 26 of the 66 weeks before the EWC and had average weekly earnings of at least £30 during 13 of those weeks; and
3. both parents must give the necessary statutory notices and declarations including notice to end any maternity leave, statutory maternity pay (SMP) or maternity allowance (MA) periods.

Mothers will still have to take an initial 2 weeks maternity leave after the birth during which they will receive statutory maternity pay (or enhanced maternity pay if the employer so provides).

After this, either:

1. the mother will be able to take 50 weeks maternity leave and receive a further 37 weeks of statutory maternity pay; or
2. the mother can go back to work after 2 weeks, the father/partner can take 50 weeks shared parental leave and the 37 outstanding weeks of statutory maternity pay can be paid to the father/partner; or
3. the mother and father/partner can share the 50 weeks leave and the 37 weeks of statutory maternity pay between them.

How Shared Parental Leave can be taken

Shared parental leave may be taken:

• by both parents at the same time;
• by one parent at a time;
• in blocks;
• whilst the mother is still on maternity leave provided she has given notice to terminate her maternity leave.

Shared parental leave can be taken in blocks.  Employees are entitled to take up to 3 blocks of leave, for example, if a parent wishes to take 20 weeks in total of shared parental leave then they could take:

• a 10 week block, then return to work;
• then a 5 week block, then return to work;
• then a 5 week block, then return to work.

They would have to issue a notice of their intention to take this leave in relation to each of these blocks.  Provided that the employee has given sufficient notice (8 weeks’ notice) the employer cannot object to the employee taking this leave.

An employee can request that these 3 blocks are split up further, for example, instead of taking the first 10 week block an employee could ask to take 2 weeks leave then return to work, then take a further 3 weeks, then return to work, then take a further 3 weeks, then return to work and take a further 2 weeks.  However, an employer can object to this further splitting up of the 3 blocks of pay.  In total, including maternity leave and shared parental leave, the parents are entitled to 39 weeks of statutory pay.  Therefore the amount of statutory shared parental pay that will be payable to the parents is a maximum of 39 weeks minus the number of weeks statutory maternity pay that the mother has already received.

For example, if the mother took 9 weeks maternity leave and claimed for 9 weeks statutory maternity pay and then the parents both decided to share the remainder of the leave, they would be entitled to a further 30 weeks statutory shared parental pay.  The employees have to tell their employers how they wish this to be paid i.e. who should be paid what amounts and at what times.

Each employee is also entitled to an additional 20 KIT days in addition to the 10 KIT days that the mother is entitled to during her maternity leave.  These are sometimes known as SPLIT days.

Shared parental leave must end no later than one year after the birth/placement of the child.  Any shared parental leave not taken by the first birthday or the first anniversary of placement for adoption is lost.

Significant case law

Calculation of holiday pay

The most significant case law of late is the case of Fulton and another v Bear Scotland Ltd joined with Wood and others v Hertel (UK) Ltd and another which has received significant media coverage as a result of the decision that many overtime payments should be included in holiday pay calculations. We recently sent an update on this case and let us know if you would like to see this again.

Lock v British Gas Trading Limited and others (C-539/12)

In this case which was heard by the European Court of Justice, a worker was paid commission based on his individual sales, but during his holidays he was not paid commission as he did not generate any sales. Despite the worker’s commission varying from month to month, the court decided that the worker’s commission was still permanent enough to be considered part of his pay and therefore his commission should be included in the calculation of holiday pay, since it is directly linked to the work he normally carries out. The court said that if commission was not taken into account, the worker would be at a financial disadvantage when taking holiday, and might be deterred from taking holiday. However the court did not determine how to recalculate holiday pay to include commission as it said that it was a matter for the UK courts. This case is due to be heard by a UK Tribunal in February 2015 to consider this issue.

Post Termination Restrictions

Re-use Collections Limited v Sendall & May Glass Recycling Ltd

This recent case decided that where an employer changed an employee’s contract to include new post termination restrictions, but the contract did not provide any extra benefits or money to provide consideration for this change, the post termination restrictions were not enforceable, even though the employee signed up to this change. This changes the previously understood position that continuing to employ the individual would provide sufficient consideration for new contractual restrictive covenants. This case appears to apply to the particular situation where the only changes made to the contract were to include post termination restrictions. In many cases, separate consideration would not be required for post termination restrictions in an employment contract, as the whole package on offer (salary, benefits, job offer) may well be adequate consideration for the post termination restrictions.

Reminders

Time off to accompany partner to antenatal appointments

From 1 October 2014 the partner of a pregnant woman has the right to unpaid leave to accompany the pregnant woman to up to two antenatal appointments, up to a maximum of six and a half hours for each appointment. In addition, those who exercise this right will have protection from suffering a disadvantage or being dismissed in relation to accompanying a pregnant woman to ante natal appointments.

Annual National Minimum Wage Rate Increases

From 1 October 2014 the National Minimum Wage increased:

• The standard adult rate (for workers aged 21 and over) rose by 3% to £6.50 an hour.
• The youth development rate (for workers aged between 18 and 20) rose by 2% to £5.13 an hour.
• The young workers rate (for workers aged under 18 but above the compulsory school age who are not apprentices) rose by 2% to £3.79 an hour.
• The rate for apprentices rose by 2% to £2.73 an hour.

Scully Twiss Recommendations

Review your family friendly policies to ensure that they are up to date including the introduction of rights such as accompanying a pregnant partner to antenatal appointments and the rights of surrogate parents.

Introduce a Shared Parental Leave Policy and consider whether you will offer enhanced pay to those taking shared parental leave or if you will offer statutory pay.

Update your adoption policies and parental leave policies to reflect the new changes.

Ensure that you have updated pay for all those on the national minimum wage.

Consider taking legal advice if you are thinking of updating employment contracts to include new post termination restrictions.

Review your position on commission and overtime payments in how you calculate your holiday pay.