The Employment Appeal Tribunal (EAT) has overturned the 2017 employment tribunal decision in Ali v Capita, which had found that paying a new father full pay only for 2 weeks’ paternity leave and thereafter paying him only at the statutory rate for his shared parental leave (SPL), when its female staff were entitled 14 weeks of maternity leave at full pay, amounted to direct sex discrimination.
In overturning the original tribunal finding of direct discrimination, the EAT confirmed that the two types of statutory leave, maternity leave and SPL, are not comparable, as one is provided for the health and safety of a mother following childbirth and the other is purely for the purposes of childcare.
Under Capita’s applicable maternity policy, female employees taking maternity leave were entitled to 14 weeks' maternity leave at full pay. New fathers were only entitled to two weeks on full pay during their statutory paternity leave. Mr Ali took his two weeks' paternity leave immediately following the birth of his child, followed by a further week of paid annual leave. On his return to work, Mr Ali informed Capita that he wanted to take more time off to care for his baby, as his wife had been diagnosed with severe post-natal depression and the medical advice was that she should return to work as soon as possible to assist her recovery.
Capita told Mr Ali that he was eligible to take SPL, but that he would receive statutory shared parental pay only for such leave. Mr Ali believed that, in his particular circumstances, he should be entitled to the same level of paid leave as his female colleagues who took maternity leave. Following an unsuccessful grievance, Mr Ali brought a claim for direct sex discrimination in the employment tribunal.
The original employment tribunal concluded that, after the two-week compulsory maternity leave period, Mr Ali was entitled to compare himself with a hypothetical female comparator on maternity leave, as both were taking leave to ‘look after their baby’, and the tribunal concluded that such a caring role was not exclusively that of a mother. On this basis, the tribunal found that the enhancement of maternity pay was not ‘exempt’ from the challenge of direct sex discrimination on the basis of ‘special treatment in connection with pregnancy and childbirth’ as provided for in the EU Pregnant Workers Directive and section 13(6)(b) of the Equality Act 2010, but rather was ‘special treatment’ in relation to the care of a new-born baby which was not so protected from an assertion of direct sex discrimination. The tribunal held that Mr Ali had suffered direct sex discrimination because, unlike his female comparator on maternity leave, he would not receive enhanced pay for an equivalent period.
Capita appealed to the EAT.
The EAT found that the employment tribunal had failed to appreciate the ‘proper’ purpose of paid maternity leave, and wrongly interpreted Mr Ali’s circumstances to be the same as a woman on maternity leave who had recently given birth.
The EAT found the tribunal’s proposition that maternity leave was for the purposes of childcare was contrary to the PW Directive, which requires measures to be implemented to ‘encourage improvements in the safety and health of women who have recently given birth or who are breastfeeding’. The EAT confirmed that this was the reason that Article 8 of the PW Directive gives women the right to ‘at least’ 14 consecutive weeks' maternity leave, and the right for such leave to be paid under Article 11 of the PW Directive. The EAT emphasised that leave for ‘the care of a child’ was specifically provided for under a different EU directive, the EU Parental Leave Directive 2010, which does not provide for such leave to be paid. The EAT also emphasised that SPL and shared parental pay were purely domestic concepts and entitlement to them derived from the Shared Parental Leave Regulations 2014, which made provision for payment at a statutory rate.
The EAT found that the maternity policy applied by Capita implemented the requirements of the PW Directive in protecting the health of the mother. It also found that Capita’s SPL policy fulfilled the separate requirements of the Shared Parental Leave Regulations in providing pay for such leave at the statutory rate. Having drawn these conclusions, the EAT considered that an appropriate hypothetical female comparator for Mr Ali would be a female employee ‘caring for her child’, and therefore a woman on SPL, not a women on maternity leave. Once the correct comparator had been identified, the inevitable conclusion was that Mr Ali was not discriminated against on the grounds of sex by being entitled to SPL at the statutory pay rate only, as a female employee taking SPL would also receive only statutory pay.
The EAT allowed the appeal and set aside the tribunal’s original finding of direct sex discrimination.
The EAT’s decision in Capita v Ali is not really surprising from a legal perspective, but will nevertheless come as a relief to the large number of manufacturing employers who currently enhance maternity pay, (often as a measure to seek to address significant gender imbalances in their workforce), but do not feel financially able to mirror such enhancements for their shared parental pay schemes. The EAT’s decision to overturn the original employment tribunal finding of direct discrimination has now restored the previous status quo in the ‘SPL payment enhancement debate’.
However, the legal risk of future potential challenges to inequalities in pay for maternity and SPL on the grounds of direct sex discrimination have not be completely quashed by the EAT’s decision. Ali concerned a period of fully paid maternity leave of 14 weeks, which happened to coincide with the 14-week maternity-leave period guaranteed by the PW Directive. The EAT itself acknowledged that the position might be different if a company were to provide enhanced maternity pay for a significantly longer period, because in such circumstances a father ‘might’ be able to successfully compare himself to a mother on enhanced maternity pay.
Aside from any questions of direct sex discrimination, the government remains committed to an ongoing awareness-raising programme on the availability of SPL and, in particular, is seeking to promote take-up among new fathers. The recent gender pay gap fallout has also refocused attention on the ongoing workplace/career penalties that women suffer as a consequence of pregnancy and childbirth/childcare and the need to remove the gender bias in this area. It is therefore not out of the question that the government might, at some point in the future, seek to ‘tweak’ the current legislative framework in order to make shared parental pay more generous than the current statutory minimum, and hence more attractive. As yet, however, no such plans have been put forward.
Employers should also be aware that the EAT's decision in Hextall v Chief Constable of Leicestershire Police is also due to be delivered shortly. This will hopefully provide more guidance/clarification on the indirect discrimination risks of paying different rates of pay for maternity leave and SPL. We will, of course, keep members updated.
How can EEF Help?
EEF members can find additional information and support on the HR resources section of the EEF website, including information on the operation of statutory family leave. For further information, click here.