This article provides a summary of the decisions in Ali v Capita Customer Management Ltd and Chief Constable of Leicestershire Police v Hextall which were handed down by the Court of Appeal on Friday 24 May 2019.

Summary of Court of Appeal decisions

Ali v Capita: it is not direct discrimination to pay fathers on shared parental leave statutory pay less than women on enhanced maternity leave pay;

CC of Leicestershire Police v Hextall: it is not indirect discrimination or a breach of equal pay provisions to pay statutory parental pay instead of providing the same level of enhanced pay given to women on maternity pay.

It follows that there is no requirement at this time for employers to review their parental pay provisions.

The basics

Shared parental leave was introduced in 2015.  The legislation was implemented to provide parents with more flexibility in how they share the care of their child in the first year following birth (or adoption).

Parents can share up to 50 weeks of leave and up to 37 weeks of pay and choose to take the leave and pay in a more flexible way.  Each parent can take up to 3 blocks of leave, more if their employer allows, interspersed with periods of work.

Eligible parents can be off work together for up to 6 months or alternatively stagger their leave and pay so that one of them is always at home with their baby in the first year.

Is it working?

The  government's own figures show that only around 2% of all those who are eligible to take shared parental leave are taking advantage of this scheme, although figures from the HMRC appear to show that the take up may even be lower than that.

The pay problem

One of the key hurdles for workers is the level of pay.  Shared Parental Leave Pay is paid at the statutory rate of £148.68 (as at April 2019) or 90% of the employee’s average weekly earnings, whichever is lower.  The issue that arises for many families is that the household income would fall if the father (or partner of the mother) were to take Shared Parental Leave (and the statutory pay) in circumstances where the mother may be able to access enhanced maternity pay.

So where does this leave us if we pay men statutory pay for Shared Parental Leave and women on Maternity Leave enhanced pay?

This question was unresolved when the legislation was introduced.  The government was pressed during the consultation process to provide certainty in the legislation to address this issue but chose not to do so as it did not consider that there was a requirement to do so.  They felt that the legislation was clear enough already.

Many commentators did not agree and the events of the past couple of years have gone some way in demonstrating that uncertainty remains.  

On Friday we saw the latest cases on this issue make their way to the Court of Appeal:

  • Ali v Capita Customer Management Ltd; and 
  • Chief Constable of Leicestershire v Hextall. 

But before both of these cases we had the case of Shuter v Ford Motor Company Limited, an employment tribunal level case which dealt with the previous regime of Additional Paternity Leave Regulations 2010.  The issues that it dealt with were broadly the same, namely whether men are potentially discriminated against (directly and/or indirectly) by getting paid less than a woman on maternity leave.  This was the first (and only case of significance) reported dealing with this issue during the life of the Additional Paternity Leave Scheme.

The facts of Shuter

Ford operated a 12-month enhanced maternity pay scheme but did not provide any enhancement to its Additional Paternity Leave Scheme.  Consequently, Mr Shuter argued that had he been a woman he would have received a further £18,000 during his period of leave. 

His claims of direct and indirect discrimination failed because:

  • The comparator of a woman on maternity leave was an incorrect one.  There are substantial differences between a woman on maternity leave and a man on Additional Paternity Leave, most notably the fact that she has given birth and that she will have been caring for and feeding (potentially breastfeeding) the child. 
  • That Ford Motor company were able to justify the indirect discrimination caused through the enhancement of pay for women on maternity leave through its need to recruit and retain women in its workforce. 

So, how have the challenges of Ali and Hextall affected this position?

Both cases looked at different legal tests:

  • Ali v Capita Customer Management Ltd: was paying statutory pay direct discrimination against men
  • Chief Constable of Leicestershire v Hextall: was paying statutory pay indirect discrimination against men?

Direct discrimination

In Ali, the decision was largely as expected and upheld the earlier decision of the Employment Appeal Tribunal which was:

  1. It stated that the circumstances of a father seeking to take shared parental leave are not comparable to those of a woman who has recently given birth and therefore to pay a father at a lower rate of pay is not discrimination because of sex;
  2. The purpose of maternity leave is for the health and wellbeing of the expectant and new mother whereas shared parental leave is for the care of the child; 
  3. A payment to a woman who has recently given birth and is on maternity leave at a higher rate than that given to parents of either sex on shared parental leave falls within section 13(6)(b) of the Equality Act 2010 (EqA 2010), which provides that it is not unlawful to afford special treatment to a woman in connection with pregnancy or childbirth, according to the EAT.

There were some thoughts that the "protection" afforded to the beneficial treatment of women of maternity leave may lapse after 14 weeks of maternity leave because of the way in which EU law was framed to protect the health and safety of the mother following birth.  But the Court of Appeal ruled that there was no period of maternity leave that could be said to be appropriately comparable to shared parental leave.  

It cannot therefore be direct discrimination to pay men on shared parental leave less than women on maternity pay.  We do not expect this decision to be appealed to the Supreme Court.

Indirect discrimination

The case of Chief Constable of Leicestershire v Hextall looked at legal test of indirect discrimination, which as a reminder when there is a policy that applies in the same way for everybody but disadvantages a group of people who share a protected characteristic, and you are disadvantaged as part of this group. If this happens, the person or organisation applying the policy must show that there is a good reason for it.

Or at least, that is what we expected.  However, the Court of Appeal concluded that it was not actually a case of indirect discrimination but rather an Equal Pay case because the contract provided women with a higher rate of pay than men.  The CofA then turned to section . Paragraph 2 of Schedule 7 to the Act which says:

"A sex equality clause does not have effect in relation to terms of work affording special treatment to women in connection with pregnancy or childbirth." 

Just to ensure that all points were covered though, the CofA also looked at the indirect discrimination argument and concluded that if it was an indirect discrimination claim it would have failed in any event because the preferential treatment of women would have been justified - in the same way that it had been in Shuter v Ford.

Given that there were new legal arguments run in this case at the Court of Appeal hearing which had not been explored in the Employment Tribunal or the Employment Appeal Tribunal there is a greater likelihood of this being appealed to the Supreme Court.

What does this mean for employers?

This means that employers can (continue) to treat anyone on shared parental leave differently to women on maternity leave, or to be more precise - can continue to treat women on maternity leave in a preferential way to any other individual on any other form of family leave.  There is no requirement to 'level the playing field' in respect of pay.  Of course, there is nothing to prevent employers from doing so though.

28 May 2019