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More flexible Maternity and Paternity Leave: Another Administrative Burden for Business?

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The government has announced a consultation on the proposed introduction of a more flexible system of maternity and paternity leave. The new regime, if approved by parliament, would apply to parents of children due on or after 3 April 2011 and would, in effect, allow fathers to take advantage of maternity leave not used by mothers significantly increasing their potential eligibility to both paternity leave and pay.

The Current Situation

Currently mothers are entitled to 52 weeks maternity leave of which 39 weeks are paid if they fulfil the relevant requirements. In contrast, if fathers meet the eligibility requirements, they are only entitled to 2 weeks paid paternity leave which can only be taken in either a single block of one week or two weeks.

The New Regime

Under the new scheme families would have much more flexibility in how they choose to implement their maternity and/or paternity leave. Families could choose to transfer up to 6 months of the mother's maternity leave to the father. The transfer is only possible if the mother has returned to work and only during the second 6 months of the of the child's life. This additional leave, once introduced, would be known as Additional Paternity Leave.

As a consequence of fathers potentially being able to utilise the last 6 months of a mother's maternity leave, they may be able to claim up to 3 months of the mother's remaining and untaken Statutory Maternity Pay as Statutory Paternity Pay. The proposals suggest that this would be paid at the same rate as Statutory Maternity Pay which currently stands at £123.06 per week. This would increase a father's paternity leave from 2 weeks to a potential 6 months, three months of which would be paid. Once affective this new legislation therefore significantly increases a father's right to paternity leave.

The new regime would require parents to provide details of their eligibility for leave and pay to their employers and in effect "self certify" their entitlement. However, as a safe guard both employers and HMRC would be able to carry out further checks on the eligibility of parents if they felt it necessary.

Reaction from Business

Business Minister Pat McFadden suggests that the number of businesses affected is expected to be small. It is estimated that the proposals could affect as little as 0.7 per cent of small businesses. It is the government's aim to work with business to ensure that the introduction of the proposed changes is completed in such a way as to minimise the burdens placed on business. It is hoped that this support will ensure that business will not suffer from the more uncertain leave entitlements.

Small business leaders have expressed concern about the new regime. There concerns do not relate to the additional paternity leave or pay but rather that business will be further burdened by administration. It is argued that in a time of economic hardship businesses should not have to suffer additional administrative burdens which consume precious resources. David Frost, director-general of the British Chambers of Commerce has stated that the British Chambers of Commerce believes the "focus in these very difficult times should be on business getting out of this very deep recession and this will be an administrative nightmare for employers".

Conclusion

The government's proposed new regime would provide much greater flexibility to families and reflect the modern family much more accurately. This increased flexibility will however, come at a cost to business, especially small business. In particular, when considered in combination with other recent legislative developments such as the exclusion of tips and gratuities from the calculation of the national minimum wage, the early increase of the maximum ‘week's pay' and the news that Gordon Brown has expressed support for increased flexibility in parental leave which is likely to cause still further administration for business. At a time when many small businesses are feeling the effects of the harsher economic environment, the cost of positive legal development for families may simply prove too much.

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