The Court of Appeal has confirmed that it is not discriminatory to pay men on shared parental leave less than an enhanced rate of maternity pay paid to women on maternity leave (ML). In this article, Shelley Morgan, senior associate, looks at the case and highlights the key points to take away.
The central issue in the two appeals heard by the Court of Appeal (Capita v Ali and Hextall v Chief Constable of Leicestershire) was whether it was unlawful sex discrimination - whether direct, indirect or equal pay - for men on shared parental leave (SPL) to be paid less than birth mothers on ML. The Court of Appeal found that restricting enhanced maternity pay to birth mothers did not:
- Constitute direct discrimination as men on SPL and women on ML were not in comparable positions.
- Give rise to a valid claim for equal pay as the operation of the sex equality clause (to modify the contract so that it is not less favourable and/or to include any beneficial term) did not have effect in relation to terms of work affording special protection to women in connection with pregnancy or childbirth.
- Entitle the Claimants to bring an indirect discrimination claim as there is a 'mutual exclusivity provision' in the Equality Act 2010 which precludes claims relating to terms that would be modified by the sex equality clause were it not for the exception referred to above, as was the case here.
Entitlement to various kinds of parental leave derives from both EU law and UK law. In the UK, women are entitled to a total of 52 weeks ML. The first two weeks of ML after childbirth are compulsory. The SPL regime was introduced on 1 December 2014. It is in addition to the right to take two weeks' ordinary paternity leave and pay and allows a mother and co-parent to share responsibilities more evenly. Aside from the initial 2 week period of compulsory ML after childbirth, the remaining 50 weeks of leave can be shared between co-parents and taken either concurrently, consecutively or a mix of the two.
The two appeals in this case related to claims brought by Mr Ali (A) and Mr Hextall (H). (For a summary of the first instance decisions, please see our previous article on these cases here.) They argued that they had been subjected to sex discrimination on the grounds that they had only received the statutory level of pay for a period of SPL taken in circumstances where the biological mother was contractually entitled to receive enhanced maternity pay. Enhanced maternity pay was paid at a rate of full pay for 14 weeks followed by 25 weeks statutory maternity pay by A's employer, whereas H's employer provided for 18 weeks of full pay followed by 39 weeks statutory maternity pay.
A claimed that he had been subject to direct sex discrimination as he was only entitled to the statutory rate of pay for SPL where a mother was entitled to full pay for 14 weeks. A recognised that the two week compulsory period of ML was reserved for birth mothers as a result of pregnancy and childbirth, but argued that from week 3 to 14 the purpose of ML and SPL were the same – namely to facilitate childcare. A therefore argued that a direct comparison could be made between a partner taking shared parental leave and a birth mother taking maternity leave.
H claimed that he was subjected to indirect discrimination on the grounds that the contractual provisions providing birth mothers with enhanced maternity pay amounted to a policy criterion or practice (PCP) that had the effect of being indirectly discriminatory towards men. H's employer argued (on appeal) that the proper classification of H's claim was in fact an equal pay claim rather than a claim for indirect discrimination because of the operation of the sex equality clause to ensure men and women in like circumstances are paid equally.
The Court of Appeal dismissed all of the claims and held that it was not discriminatory to pay men on SPL less than an enhanced rate of maternity pay paid to women on ML for the reasons set out below:
- Direct Sex Discrimination - The Court concluded that the primary purpose of ML was not to facilitate childcare (as was the primary purpose of SPL), but related to "other matters exclusive to the birth mother resulting from pregnancy and childbirth and not shared by the husband or partner". As a result of the different purposes of ML and SPL, it concluded that an appropriate comparator for A would be a female worker who is on SPL. As there was no difference between how a man on SPL and a woman on SPL were treated, the appeal failed.
- Equal Pay - The Court found that H's claim was properly brought as an equal pay or equality of terms claim. As the contract of employment for female police officers incorporated terms relating to ML and maternity pay, under operation of the sex equality clause, corresponding terms should be incorporated into H's contract of employment. However, the Court held that the sex equality clause does not apply to terms affording special treatment to birth mothers connected with pregnancy or childbirth. As a result, the appeal failed.
- Indirect Discrimination - Following on from the Court's finding that H's claim was properly brought as an equal pay claim, the Court held that H was prevented from bringing a claim for indirect discrimination as a result of a specific exclusion in the Equality Act 2010. However, the Court still went on to explain why an indirect discrimination claim based on the arguments put forward would fail. The Court concluded that birth mothers on ML should not be included in the pool of individuals to which a PCP relating to SPL applies. However, even if birth mothers entitled to take ML were included in the pool, the Court would find that the disadvantage argued by H was justified as being a proportionate means of achieving a legitimate aim; the aim being the special treatment afforded to birth mothers as a result of pregnancy and childbirth.
Both claimants are seeking leave to appeal to the Supreme Court so this may not be the final decision on this matter.
Ultimately the decision of whether to offer enhanced SPL pay is personal to each business or organisation. The legal position is unlikely to be solely determinative for many, with cost and employee relations both being key considerations. However, this decision is obviously a welcome comfort for employers (subject to any appeal to the Supreme Court).
Notwithstanding the legal position, some employees may still seek to challenge parental policies which offer different entitlements for different types of leave, which will likely be time consuming for employers to deal with and may potentially be damaging for employee relations. In addition, many large employers (public and private) already offer enhanced shared parental pay matched to their ML in order to promote diversity and equality and as part of their recruitment and retention strategy so there are various considerations for employers to take into account when they are looking at employee entitlements.
If you would like to discuss this case or the issues relating to SPL and pay and ML and pay, please contact your usual Foot Anstey contact in the employment team or Shelley Morgan, senior associate on +44 1392 685216 or email email@example.com.