Holiday pay: A time bomb waiting to happen?
There has been recent press coverage about trade unions gearing up to bring claims for owed holiday pay, and the potential liabilities for employers running into the millions.
Published 2 September 2014
Following the birth of a son the claimant’s wife took maternity leave. When she returned to work he took about 5 months additional paternity leave (APL). His employer, Ford Motor Company, has operated for many years a maternity pay scheme under which mothers receive 100% of basic pay (including SMP) for 52 weeks. This decision was taken with the aim of retaining and increasing the number of women in its workforce, and they had statistics that showed this policy had contributed to some extent to fulfilling that aim. Since the introduction of APL in 2011, Ford has only paid workers taking this leave the statutory rate. The Claimant contended that the lack of availability of enhanced pay for men on APL was both direct and indirect sex discrimination. The Claimant pointed out that the effect of the difference of treatment meant he was paid approximately £18,000 less than had he been a woman on maternity leave caring for his son in an equivalent period of leave.
In a well reasoned judgment an employment tribunal found that the Claimant had not been discriminated against directly or indirectly. In his direct discrimination claim the Claimant had tried to compare himself to a woman on maternity leave. The tribunal found that this was not the correct comparison, so his claim fell at the first hurdle. They noted that there were substantial differences between a man on APL and a woman on maternity leave, notably that the latter will have been pregnant, given birth, likely to have cared for the child since birth and may have breastfed the child. The tribunal considered the correct comparator was a female on APL (a female spouse or civil partner) with whom there would be no difference in treatment. The tribunal also rejected the Claimant’s more nuanced argument that the introduction of APL reflected Parliament’s view that after 20 weeks maternity leave is no longer aimed at protecting the mother’s biological condition, but at facilitating childcare, which can be done by either parent. The tribunal found that this was wrong because APL is not a freestanding right, but dependent on the mother choosing to end her maternity leave and returning to work and that for each woman that decision is a personal one. There was therefore a material difference between the two leaves even at this later stage. The tribunal also found that in any event the more favourable treatment of women was lawful because it protected their health and safety following pregnancy.
In respect of the Claimant’s indirect sex discrimination claim there was a practice/policy of paying women basic pay when on leave beyond 20 weeks after the birth of a child, when looking after their child. Ford conceded that men were likely to suffer group disadvantage as the largest group eligible for APL are fathers. It was also conceded that the Claimant himself was disadvantaged. The issue was therefore whether Ford’s policy was justified and the tribunal found it was. Ford’s objective in paying women on maternity leave full pay with the aim of retaining and recruiting them was legitimate and their evidence, and statistics, showed that it had been to some extent effective. Although the disadvantage to male employees was great, again it arose because men cannot qualify for maternity leave which is gender specific, and arises in connection with pregnancy and childbirth.
While only a tribunal decision and not binding on other tribunals this case is welcome and its timing is helpful. One question which many employers are currently considering is whether they should enhance pay for those who take shared parental leave (SPL) from next April onwards. This case accords with our view that not enhancing pay for those on SPL should not be discriminatory. This is because SPL is available to both sexes. Any direct sex discrimination claim will fall at the first hurdle because, provided the SPL pay package pays men and women the same, a man taking SPL will be treated the same as a woman on SPL. In terms of any indirect sex discrimination claim the group for establishing group disadvantage will be those eligible to take SPL. Again, provided both sexes are paid the same, men will not be at a group disadvantage, so any challenge should not get as far as arguments about justification.