In an emphatic judgment, the Court of Appeal has ruled that it is not direct discrimination, indirect discrimination or a breach of equal pay rights to provide enhanced pay for maternity leave and statutory pay only for shared parental leave (SPL).(1)
The SPL system allows parents to share leave between them in order to care for their new child. This is done by the mother shortening her maternity leave.
It is relatively common for employers to pay enhanced pay to mothers on maternity leave, but less common to enhance pay for parents taking SPL. Two cases recently considered by the Court of Appeal have raised arguments as to whether it is direct sex discrimination, indirect sex discrimination or contrary to equal pay law to provide different amounts of pay for maternity leave and SPL.
Under the Equality Act 2010 direct discrimination is where someone is treated less favourably than another person because of sex. Indirect sex discrimination occurs when an employer has a provision, criterion or practice which applies to everybody but results in one sex being put at a disadvantage. Unlike direct discrimination, employers can justify indirect discrimination.
The equal pay provisions of the Equality Act require men and women doing equal work to receive equal pay and equality in other contractual terms. This is done by implying a 'sex equality clause' into employment contracts.
The first case involved a direct discrimination claim. Mr Ali took two weeks of paternity leave from Capita Customer Management immediately after the birth of his child and then asked to take SPL so that he could care for the child while his wife returned to work. Capita paid only basic statutory pay for SPL. Ali was aware that female employees on maternity leave from Capita were entitled to 14 weeks at full pay and he asked for the same treatment, but was refused.
The Employment Tribunal decided that this treatment amounted to direct sex discrimination. The Employment Appeal Tribunal (EAT) disagreed and upheld the appeal on two main grounds (for further details please see "Failure to pay father full pay for shared parental leave is not sex discrimination"). First, the Employment Tribunal had used the wrong comparator for Ali's claim. The correct comparator was a female employee who was taking SPL in order to care for her child – she would have been treated in the same way as Ali. Second, even if Ali had been able to compare himself with a female employee on maternity leave, his claim could still not succeed because the Equality Act allows special treatment to be given to women in connection with pregnancy or childbirth.
The second case involved claims for both direct and indirect discrimination. Leicestershire Police paid 18 weeks of enhanced maternity pay to mothers on maternity leave, but paid only statutory pay to parents taking SPL. Mr Hextall took 14 weeks of SPL in the period that, if he had been a woman on maternity leave, would have entitled him to full pay.
The Employment Tribunal found that this was neither direct nor indirect sex discrimination. When Hextall appealed to the EAT claiming indirect discrimination, the EAT decided that the Employment Tribunal had not properly considered the legal test (for further details please see "Failing to enhance pay for shared parental leave may be indirect sex discrimination"). The provision, criterion or practice in this case was that Leicestershire Police paid only statutory pay to parents taking SPL. According to the EAT, there was a disadvantage because a man is proportionately less likely to benefit from an equivalent rate of pay when taking leave to act as the primary carer for his child. That was because men must take SPL, while women who have given birth can choose to take maternity leave or SPL. The EAT also rejected the argument that this was an equal pay claim.
The Court of Appeal held that there had been neither sex discrimination nor a breach of equal pay rights in either of the two cases. The key points were as follows:
- There had been no direct discrimination because the correct comparator for a man on SPL is a woman on SPL – and everyone on SPL is treated the same. The Court of Appeal held that a man on SPL cannot compare himself with a woman on maternity leave because the purposes of the leave differ. Maternity leave relates to special protection of the birth mother after pregnancy and childbirth, including:
- recuperation and protection of the mother's biological condition; and
- developing the special relationship between mother and newborn child.
The Court of Appeal concluded that maternity leave is not just for the purpose of caring for the child, which meant that Ali's claim could not succeed.
- In Hextall's case, the Court of Appeal decided that this was an equal pay claim rather than a discrimination claim. All contractual terms relating to pregnancy and giving birth had not been available to Hextall because he is not a woman. A sex equality clause would give him a comparable term with the same rights to leave and pay to care for a newborn child. However, crucially, the Equality Act says that a sex equality clause applies no contractual terms giving women special treatment in connection with pregnancy or childbirth. The whole of maternity leave is part of this special protection, so the equal pay claim must fail.
- Claims for equal pay and sex discrimination are mutually exclusive. If something is properly characterised as an equal pay claim, it cannot also be indirect sex discrimination. This meant that Hextall's indirect discrimination claim could not be considered because the Court of Appeal had found that it fell within equal pay law.
- For completeness, the Court of Appeal held that the indirect discrimination claim would have failed anyway. The provision, criterion or practice was the application of the contractual provisions relating to SPL. The pool for comparison should not include birth mothers on maternity leave, as they are in a different situation from men and women on SPL. Therefore, men in Hextall's situation are not caused a particular disadvantage because women on SPL are also limited to statutory pay.
- Finally, the Court of Appeal held that any indirect discrimination could be justified in any event as special treatment of mothers on maternity leave. Although the special treatment exemption was missing from the indirect discrimination provisions in the Equality Act, the Court of Appeal regarded this as an error by Parliament because the exemption was included in EU law and in previous UK legislation.
This judgment is good news for employers, as it gives a clear message that it is lawful to enhance maternity pay but provide statutory pay only for SPL. The Court of Appeal has taken the position that the whole period of maternity leave provides special protection for mothers after giving birth, meaning that it is always permissible to treat this differently from SPL.
This result is not particularly surprising in Ali's claim for direct discrimination. It was always going to be difficult to show less favourable treatment of men in circumstances where both men and women can take SPL and are treated the same when they do.
What is more unexpected is the Court of Appeal's treatment of indirect discrimination, as the EAT had taken the view that such a claim by Hextall was possible. The Court of Appeal deals with indirect discrimination quite briefly, with its decision turning on the point that women on maternity leave should not be included in the pool for comparison because they are in different circumstances. This does not seem to engage with the specific argument before the EAT – specifically, that women have a choice between maternity leave and SPL, while men must take SPL. Even if women on maternity leave are excluded from the pool, the provision, criterion or practice of paying statutory pay for SPL applies to both men and women. Is it not still arguable that a man on SPL is disadvantaged because many women taking SPL could choose to take this as maternity leave instead?
This may be something of an academic point, as the Court of Appeal thought that indirect discrimination was ruled out by the fact that this ought to be brought as an equal pay claim. The Court of Appeal's reasoning on equal pay is quite complex, but the claim ultimately fails for the same reason as the direct discrimination claim: the exemption for special treatment of women in connection with pregnancy and childbirth.
Ali had put forward detailed arguments that the nature of maternity leave had changed after the introduction of SPL, because after the two-week period of compulsory maternity leave parents can choose how to share leave between them. As this was designed to promote gender equality, there should be no financial incentive for the mother to stay at home as the primary carer with the father continuing to work as the primary breadwinner. The Court of Appeal comprehensively rejected this argument, saying that there was nothing in EU or UK law to support the conclusion that the primary purpose of statutory maternity leave is the facilitation of childcare.
A question remains as to whether the whole period of maternity leave in the United Kingdom is legitimately about the protection of the mother after childbirth. The minimum maternity leave period under EU law is 14 weeks, whereas the United Kingdom has chosen to extend this to 52 weeks. It is certainly arguable that the purpose of maternity leave ceases to be about the protection of the mother's health and wellbeing after a certain period. The Court of Appeal did not fully deal with this argument as both Ali and Hextall took SPL immediately or soon after the birth, expressly referring to the purpose of statutory maternity leave in weeks three to 14 after childbirth. The Court of Appeal listed several general differences between maternity leave and SPL, but it remains unclear whether it was saying that the full 52 weeks of leave is for the special protection of women after giving birth.
This may be a political issue that only Parliament can resolve. Recognition of the special position of women after childbirth is important, but so is encouraging a more equal sharing of childcare between men and women. The introduction of SPL provided an opportunity to address this – for example, by shortening maternity leave to a period more in line with the EU minimum and introducing a new right to additional leave for everyone – but instead the full period of maternity leave has been retained.
A further appeal on these issues is likely, in which case the Supreme Court could feel more able to address contentions around gender equality and the purpose behind SPL. So the Court of Appeal's judgment may not be the end of the story.
Endnotes
(1) Ali v Capita Customer Management Ltd and Chief Constable of Leicestershire Police v Hextall – judgment available here.
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