In Capita Customer Management Ltd v Ali, the Employment Appeal Tribunal (EAT) decided that failure to pay a father his full salary during shared parental leave (SPL) does not constitute sex discrimination in circumstances where a mother taking maternity leave during the same period would have received full pay.
The SPL system allows parents to share leave between them for the purposes of caring for their new baby. This right applies to both opposite-sex and same-sex couples, and similar rights apply to couples that are adopting a child.
The regime works by shortening the mother's maternity leave, meaning that the amount of SPL and pay available is reduced by any time spent by the mother on maternity leave after the initial compulsory leave period. The compulsory maternity leave period is two weeks in most cases (increased to four weeks for certain types of work).
It is relatively common for employers to pay enhanced pay to mothers on maternity leave, but less common to enhance pay for SPL.
Capita Customer Management had various policies about pay for different types of family leave. Mr Ali took two weeks' paternity leave immediately after the birth of his baby. As his wife was unwell with post-natal depression and had been advised to return to work, Ali asked to take SPL in order to care for the baby.
Capita paid only basic statutory pay for SPL. Ali was aware that female employees on maternity leave from Capita were entitled to 14 weeks' full pay and requested the same treatment. When this was refused, Ali submitted a grievance alleging sex discrimination and then brought various claims in the employment tribunal.
The employment tribunal decided that Ali's treatment constituted direct sex discrimination. The initial compulsory maternity leave period of two weeks was specifically associated with recovery after childbirth, and therefore was unique to the mother. However, after the two-week period, Ali could compare his treatment with that of a hypothetical female colleague on maternity leave.
The tribunal rejected Capita's argument that the full 14 weeks' maternity leave constituted special treatment in connection with childbirth, which is an exception to sex discrimination under the Equality Act 2010. Since Ali wanted to carry out a caring role which was not exclusive to the mother, equality of treatment required the same pay for carrying out the same role.
Capita appealed the employment tribunal decision and the EAT upheld the appeal on two main grounds.
First, the employment tribunal had used the wrong comparator for Ali's claim. The correct comparator was a female employee taking SPL in order to care for her child – who would have been treated in the same way as Ali.
The EAT stated that the purposes of maternity leave and SPL were not the same. The right to maternity leave is based on the EU Pregnant Workers Directive and its primary purpose is to protect the health and wellbeing of the birth mother. Rights to parental leave have the primary purpose of caring for the child. As such, a woman on maternity leave and a man taking SPL are not in comparable circumstances because the purposes of the leave are different.
Second, even if Ali had been comparable to a female employee on maternity leave, his claim still could not succeed because the Equality Act allows special treatment to be given to women in connection with pregnancy or childbirth. The EAT held that this exemption covers additional pay for a woman on maternity leave.
Therefore, it is not direct sex discrimination to pay a woman on maternity leave more than a man taking SPL, even when the leave is taken within the same short period after birth.
The employment tribunal decision was worrying for the many employers that have chosen to provide enhanced pay for maternity leave but not for SPL. The tribunal's approach created various legal problems, which the EAT has addressed in its judgment.
As has been found in other cases, a man on SPL simply cannot compare himself with a woman on maternity leave. The EAT has confirmed that the purposes of these types of leave are different, and thus they cannot be compared for the purposes of a direct sex discrimination claim.
Nonetheless, some areas of uncertainty remain. The EAT based its decision on the different purposes of the two types of leave, with maternity leave primarily protecting the health and wellbeing of the birth mother. This is the underlying aim of the Pregnant Workers' Directive, but the directive sets a minimum period of 14 weeks' leave only – raising the question as to whether this purpose remains valid for longer periods of maternity leave.
The work-life balance organisation Working Families intervened in the case and suggested that after the initial 26 weeks' leave:
"the purpose of maternity leave may change from the biological recovery from childbirth and special bonding period between mother and child. At that point it may be possible to draw a valid comparison between a father on shared parental leave and a mother on maternity leave."
The EAT's judgment does not decide this point, but notes that a claim based on these facts may give rise to comparison.
In addition, an alternative argument remains that this is indirect sex discrimination. The rule that enhanced pay is paid for maternity leave only, rather than SPL, disadvantages both men and women because both sexes can take SPL, and particularly disadvantages men because they have no option of taking maternity leave instead.
The difference with indirect discrimination is that the employer's pay policy can be objectively justified, which is not possible with direct discrimination. In Shuter v Ford Motor Company, an employment tribunal accepted that the employer's policy of paying full pay to women on maternity leave in order to recruit and retain them in a male-dominated workforce was a valid justification.
Employers are still waiting for the EAT's decision in Hextall v The Chief Constable of Leicestershire Police – a similar case in which the employment tribunal decided that there had been no sex discrimination. This may provide further guidance on the topic.
In the meantime, employers can seemingly pay different rates of pay for maternity leave and SPL without the risk of a direct sex discrimination claim, at least during the initial 14-week leave period. The argument remains that the purpose of maternity leave changes after a longer period. Employers that pay enhanced maternity pay after the first 26 weeks of leave, but do not offer the same enhancement for SPL, may want to review this policy in light of the EAT's comments.
For further information on this topic please contact Michael Burd at Lewis Silkin by telephone (+44 20 7074 8000?) or email ([email protected]). The Lewis Silkin website can be accessed at www.lewissilkin.com.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.
