Shared parental leave: should employers enhance shared parental leave pay if they enhance maternity pay?

The Court of Appeal has held that, under the equality law of England and Wales, it is not unlawfully discriminatory on the basis of sex for an employer to enhance the maternity pay it pays to female employees beyond the required statutory level but not to apply the same enhancement to the statutory level of shared parental leave pay to which men taking shared parental leave are entitled.

Background

The appeals heard by the Court of Appeal in the cases of Capita v Ali and Hextall v Chief Constable of Leicestershire concerned the issue of whether it constitutes unlawful sex discrimination – whether by way of direct discrimination, indirect discrimination or within the scope of an equal pay claim – for an employer to enhance a female employee’s maternity pay paid to her during her maternity leave beyond the statutory level but not the shared parental leave pay paid to a man taking shared parental leave (SPL). In a previous OnPoint we reported on the detailed facts of the Ali case.

Court of Appeal

Whilst the two cases had centred on arguments about direct and indirect sex discrimination at the employment tribunal and Employment Appeal Tribunal stages, when the appeals came before the Court of Appeal, both employers agreed that the claims should be treated as claims based on equal pay or "equality of terms" since they concerned allegedly discriminatory rates of pay.

Summarising by way of overview the conclusions of the Court of Appeal across the two appeals:

• In relation to direct discrimination, a man who is taking SPL, the purpose of which is childcare, cannot compare himself to a mother on maternity leave, whose special treatment is for health and safety purposes. The proper comparator for a man in such circumstances is a female worker taking SPL. Therefore, there was no direct discrimination where a woman’s maternity pay was enhanced but a man’s shared parental pay was not enhanced, not least as the Equality Act 2010 specifically provides that no account is to be taken of “special treatment afforded to a woman in connection with pregnancy or childbirth."
• In relation to indirect discrimination, the policy of only paying the statutory level of shared parental leave pay to men did not constitute indirect discrimination. First, men were not placed at any particular disadvantage by that policy in terms of the appropriate pool for comparison. As the pool of individuals upon whom the effect of such a policy is to be evaluated must “be populated by persons whose circumstances are the same as, or not materially different from, the claimant,” this pool could only comprise men – on the basis that women on maternity leave are in materially different circumstances from men taking SPL. Secondly, albeit not a binding part of the decision, the Court of Appeal considered that the policy of enhancing maternity pay but not shared parental leave pay was justified as a legitimate and proportionate way of complying with the policy of EU law ensuring special treatment relating to maternity. Moreover, an indirect sex discrimination claim could not be brought as the Equality Act 2010 provides that an equal pay claim is the exclusive route to complain about unequal terms as to pay.
• In relation to equal pay, the “sex equality clause” which the Equality Act 2010 implies into all contracts – and that a claimant man would need to rely on to make out a claim based on contractual shared parental leave pay being less than contractual maternity pay – could not assist a man bringing a claim in these circumstances. This is because of the exception made for the treatment of women in connection with pregnancy or childbirth. Along the same lines as with direct discrimination, the Equality Act 2010 provides that the sex equality clause does not have effect in relation to terms of work affording special treatment to women in connection with pregnancy or childbirth.

Conclusion

Whilst it brings consistency to the position, the Court of Appeal decision may not be the end of the story. It is understood that permission to appeal against the Court of Appeal’s decision to the Supreme Court is being sought by both Mr Ali and Mr Hextall. Whilst on the basis of this decision employers can differentiate between SPL and maternity leave in terms of any enhancement they choose to make beyond the statutory level to favour those receiving maternity pay, they need to watch this space if and when the matter reaches the Supreme Court.