Modern workplaces

The governments want to create a society where work and family complement one another. One where employers have the flexibility and certainty to recruit and retain the skilled labour they need to develop their businesses and one where employees no longer have to choose between a rewarding career and a fulfilling home life. As part of this pledge they have recently published a consultation document called Modern Workplaces which details proposals in four key areas:  
•    a system of flexible parental leave
•    a right for all employees to request flexible working
•    changes to the Working Time Regulations affecting the interaction of annual leave with sick leave and family-friendly leave
•    measures to encourage equal pay for equal work between men and women.
The flexible parental leave has the main potential to heavily increase the workload of the payroll department. And depending on which department looks after annual leave within a company the changes proposed to the Working Time Regulations will certainly provide clarity for employers but still be an additional administrative process.

Flexible Parental Leave

The area of the consultation with the majority of proposals is regarding parental leave where the government want to introduce a system of genuine flexibility that will give parents choice and facilitate truly shared parenting.  Together with the fact that allowing flexibility will increase the overall number of families eligible for statutory payments, this means that the proposed policy will have expenditure implications. The aim, as a priority, is to introduce the new system in April 2015, although this timescale is subject to affordability.  

There is currently a period of maternity leave reserved exclusively for mothers which must be taken in a continuous block around the time of the baby’s birth; this will of course be retained. As will the current statutory maternity pay and maternity allowance arrangements during this period. The period classified as maternity leave and pay will become 18 weeks as opposed to the current 39 weeks. The 21 remaining weeks will then be reclassified as parental leave shared between both parents. However, if parents so choose, mothers will be able to retain access to exactly the same amount of statutory leave as they have now by combining maternity and parental leave.      

The existing system of Statutory Maternity Pay (SMP) and Maternity Allowance (MA) would be replicated with statutory shared parental pay and parental allowance, paid at 90 per cent of average earnings up to the existing flat rate (capped at £128.73 in 2011/12), and with similar eligibility criteria.  Under consideration will also be other payment routes, ensuring that all current recipients of SMP and MA are covered.   

The needs of lone parents will of course also be taken into account. Where parents are not living together, the default position could be that the parent with main responsibility for the child should be able to take all the unreserved period of leave and pay.

Additional paternity leave
The current two week (ordinary) paternity leave entitlement for fathers will also be protected and retained. The introduction of additional paternity leave (APL) in April 2011 gives both parents access to an extended period of leave in the first year, part of which may be paid. The government believe that although this is a move in the right direction for shared parenting, the system places too many restrictions on when and how leave can be taken, and prevents families from making their own choices about when and how to share leave. APL will be replaced with a system of truly flexible parental leave, available to mothers and fathers on an equal basis. This will extend provisions to all working fathers, including those who are self-employed or change jobs during the pregnancy.    

Flexible working could provide parents with helpful flexibility in their time off to care for their children and also reduce the impact of leave on businesses by allowing their employees to return to work for busy periods without forfeiting leave entitlement. This could be particularly helpful where employers have not secured cover or to ease the parent back into work towards the end of their leave. Employees would not have an absolute right to take leave flexibly, but nor would employers have a right to refuse an employee the opportunity to take their statutory leave entitlement. In the great majority of cases, it is expected that parents and their employers will agree that leave is taken in only one or two long blocks.    

Allowing only one parent to be out of the workplace at any one time would place unnecessary restraints on how leave may be taken, and interfere with the ability of parent and employer to agree how leave is taken. This increased flexibility will require a new workplace approach to parental leave and will of course mean new administrative arrangements. However the government are keen that administration be as light touch as possible, and that the process of agreeing when leave is taken is left up to the parties involved. Where they can not agree, the default position would be for parents to take leave in one continuous block. Although this could be a real issue if the mother and father both work for the same employer.

Leave might be taken in blocks of time between which the parent returns to work. For example, a father could take a period of leave when his baby was born, and a further period later on. Leave might also be taken in blocks of days (rather than weeks as at present). For example, a mother may wish to return to work after 18 weeks of maternity leave, but use two days per week of parental leave to facilitate part-time working for the first year. Future consultation will explore in more detail the process of agreeing how and when leave is taken.   

Parents will provide ‘self-certified’ notice of their leave plans to their employer in-line with specified notification requirements. This will build on the existing arrangements for APL, which require that parents give two months’ notice. This notice is signed by both parents so that employers can have confidence that the request is genuine.     

However, as with all statutory payments, HMRC will have powers to investigate claims where there is concern. The APL administration process will be evaluated to see how it works for employers and this will feed into future consultations on the administration of parental leave.   

Proposals also include that part of the paid period of flexible parental leave be reserved for the exclusive use of each parent. However, it is not the intention that reserving a period of leave for fathers should reduce mothers’ overall leave rights: if a family still wishes the mother to take the full 52 weeks of leave currently available, she should be able to do so. So an additional four weeks of paid leave will therefore be provided so that the period of paid leave available to the mother is not reduced.     

The single system of parental leave means that employees would have the same eligibility criteria for taking parental leave whether it is taken during or after the first year of a child’s life. Another proposal is to remove the existing requirement that an employee must have been with their employer for at least a year to take unpaid parental leave. This will bring the rules in line with those currently in force for maternity leave.  

Unpaid parental leave

Although parental leave will be available during and after the first year of the child’s life, it is proposed that, to ease administration, pay will not be available beyond the child’s first birthday. Under existing arrangements, unpaid parental leave can be taken until the child is five years old. Although under these new plans paid parental leave will be limited to the first year of a child’s life, this consultation considers extending the point until which a parent can take unpaid leave to either the child’s eighth twelfth, sixteenth or eighteenth birthday.

It is also proposed that there will be a statutory provision made for fathers to take time off to attend a limited number of significant antenatal appointments. There are two ways in which this right for fathers could be achieved. In either case the ultimate decision on whether a father is welcome at appointments would remain with the mother.

As the changes are not due to come in until 2015 there is valuable time available for HMRC to explore the extent to which their current proposals to reform the operation of the PAYE system through provision of real time payroll information can support any new system. As mentioned previously there will be lessons learned when sufficient time has passed to allow evaluation of the administration of additional paternity leave and pay. The government response to this consultation will provide more details of plans in this area.