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State of the Nation

New Rules On Shared Parental Leave Starts April 5. Prepare Now.

By October 23, 2014 No Comments
New Rules On Shared Parental Leave Starts April 5. Prepare Now.

Maternity LeaveIf you’re employing a pregnant woman in your business, then you’re probably already thinking about finding maternity cover. But if her child is due on or after April 5 next year, new shared parental leave rules will be in force, meaning she could split her statutory leave with her partner. So, any new fathers in your employ could also take more time off as a result of the law change.

The new legislation allows mothers to split leave with their partners in the first year of their child’s life, with the 50 weeks of statutory maternity leave and 37 weeks of statutory pay able to be divided between parents as they see fit. A total of 52 weeks’ leave are permitted by law, and 39 weeks’ pay, but women are required to take a minimum of two weeks’ leave after the birth to recover. Parents of adopted children will also be eligible to take advantage of the new system.

How SMEs currently cope

The intention is that new parents will be given more flexibility about managing the care of their child in the first year. They can have time off together, or take it in turns to share up to 12 months’ leave between them. Businesses should also have more leeway in terms of managing staff absence. And it’s hoped that a more flexible system will encourage better dialogue between employers and parents during their time off, making it easier for small firms to plan ahead. But many experts fear that the new system could create more problems than it solves.

A controversial aspect of the regulation change is that neither parent will have to take their leave in one block – they could opt to split it into up to three chunks, coming back to work in-between times. Not surprisingly, business groups have warned this is likely to cause a headache for resource-tight smaller firms, in particular, many of which already struggle with current maternity and paternity legislation.

  • Half of SMEs with staff say maternity leave is already complex or very complex to manage, according to the Federation of Small Businesses.
  • About 53 per cent say paternity leave – which currently allows new fathers to take a paid fortnight off after a child’s birth – is similarly difficult to administer.
  • A third of bosses say maternity and paternity leave are the most complicated area of employment law to handle.

How shared parental leave will work

Regardless of whether you think the forthcoming changes are good or bad news, they’re definitely going ahead, so businesses need to get to grips with them.

  • To qualify for shared parental leave and pay, a member of staff must have worked for a company for at least 26 weeks at the 15th week before the expected due date of the child – or at the point at which an adopting parent is informed of being matched with a child.
  • In the 66 weeks leading up to the baby’s expected birth date, the person should have worked for a business for at least 26 weeks, earning an average of at least £30 a week in any 13 weeks.
  • An employee must inform their boss of their plans in writing at least eight weeks in advance of taking their time off, stating when leave will start and end, and possibly requesting more than one period of leave.
  • Both parents are required to submit details of their eligibility to take shared parental leave, and confirm that they agree to the amount of time the other parent wishes to take away from work.

But it’s important for business owners to realise that, even though parents can ask to divide their time off in up to three blocks, SMEs aren’t obliged to accept if they think it would be too disruptive. However, bosses do have to accept an application for continuous leave unconditionally. And, if you have been given a fair amount of notice of a request for discontinuous leave, it’s wise to see if it can be accommodated. Losing valuable members of staff for the sake of a little bit of flexibility is an expensive mistake to make.

How much will it cost?

As with present maternity leave arrangements, not all time taken off as shared parental leave will necessarily be paid. Under the new system:

  • Either parent is entitled to 90 per cent of their usual pay for six weeks after the birth or adoption of a child.
  • This is followed by 33 weeks of statutory pay, which is currently £136.78 a week.
  • The remaining 13 weeks of leave are unpaid, unless the employer decides otherwise.

Businesses are then repaid statutory parental leave payments by the Government through underpayment of National Insurance (NI) contributions. Most employers can claim back 92 per cent of all statutory payments from HMRC, and the smallest employers – those with tax and NI payments of less than £45,000 a year – can claim back 100 per cent, plus three per cent extra towards their NI contribution. But employers must keep thorough records of the business’s parental leave payments, and those reclaimed.

Employers’ responsibilities

The Government doesn’t expect businesses to act the detective, checking up on employees and their partners to see if they’re taking more leave than is permitted. There’s a technical guide on the subject for employers, explaining exactly where their responsibilities begin and end. HMRC will take responsibility for overseeing the system, and identify any abuses. Those found to have defrauded the system could face big financial penalties, and will have to pay back any sums over-claimed, but employers won’t be held liable.

If a parent wants to stay in touch with the workplace, businesses and employees can agree to use up to 20 Shared Parental Leave In Touch (SPLIT) days, allowing the staff member to come back to work without bringing their leave to an end. This can be a good way to keep individuals engaged with their job and the workplace as a whole, though it’s not obligatory on either side. When either parent returns to work once their leave is finished, an employee who has taken 26 weeks or less off is entitled to return to their same job. When someone has taken more than 26 weeks’ statutory leave, they have the right to return to the same position as long as it is reasonably practicable. If it isn’t for some reason, the business owner must offer them an appropriate alternative role. The Chartered Institute of Personnel and Development has some more information on employees’ right to return to work after a baby.

So, start updating your company policies now in time for the forthcoming law changes. Acas offers good advice on drafting parental leave policies. Encourage staff to discuss plans with you as far in advance as possible. And, finally, don’t expect the worst. Many experts are predicting that because men still tend to earn more than women on average, many households will decide to stick to the mother taking the greater part of the leave permitted post childbirth. The shake-up, and upset to your business, may not be as drastic as you think.
Image courtesy of David Castillo Dominici / FreeDigitalPhotos.net

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