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Case Update (3): Sex Discrimination and Shared Parental Leave Pay

What do we already know?

In our April 2018 Newsletter Case update (1): Sex discrimination and shared parental leave pay and May 2018 Newsletter Case update (1): Sex discrimination and shared parental leave pay we updated you on the EAT decisions in Capita Customer Management Ltd v Ali and Hextall v Chief Constable of Leicestershire police.

The EAT in these cases confirmed that it is not direct sex discrimination, but maybe indirect sex discrimination, to pay less than full salary to a father taking shared parental leave, in circumstances where a mother taking maternity leave during the same period would have received full pay.

What’s new?

The Court of Appeal has decided that it is definitely not direct or indirect discrimination to pay less than full salary to a father taking shared parental leave, in circumstances where a mother taking maternity leave during the same period would have received full pay.

This is in keeping with the Government’s view that there is no legal requirement for employers who offer enhanced maternity leave pay to offer corresponding enhancements to Shared Parental Leave pay. Employers are free to offer more generous enhanced arrangements if they wish, but are not obliged to do so (see the Employer’s Technical Guide to Shared Parental Leave and Pay (September 2014) available here). This is the Government’s view but is not binding on Employment Tribunals.

For further details of the Court of Appeal’s decision see below:

Summary: Is it discriminatory to pay men on shared parental leave less than an enhanced rate paid to women on maternity leave?

No, says the Court of Appeal in the combined cases of Ali v Capita Customer Management Ltd and Chief Constable of Leicestershire v Hextall available here.

Facts:  Mr Ali is employed by Capita as a business customer adviser and Mr Hextall is a serving police constable. Both decided to take Shared Parental Leave (ShPL) upon becoming new fathers. Both Capita and Leicestershire Police offer enhanced maternity pay to women taking maternity leave – 14 weeks’ full pay followed by statutory maternity pay (SMP) in the case of Capita, and 18 weeks’ full pay followed by SMP in the case of Leicestershire Police. However, both only offer the statutory rate of ShPL pay.

Mr Ali and Mr Hextall separately brought Tribunal claims, arguing that the failure to pay them the equivalent of enhanced maternity pay amounted to direct discrimination contrary to the Equality Act 2010 (EA). Mr Hextall also claimed indirect discrimination contrary to the EA.

The Tribunal upheld Mr Ali’s direct discrimination claim.  However, in Mr Hextall’s case, the Tribunal dismissed his direct and indirect discrimination claims.

The employer appealed against the decision to uphold Mr Ali’s claim and Mr Hextall appealed against the dismissal of his indirect discrimination claim.

At the EAT, Mr Ali lost his claim for direct discrimination. The EAT considered that Mr Ali’s circumstances were not comparable to a woman who had recently given birth. The correct comparator was instead a woman on ShPL, who like Mr Ali, would only receive statutory ShPL pay under the employer’s policy.

In Mr Hextall’s case, the EAT held that the Tribunal had not properly considered the test for indirect discrimination.   The EAT accepted Mr Hextall’s case that the relevant provision, criterion or practice (PCP) was paying only the statutory rate of pay for those taking shared parental leave and that the Tribunal had incorrectly approached this question and that of comparators.  The EAT remitted Mr Hextall’s claim to a differently constituted Tribunal.

Mr Hextall’s employer and Mr Ali both appealed.

The Court of Appeal’s decision was resounding – paying men on ShPL less than women on maternity leave is not direct sex discrimination, indirect sex discrimination or a breach of equal pay rights.

The Court of Appeal considered that there was no direct discrimination because the circumstances of a man on ShPL could not be compared to the circumstances of a birth mother on maternity leave. ShPL was for childcare purposes whereas a birth mother is afforded special treatment for health and safety purposes (and this special treatment can continue beyond the two-week compulsory maternity leave period). The correct comparator for a man on ShPL was a woman on ShPL, both of whom would receive the same pay. As such, there was no direct discrimination.

Whilst the indirect discrimination claim could be properly characterised as an equal pay claim, the Court of Appeal nevertheless considered that a policy of paying men on ShPL statutory pay only could not be indirect discrimination. It noted that women on maternity leave are materially different from men or women taking ShPL, and should, therefore, be excluded from the relevant comparison pool. As such, the policy of paying statutory pay only for ShPL did not place a male employee at a particular disadvantage.

Regarding an equal pay claim in respect of contractual ShPL pay being less than contractual maternity pay (what was really being claimed, rather than indirect discrimination); the Court of Appeal determined that any such claim would fail. This was because the sex equality clause (which is implied into contracts of employment) does not have effect in relation to terms of work affording special treatment to women in connection with pregnancy or childbirth. This provision was broad enough to cover enhanced maternity pay.

Implications: The Court of Appeal’s decision is good news for employers, as it gives a very clear message that it is lawful to enhance maternity pay but provide statutory pay only for Shared Parental Leave.

The Court of Appeal has taken the position that the whole period of maternity leave provides special protection for mothers after giving birth, meaning it is always permissible for employers to treat this differently from Shared Parental Leave.

We wait to hear if permission to appeal will be sought from the Supreme Court. Given the importance of the issues raised and the wide range of different conclusions reached by the Tribunals, EAT and now the Court of Appeal, a further appeal seems highly likely, particularly on the equal terms claim or indirect discrimination claim debate. We’ll be sure to update you, so watch this space…

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