Court of Appeal provides clarity on shared parental pay

United Kingdom

The Court of Appeal has ruled that there was no discrimination where men taking shared parental leave did not receive enhanced rates of pay in circumstances where women on maternity leave were paid a higher rate. This case provides reassurance to employers that it is lawful to pay women enhanced maternity pay without matching those benefits for parents taking shared parental leave.

The central issues to be determined in the appeals of the EAT decisions in Hextall v Chief Constable of Leicestershire Police and Capita Customer Management Ltd v Ali were whether it was either unlawful discrimination on the basis of sex (whether direct or indirect) for men to be paid less on shared parental leave than birth mothers on paid statutory maternity leave, or whether an implied sex equality clause should ensure that men and women in like circumstances are paid equally.  For those interested, further details of the ET and EAT decisions which were appealed can be accessed here.

Direct Discrimination

There is a special provision within the Equality Act contained in section 13(6)(b), which states that in a direct sex discrimination claim, no account is to be taken of special treatment afforded to a woman in connection with pregnancy or childbirth. An employer is therefore able to rely on this provision to provide enhanced rates of pay to mothers on maternity leave, without this amounting to direct discrimination.

The Court of Appeal explained that statutory maternity leave related to matters exclusive to the birth mother and was not just about facilitating childcare.  The argument that following the compulsory two weeks a birth mother is a legitimate comparator to a man on shared parental leave therefore failed. The Court determined that in fact the proper comparator for Mr Ali was a female worker on shared parental leave. 

Equal Pay

Section 66 of the Act concerns equal pay, and implies into all contracts of employment a “sex equality clause”.  However, this clause does not apply “in relation to terms of work affording special treatment to women in connection with pregnancy or childbirth.”  The Court of Appeal decided that the Hextall claim was actually an equal pay case, but the equal pay exclusion applied here, meaning that the more favourable maternity terms available to female employees related to the special treatment afforded to them in connection with pregnancy or childbirth. As a result, the sex equality clause did not operate to include those terms into Mr Hextall's terms of work

Indirect Discrimination

The Court explained that because on the facts of this case, this was an equal pay claim, Mr Hextall was not also able to bring a claim for indirect sex discrimination, but went on to explain why such a claim this would have been rejected in any event. The indirect sex discrimination claim would have failed because the correct pool for comparison could only consist of employees on shared parental leave. Any disadvantage to Mr Hextall would have been justified as being a proportionate means of achieving the legitimate aim of the special treatment of mothers in connection with pregnancy or childbirth.

Decision removes uncertainty for employers

This is not necessarily the end of the story as both Mr Ali and Mr Hextall are seeking leave to appeal to the Supreme Court.  While the Government in its  guidance on shared parental leave has said from the outset that there is no requirement for employers to match enhanced benefits, there was always the risk that a claim for discrimination may be successful in challenging this view.

However, for the time being these decisions give clear comfort to employers across all the potential claims of sex discrimination that they can treat maternity pay and maternity leave as a special case without the risk of claims by men for comparable terms. Leaving aside the risk from discrimination claims, many employers decided to match enhanced rates of pay to parents taking shared parental leave anyway as a financial incentive to encourage more fathers to take such leave.