Helping working parents to stay in the labour market, particularly mums, has been a cornerstone policy of the Labour government since it came to power in 1997. There are clear business benefits in not having to recruit and train a new member of staff when someone leaves because of caring responsibilities. But what about the costs of replacing the individual while they are out of the business for up to a year, funding that 8% of statutory payments that resolutely refuses to leave our balance sheet and simply trying to keep on top of the ever changing legislative landscape?

Well those costs are not going away; in fact as a result of the Work and Families Act 2006 they are about to get a whole lot more expensive. While the act was going through the House of Lords one of the peers commented, in respect of Additional Statutory Paternity Leave and Pay that is was a ‘novel proposition’, you might have other views!

But its not all bad news, credit must go to the three departments involved – the Department of Trade and Industry, Department for Work and Pensions and HM Revenue & Customs – for listening to employer representatives and simplifying the underpinning maternity and adoption legislation where possible. Thanks to the European Union there is little room to manoeuvre in this area as we are constrained by the provisions of the Pregnant Workers’ Directive, and we all know the power of European institutions after the Alabaster judgement handed down by the European Court of Justice in 2004.

Maternity/Adoption Pay

The first changes come into effect on 1st October, with an increase in Statutory Maternity Pay (SMP) and Statutory Adoption Pay (SAP) to 39 weeks for all women with an Expected Week of Childbirth or an expected date of placement for adoption, of 1st April 2007 or later. This means you will be running parallel SMO/SAP schemes for some time, with women with an EWC of 31st March or earlier entitled to 26 weeks and the lucky ones whose MATB1 certificate/adoption papers are dated the next day, 39 weeks. Remember it is the date the baby or the adoption is due that is crucial, not when it is actually born/adopted. This can mean that women with babies born before 1st April can qualify if they were due after 31st March, and yet those with babies born late can still fail to receive the increased SMP. Some commentators persist in saying the regulations change on 6th April – yes we all know about common commencement dates – but in this case it is the 1st of the month that has been chosen.

There is also new flexibility on the start date for SMP and how it is paid. Women will no longer be tied into SMP weeks that start on a Sunday. Everyone will be able to choose to start their SMP on any day of the week. For the first time there will also be a published daily rate of SMP so that an employers can chose to pay SMP in line with pay rather than in blocks of four or five weeks – always a devil of a job to explain tom monthly paid staff. The daily rate will also apply to SAP and Statutory Paternity Pay (SPP).

Women will still need to have 26 weeks’ service to qualify for SMP/SAP but service will no longer be relevant for qualification for maternity leave. All women will now qualify for Additional Maternity Leave (AML), allowing them to take a maximum of 52 weeks off work.

In light of such reports and the publication of the Irish Independent 2007 list of the 50 Best Companies to Work for in Ireland it begs the question – what makes a great place to work? A great place to work, according to the Great Place to Work Institute who compile the annual list, is “a place where employees trust the people they work for, have pride in what they do, and enjoy the people they work with.”

No amendment to Statutory Adoption Leave (SAL) has been made in the Act, so there is still a 26 week service test for SAL, which includes 26 weeks Ordinary Adoption Leave (OAL) and 26 weeks Additional Adoption Leave (AAL). If you meet the service test you automatically qualify for both. With 39 weeks of SMP/SAP the last 13 weeks will now overlap with AML/AAL. This is important; even though the service qualifier for AML has been scrapped AML/AAL still exists, for now. The distinction is crucial to employers as during additional leave there is no requirement to provide contractual benefits such as a company car or holiday entitlement.

Return Dates

With an employee off for up to 52 weeks an employer needs certainty as to expected return dates, as it is likely that they will have had to engage fixed term cover. The regulations acknowledge this by increasing the notice that an employee must give if they want to change their date of return in any way from 28days to 56 days.

Contact during leave has always been a tricky area with a climate of suspicion prevailing, based on the fear of harassment claims against the employer or of damaging prospects of return to the same job on the part of the employee. To address this, and the need to keep employees engaged with developments in the workplace, employees will now be able to come into work for up to 10 ‘keeping in touch’ (KIT) days. Previously if an employee came into work during the Maternity Pay Period they had to lose a week’s worth of SMP. With KIT days this will no longer be the case, although, of course, the employee will expect to be paid under their contract of employment for any time worked. It will be vital therefore to agree remuneration levels in writing if you, and the employee, want to take advantage of KIT days. Whatever you pay you’ll be able to offset the SMP due for that day and reclaim 92% (or 104.5% if you are a small employer). Mutual agreement is the key here as you cannot insist that the employee attend work, nor can she insist that work is offered; but it will prove useful for both parties to be able to deliver appraisals and attend training courses without a material impact on SMP.

Breathing Space

Fortunately we have a two-year breathing space before the next set of changes, as it will be April 2009 when SMP/SAP is extended to 52 weeks. At that point the most contentious proposals come into affect – the introduction of up to 26 weeks Additional Statutory Paternity Pay (ASPP) and leave (there will be no change to the existing two week period taken around the birth/adoption). Parents will then have full flexibility to share the care of a baby or adopted child. Qualification will be based on the mother returning to work with unexpired SMP/SAP and leave and then the father having sufficient service and earnings (what these earnings and service qualifiers are has yet to be decided). It will certainly be challenging for the father’s employer who will have to liaise in some way with the mother’s employer to ascertain qualification. One option might be to adopt the MATB1 maternity certificate to include an extra page that can be certified by the mother’s employer and given to the father to forward to his employer. KIT days will also apply to Additional Statutory Paternity Leave and we should perhaps resist the temptation to refer to this as a father’s right as in the case of adoption either can elect to take the SAP or ASPP.