How can your business prepare for shared parental leave in UK?

The UK Government introduced new parental leave legislation in April this year giving parents a choice in how to share child care for their child’s first year.

The legislation creates a new, more equal system which allows fathers to have greater involvement in raising their child and gives women the opportunity to return to work earlier if they wish. The legislation also provides an opportunity for companies to improve employee engagement and inspire greater loyalty.

However, not everyone has welcomed the new legislation. Amongst its harshest critics are the Small Business Federation and The Institute of Directors who claims the legislation could create a “nightmare” and chaos for employers, particularly small businesses.

Research from law firm Slater Gordon undertaken in March has shown that 44 per cent of small and medium businesses are worried about how the regulations will impact on their business, and nearly one in five are simply ‘putting off’ preparing for it.

For any business, the changes will mean additional costs and more time and resources needed as well as increased administration. However, the impact will be felt most acutely in a small business. If a couple are employed by the same company or several employees are taking leave simultaneously, the impact could be quite devastating.

What is shared parental leave?

Previously, fathers were entitled to one or two weeks paid ordinary paternity leave, or up to 26 weeks’ paid additional paternity leave – but only if the mother or co-adopter returned to work.
Shared paternity legislation replaces this and now fathers (or a mother’s partner) can take up to 50 weeks of leave, which is particularly useful for families where the mother is the higher earner. Statutory shared parental pay is 90% of your average weekly earnings, or £139.58 a week, whichever is lower.

Couples can take all or part of the leave at the same time and each parent may take up to three separate blocks of leave. Both parents need to be working, but only one has to be an employee. By the 15th week before their baby is due, one parent must have been continuously employed for six months.

Providing an employee gives eight weeks’ written notice before the leave commences, an employer has no right to refuse any requests for continuous leave, however they can refuse requests for discontinuous leave.

According to the Department for Business, Innovation and skills, 285,000 working couples would be eligible to share leave under the new rules, however the government has predicted that take up will be low in the first year.

What does this mean for businesses?

Some larger companies like Virgin are embracing the legislation and seeing it as an opportunity to provide even better employee benefits.  This month, Virgin announced that new Dads who have been employed by Virgin for four years can take a year’s paternity leave at full pay, whereas those who have worked for two years will receive 25 per cent of their pay during paternity leave.

Whilst Virgin may be able to offer this generous paternity package, many small businesses will struggle to manage the impact and potential disruption of shared paternity leave.

For starters, the eight week notice period employees must give before embarking on their leave might sound reasonable, but in reality it doesn’t give businesses much time to find, recruit and train a replacement.

It might even be impossible to find a willing replacement to cover what could be a very short periods of employment, particularly if the employment is in small chunks and completely ad hoc.

If employers fail to find people to step in then colleagues will have to pick up additional workloads, which could impact their morale and well-being. Businesses will also find it extremely difficult to plan their projects and ensure they are appropriately staffed.

From an administration perspective, there will be challenges too. Small businesses that are managing their employee absence on spread sheets simply won’t cope. Many are already overburdened by managing absence requests for holidays and staff sickness. They rely on absence requests being emailed to an HR manager, the request being approved and being sent back and then finally input into a spread sheet. This process is time consuming, it costs money and it is not 100% accurate, which means that some companies aren’t fully measuring the extent of their absence.

With one in five SMEs saying that they have already had a leave request from an employee now is the time for companies to get organised to ensure they can cope with the new legislation.

In order to plan ahead in terms of strategy and projects, as well as being able to cope on a day to day basis, businesses need to have systems in place to manage shared parental leave. This includes software that can manage and measure absence whether parental leave, sickness or annual leave. Such tools will enable companies to minimise the cost of administrating shared parental leave and reduce the impact to business.

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Written by Adrian Lewis, Commercial Director, Activ Absence.

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