In a reassuring decision for employers, the Court of Appeal has held that it is not discriminatory to pay enhanced maternity pay to women on maternity leave and statutory shared parental pay to men on shared parental leave 

Background 

Direct and indirect discrimination

Direct sex discrimination occurs where, because of sex, a person treats another less favourably than others (s.13(1), Equality Act 2010 (EA)).  However, there is a derogation to this general rule in relation to special treatment given to women in connection with pregnancy or childbirth (section 13(6)(b), EA).  Special treatment given on these grounds should be disregarded, meaning that a man cannot claim he has been treated less favourably because he has not received the same treatment. However, any special treatment must be proportionate i.e. limited to that which is reasonably necessary to remove the disadvantages caused by their condition.

Indirect sex discrimination occurs where the employer applies an apparently neutral provision, criterion or practice (a PCP) which puts persons of the claimant's sex at a particular disadvantage and which also puts the claimant at that disadvantage and where the disadvantage cannot be objectively justified by the employer.  Objective justification requires the employer to demonstrate that there was: (i) a legitimate aim that corresponded to a real business need (costs savings alone is not sufficient); and (ii) the PCP was a proportionate means of meeting that aim i.e. it was reasonably necessary and there was no less discriminatory means available.

Maternity leave

A woman's right to paid maternity leave stems from the Pregnant Workers Directive (1992) (PWD), which was introduced by the EU as a health and safety measure for pregnant workers and workers who have recently given birth or are breastfeeding.   The UK provides for 52 weeks of leave (of which 39 weeks is paid), to comply with the PWD.

Shared parental leave and pay

Shared parental leave (SPL) and pay was introduced in the UK in 2015.  Co-parents are able to share up to 50 weeks' leave and 37 weeks' pay.  The pay rate for statutory shared parental pay (SSPP) is the same as statutory maternity pay (SMP) (save that SSPP is paid at a flat rate throughout and there is no enhancement to 90% of pay for the first 6 weeks as there is for SMP).  There is no statutory requirement to equalise shared parental pay with any enhanced maternity pay package offered to female staff.  The Government's view at the time was that it is not unlawful for employers to differentiate, yet commentators considered there was a risk that this would be discriminatory.

The emerging case law appeared to support the Government's approach.  

• In the case of Shuter v Ford Motor Company Ltd (Shuter) (a case concerning additional paternity leave (APL) and pay, the predecessor to SPL), the Employment Tribunal decided that it was neither directly nor indirectly discriminatory to pay a woman 100% of pay for 52 weeks of maternity leave and to pay a man statutory pay only for a period of APL.  
• Similarly, in Hextall v Chief Constable of Leicestershire Police (Hextall) the Employment Tribunal decided that it was not directly or indirectly discriminatory to pay enhanced pay for maternity leave compared with SSPP.   In both Shuter and Hextall, the direct discrimination claims failed because the Tribunals rejected arguments that the male claimants on APL and SPL were entitled to compare themselves with women on maternity leave.  Instead, the correct comparators were said to be a woman on APL (Shuter) or SPL (Hextall).  
• However, the clear waters were muddied in 2017 when, in the case of Ali v Capita Customer Management Ltd (Ali), the Tribunal allowed a man on SPL to compare himself to a woman on maternity leave and went on to uphold his complaint of a direct sex discrimination.  This left employers with conflicting first instance decisions on the issue.  Both Hextall and Ali were appealed to the Employment Appeal Tribunal (EAT) in 2018.
• In Capita Customer Management Ltd v Ali, the EAT held that the practice of enhancing maternity pay whilst paying SSPP was not directly discriminatory because the male employee was not entitled to compare himself to a woman on maternity leave.  Mr Ali appealed to the Court of Appeal.
• However, the question of whether it is indirectly discriminatory was left open by the EAT in Chief Constable of Leicestershire Police v Hextall.  The EAT overturned a decision that such a practice was not indirectly discriminatory and remitted the claim for rehearing by a different Tribunal.  In doing so, it rejected Leicestershire Police’s cross appeal that the Tribunal had wrongly classified the claim as one of indirect discrimination rather than equal pay.  Both Mr. Hextall and Leicestershire Police appealed to the Court of Appeal.
• The appeals in the cases of Ali and Hextall were heard jointly by the Court of Appeal in May 2019.

Facts

In Ali, the Claimant had begun working for the Respondent following a TUPE transfer. Female transferring employees were entitled to an enhanced maternity package of 14 weeks' full pay, followed by 25 weeks' SMP.  After the birth of his daughter the Claimant took 2 weeks' ordinary paternity leave for which he was paid in full.  He wanted to take additional time off, for which he was told that he was eligible to take SPL and receive SSPP only.  

In Hextall, the Claimant was a police officer.  Female police officers were entitled to an enhanced maternity package of 18 weeks' full pay.  Further, male or female primary carers taking adoption leave are also entitled to enhanced adoption pay of 18 weeks' full pay. After the birth of his child, the Claimant took approximately 3 months' SPL for which he was paid SSPP only.  

Court of Appeal

Direct discrimination

Mr Ali accepted that there was a material difference in circumstances between him and a female comparator in respect of the two-week period of compulsory maternity leave, since this is aimed at protecting a woman’s biological condition during pregnancy. However, he argued that, for the remaining period of his SPL, he should receive the same entitlement to pay as a female employee taking maternity leave. 

The Court of Appeal (Court) disagreed, finding that a man on shared parental leave (which is for childcare purposes) is not in comparable circumstances to a woman on maternity leave (who is given special treatment for the purposes of health and safety). The proper comparator for Mr Ali was a female worker on SPL, where there was no difference in treatment. Therefore, there was no direct discrimination. The Court dismissed Mr Ali's appeal.

Equal Pay and Indirect Discrimination

The Court agreed with Leicestershire Police that Mr Hextall's claim was properly characterised as an equal pay claim under s.66 EA, rather than an indirect discrimination claim.  

The Court found that the Tribunal and EAT had been wrong to hold that his and his comparator’s terms of work were not ‘less favourable’ for the purposes of s.66 EA, just because the standard set of terms and conditions provided to him included terms governing maternity leave and maternity pay, as it was clear that those terms did not apply to him.  Had it not been for para 2 of Schedule 7 to the EA, a corresponding term would have been incorporated into Mr Hextall's contract.  However, para 2 of Schedule 7 to the EA provides that s.66 EA does not operate in relation to terms that afford special treatment to women in connection with pregnancy or childbirth, which meant that Mr Hextall's equal pay claim could not proceed.  

In addition, Mr Hextall was also precluded from bringing a claim of indirect discrimination by the mutual exclusivity provision in s.70 EA (which provides that a s.66 EA claim cannot also be litigated as an indirect discrimination claim). Although Mr Hextall's claim under s.66 was unable to proceed (due to the para. 2 Schedule 7 exception), the Court ruled that the mutual exclusivity provisions were still engaged.

In any event, the Court went on to explain that they would have dismissed the indirect discrimination claim on its merits anyway, on the basis that:

• the PCP of "paying only the statutory rate of pay for those taking SPL" did not cause a particular disadvantage to men when compared with women in the pool for comparison.  In reality, Mr Hextall was not disadvantaged by the PCP, but only by the fact that women who have given birth are entitled to maternity pay, and those birth mothers could not be included in any pool for comparison, as their circumstances are materially different from men or women taking SPL;  
• even if there were any disadvantage, it could be justified as being a proportionate means of achieving a legitimate aim, which is the special treatment of mothers in connection with pregnancy or childbirth.

Comment

In a resounding victory for both Capita and Leicestershire Police, this decision will be welcomed by other employers wishing to continue to treat maternity leave and pay as a special case without being accused of acting in a discriminatory manner towards men.  

Importantly, the decision also confirms the rationale for maternity leave, which is to ensure the protection of a woman's biological condition during and after pregnancy until she has fully recovered (whether that is in a matter of weeks, months, or longer) and to protect the special relationship between a women and her child over the period which follows pregnancy and childbirth.

Although Working Families intervened in these appeals, they noted that a decision going the other way could have been detrimental to women, as it might have resulted in employers withdrawing their enhanced maternity pay packages in order to equalise their maternity pay with SSPP to avoid discrimination claims (i.e. lowering the bar for all rather than raising the bar for all).

However, with progress still to be made on decreasing the gender pay gap at many organisations and gender bias in respect of childcare responsibilities having been identified as one of the key factors contributing to this, clearly, there is still a need to consider how all employees and workers (especially men) are incentivised to take leave for the purposes of caring for children.  Promoting the uptake of shared parental leave by offering enhanced pay is recommended as a good place to start.  Although this decision is helpful by taking the risk of discrimination out of the picture for employers in terms of how that leave is paid, it does not mean offering that enhanced pay for other types of parental leave is no longer a good idea.  Whilst it is important that the special protection afforded to women during and after pregnancy has been upheld, employers are still best advised to continue to consider how they can work towards achieving true gender equality in the workplace.

Mr Ali and Mr Hextall are both seeking permission to appeal to the Supreme Court, so it will be interesting to see whether the matter is now settled or whether these issues will be litigated once again. 

Ali v Capita and Chief Constable of Leicestershire Police v Hextall [2019] EWCA Civ 900