Firms feel left out of maternity deal

Companies fear there will be many hidden costs to pay under new maternity rights announced in the last Budget. And they blame government for not carrying out proper consultation.

If Gordon Brown’s pre-election budget give-away was aimed at the family, it was done so partly at a cost to business.

According to some employers not all the chancellor’s handouts were his alone to give. While much was done for small business in the way of simplifying taxation, the extension of maternity rights will come courtesy of the company bosses.

Even though their continental counterparts have been living with maternity allowances traditionally more generous than those in the UK, employers in this country let out a collective groan on Budget day. The changes mean that the standard maternity leave will rise to 26 weeks from 18, and eventually get to a rate of £100 instead of £60.20 a week.

Anne Minto, director of human resources at Smiths Group, which employs more than 15,000 people describes the move as another instance of government placing an increasing responsibility for bearing the unseen costs of its policies on business.

‘I think business was hoping for an end to the amount of responsibility being placed on its shoulders, and I think there was a collective groan when the maternity issue was mentioned, because it meant there was no light at the end of the tunnel.’

Similar situation

She explains: ‘For example we saw the same thing happening with graduates after the introduction of tuition fees. Because so many are now accruing such debts, companies are being forced to offer golden hello payments when they start work.’

The changes announced on Budget day were part of the government’s response to the DTI green paper Work and Parents: Competitiveness and Choice,published in December. It included 50 options for changes to maternity rights.

Consultation closed on 18 March, the day the chancellor explained to the Commons what shape the reforms would take, in the process angering many businesses and organisations who took part in the consultation.

The flat rate of statutory maternity pay will go up to £75 a week from April 2002 and to £100 a week from April 2003. The 26-week leave period will also be available from April 2003, and fathers will be allowed a statutory two weeks’ paid paternity leave from the same date. Brown said more compensation for small firms would be made available so that 60% of companies paying maternity pay would be able to cover their costs in full and claim compensation for administration.

Minto says the chancellor surprised industry by announcing the changes before a white paper had been published — that is before all the responses to the consultation had been digested.

‘The government should have waited. There are many things interwoven with the issue of maternity which have to be addressed, and there are many constructive views to be taken into account. In particular there is a need to simplify the existing legislation on maternity, especially where small businesses are concerned.’

The point that companies are already having to offer the best package possible in order to attract the people they want is picked up by David Yeandle, deputy director of employment policy for the Engineering Employers’ Federation.

The extension of maternity rights must be backed by good national childcare facilities, he argues. Otherwise parents who take advantage of the longer leave period may feel less inclined to return to work if they are unable to find adequate provision.

Yeandle says the lack of a proper childcare infrastructure is one example of the cultural differences between the UK and the rest of Europe that make the more generous continental benefits less appropriate in this country.

‘The government has a major responsibility to look at such issues and start to address perhaps the better use of schools and the length of the school day.’He says his members agree that the chancellor jumped the gun on maternity pay, leaving many important questions unanswered. ‘The government has been criticised in the past on the way it holds consultations and we thought that this was one area where they would try rather hard,’ he says.

In responding to the consultation, engineering bosses said they felt strongest about whether mothers should be given a statutory right to part-time work after a period of maternity leave.

‘It is very difficult for the government to legislate for flexibility in this system. It would be better that they promote examples of good practice which other companies can then follow.’

Employee responsibility

In return for extended maternity rights, EEF members want ‘a culture of responsibility’ to be encouraged among employees, for example so that return-to-work dates should be clarified.

How and when maternity leave should be taken has also to be decided. Most bosses want female employees to take the time in a single block immediately after the birth of the child.

Nor has the entitlement for mothers who have twins or more than one baby at a time been settled. The EEF wants multiple births to be treated as a single birth.

Yeandle says members would like the government to offer retraining grants to women who have been off work for six months.

The government has also to say if the new rights for fathers is in addition to existing benefits offered to fathers as part of their employment contracts.

Sir Ken Jackson, general secretary of the AEEU, says there was ample opportunity during the last two years for business to comment on the maternity pay.

‘The chancellor clearly looked at all the pros and cons very carefully. The government had extensive discussions with business representatives and the trade unions, he says.

‘The best employers have already given this a lot of thought and have not waited for the government to ask them to address the issue.’

He says the union supports the government’s actions, and that they are good for business as well. ‘This union would not support anything that would harm competitiveness and productivity. But these policies will boost morale and are a necessary part of the modern working world.’