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What does ‘Shared Parental Leave’ mean for your business?

July 3, 2015

New parental leave legislation came into effect in April 2015, giving men and women the option to share child care over the course of a year.

Increased flexibility provided by shared parental leave will enable more men to be involved in child care and bond with their babies. It will also give women the freedom to return to work earlier if they wish, which could enhance their career prospects.

However, not everyone has welcomed the new legislation with open arms. Some of the harshest critics have been the Small Business Federation and The Institute of Directors who claims the legislation could create a “nightmare” for employers, particularly small businesses.

So what are the implications of shared parental leave legislation on a business and how can you overcome the practical challenges it brings?

While the shared parental leave legislation provides an opportunity for businesses to improve employee engagement and inspire greater staff loyalty, it is employees and their families who will really benefit.

Research 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 as more time and resources are needed to deal with the 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.

How does shared parental leave work?

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 parental leave under the new rules, however the government has predicted that take up will be low in the first year.

What is the impact 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 have the capacity to offer what is surely the UK’s most 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 very short periods of leave, 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.

Managing employee leave will be harder for small businesses

From an administration perspective, there will be challenges too. Small businesses that are managing their employee absence on spread sheets may not cope with the extra complexity.

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.

Although the legislation is still in its early days and uptake of shared parental leave is currently low, this will change – particularly with companies like Virgin heralding the benefits of paternity leave.

With one in five SMEs admitting they have already had a shared parental leave request from an employee, now is the ideal time for businesses to think ahead and put in place systems that will be able to support this in the future.

It might be an opportune time to look at software that can manage the administration of shared paternity leave. This could reduce the cost of managing staff leave and minimise the disruption to your business.

Such systems can also help businesses manage and measure any kind of absence – whether it is shared paternity leave, sickness, holidays or even dental appointments. Having up to date information enables businesses to manage the new legislation effectively and also confidently plan ahead in terms of strategy, projects and resources.

About the author

This article has been written for ByteStart by Adrian Lewis, Commercial Director at Activ Absence, the cloud-based, absence management tool.

More help on managing staff

Employing people, and the legislation that it entails, can be one of the biggest headaches for small and growing business. For more help on the subject, try some of ByteStart’s other employment guides;

And for tips and ideas on how to get the best out of your staff;