Maternity leave: Cost of living crisis highlights need for support

Many pregnant employees or new mothers will be worried about the rising cost of living and economic pressures that may force organisations to make job cuts.

As inflation in the UK reaches a 40 year high of 9%, the spending power of those on maternity leave has reduced dramatically. Statutory maternity pay has already risen this year, but there is little prospect of it being further increased sufficiently to match inflation.

The British Chambers of Commerce has also recently warned that there is a “real chance” of the UK going into recession later this year, which could impact the employment prospects of many on maternity leave. Experience during previous downturns sadly suggests that women on maternity leave are made redundant disproportionately at times of economic pressure.

Recent research from Maternity Action has found that most new mothers only take the 39 weeks of paid maternity leave, with just 45% taking more leave than this. It is possible that rising costs will force many mothers to take less maternity leave because they may be unable to afford a reduced income for a prolonged period, or that they have concerns about being away from work when organisations are cutting costs.

But a further increase in childcare costs could discourage some from returning to work early, even if childcare costs were to only rise in line with inflation. This is especially the case for lower earners and mothers who do not have family to assist with childcare.

Statutory maternity pay may be claimed for up to 39 weeks, with the first six weeks being paid at 90% of their average weekly pre-tax earnings and the remaining 33 weeks being paid at £156.66, or 90% of the workers average weekly earnings, whichever is lower.

Tax and national insurance payments will also be deducted from this. The net result is that, after six weeks, many employees on maternity leave are left with a meagre income.

Protection from redundancy?

Of course, employment rights are protected during maternity leave, and employees continue to accrue holidays and other benefits while retaining the right to return to their job. However, this does not in reality prevent employers from making an employee redundant during maternity leave where the position genuinely becomes redundant, even with the right to be offered an alternative giving some protection.

An estimated 30,000 women lose their jobs as a result of pregnancy every year, according to the Equality and Human Rights Commission (EHRC). That was the case even before the emerging economic downturn truly impacted. The Alliance Against Pregnancy Discrimination reported an alarming increase in women being made redundant whilst pregnant or on maternity leave following the 2008 recession.

Generally, however, making an employee redundant during pregnancy or maternity leave comes with increased risk of litigation since women may have grounds to claim discriminatory dismissal. However, for many the short time limit to bring action and the emotional turmoil mean that they cannot always have that fight.

Offering flexibility

A new child brings joy to a family, but also inevitably creates additional responsibilities. Many new mothers returning to work, and their partners, may therefore seek reduced hours or more flexible working arrangements in the wake of a new arrival.

Recent research conducted by Fertility Families found that 45% of employees want flexible working hours and remote working as ways to improve their employers’ parental leave policy upon their return to work. In addition, 22% of employees would like their company to increase rates of maternity and paternity pay. Such changes would enable parents to work around childcare, and would also help to reduce the financial strain on a family.

Unfortunately, many employers currently lack the resources to fund such increases, especially with the risk of recession, and enhanced packages are relatively rare. While an economic downturn means reduced income for most businesses, this can sometimes create an increased willingness to allow for reduced hours. When businesses find they need fewer staff, many will be more willing to offer employees reduced hours in order to reduce costs.

I have recently seen an increase in flexible working applications, with most seeking a continuation of working from home for the whole or part of the week. Many employers discovered that working from home was effective, and some of my clients achieved amazing things at a time of adversity, with technological changes and systems being implemented. Now that many organisations have proven systems in place to facilitate home working, it can be more difficult to turn down an application as there are only certain permitted grounds to do so.

With the right to apply for flexible working now being available to all employees with 26 weeks service, employers often face the challenge of balancing competing needs of various applicants, such as mothers or those with caring responsibilities. All are entitled, and often applications are dealt with in order of receipt rather than need, which is subjective. There are proposals for reform underfoot including a right to flexible working from day one.

We must hope that the goodwill, flexibility and creativity that was shown during the pandemic emerges once again to help families and new mothers navigate any economic downturn.

Published in Personnel Today – 25 May 2022

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Disclaimer: Nothing in the Legal Insights section and this blog is intended to provide legal or other professional advice and, if readers are interested, they should consider taking separate legal or other professional advice accordingly.

Sarah King

Partner in Employment

E: [email protected]
T: +44 (0) 845 257 9449