Work and Families Act 2006: a guide

Note that all of the statutory changes discussed below will apply to adoption in the same way as they do to maternity.

Maternity leave

Under current law, all pregnant employees are entitled to 26 weeks' ordinary maternity leave (OML) regardless of length of service. Women who have completed six months' service with their employer at the 15th week before the week the baby is due also qualify for 26 weeks' additional maternity leave (AML), which follows OML.

The Regulations change the eligibility rules by removing the qualifying service for AML. Accordingly, all women who qualify for OML will also qualify for AML, and therefore will be able to take up to 52 weeks' leave. It is estimated that some 20,000 women a year will benefit from this. The government's aim is "to enable mothers and adopters to take longer off work following the birth or placement for adoption of their child. The evidence confirms the value of consistent one-to-one care in the first year of a child's life."

The distinction between the two forms of leave, however, is to be retained. Accordingly, during the sixmonth OML, terms and conditions other than those relating to pay continue to apply, whereas only residual contractual rights continue to apply during the sixmonth AML.

Changes are also being made to notice periods for early return in order to give more time to employers to plan for a mother's return to work. The law currently requires women to give 28 days' notice if they wish to return to work early from maternity leave. The period of notice for early return will be doubled to eight weeks. The justification for this is that many employers consider that the 28-day notice period is insufficient to allow them either to find alternative duties for an employee covering the mother's work, or to terminate a temporary contract. The two-month notice period will be calculated from the new date of return.

Two months' notice will also be required from women who change their mind more than once as to their intended return date, and have further leave to be taken. In such a case, the notice period will be counted from the original return date.

The Regulations also remove, as of April 2007, the exemption for small firms in respect of automatic unfair dismissal for failing to allow a woman on additional maternity or adoption leave to return to the same or similar job. According to the Department of Trade and Industry (DTI) consultation on this²: "The small firms exemption had been intended to allow an employer who has five or fewer employees an exemption from a case of automatic unfair dismissal where they did not hold open a post for an employee returning from additional maternity or adoption leave. In fact, this effect, aimed at helping very small firms, was not achieved, as a woman in such a situation could still make an unfair dismissal claim or, more significantly, a sex discrimination claim. The result was that the exemption had the potential to mislead small firms about their rights and responsibilities, leaving them open to [Sex Discrimination Act] claims." The government considers that it is in the interests of employers and employees to remove the exemption.

Maternity pay period

Statutory maternity pay (SMP) is currently paid for a maximum of 26 weeks. The Act extends the maximum period that may be prescribed to 52 weeks; and one year's maternity pay is the government's goal, to be achieved "by the end of the parliament", ie 2009/10. However, this will be achieved by stages.

The Regulations extend the period of paid leave to 39 weeks for women expecting babies on or after 1 April 2007. Similar changes are to be made to statutory adoption pay. Meg Munn, the government minister, pointed out to the standing committee considering the Bill that "an extra 13 weeks' paid maternity leave will be worth nearly £1,400 to the majority of women".

Other changes have been introduced to harmonise the statutory maternity pay and leave regimes. These will enable SMP to start from any day of the week in accordance with the date the woman gives in her notice to her employer, rather than from the Sunday following the day she stopped work. This will allow the start of the payment period to align with maternity leave.

No change is being made to the existing rules for the start of the maternity pay period in cases of early birth or where the woman is absent from work for a pregnancyrelated reason in the last four weeks of her pregnancy. Where she actually leaves her employment after the 11th week before her expected date of childbirth but before her maternity pay period is due to start, her maternity pay period will start from the day after her employment ends, instead of the following Sunday as now.

Employers will also be able to pay SMP on a daily basis so as to align it with a woman's normal pay period under the employer's payment system, which typically covers days of a month rather than an exact number of weeks.

Keeping-in-touch days

The Maternity and Parental Leave Regulations introduce keeping-in-touch days, during which an employee on maternity or adoption leave can agree to work for her employer without that work bringing the period of leave to an end, and without loss of a week's statutory maternity or adoption pay.

The Regulations provide that "an employee may carry out up to 10 days' work for her employer" during her leave period without it bringing her leave to an end. This applies to the entire period of maternity or adoption leave, except during the first two weeks from childbirth, which is a period of compulsory maternity leave during which employees may not legally work. The Regulations do not specify that these days should be taken either as a single block, or separately. This will be left to individual agreement between employer and employee.

According to the regulatory impact assessment³, "the intended effect is to allow employees, if of mutual benefit to, and with the agreement of, both them and the employer, to return to work and be paid to carry out certain activities, such as training or attendance at an annual conference. At the moment, returning to work for as little as one day would result in the loss of statutory pay for the whole week, and termination of the period of leave." Going into work for "appraisals" or for "team meetings" were also mentioned by ministers during parliamentary debate.

Following consultation, the government has decided that 10 days is an appropriate cap to set as to the number of permissible days. According to its response to consultation⁴: "Ten days would allow sufficient flexibility for employers and employees to benefit from such days, without allowing excessive amounts of work to be carried out during what remains a protected period of leave from work. It also has the advantage of being a readily memorable round figure, and is the equivalent of two working weeks for many employees." The DTI adds that what employees actually do on keeping-in-touch days will need to be agreed between them and their employer. Similar provisions relating to keeping-in-touch days will apply to additional paternity leave when that is introduced.

The Regulations thus allow up to 10 keeping-in-touch days to be worked without the employee losing a week's SMP, as would be the case under the current rules. Once the keeping-in-touch days have been used up, a woman will once again lose a week's SMP for any week in which she works under her contract of employment for the employer paying her SMP.

Because the purpose of keeping-in-touch days is to allow employees to do some work under their contract of employment, it is anticipated that employees will be paid for work done on those days. The government response to the consultation adds: "The amount of pay, however, is a matter for agreement between employer and employee, and will reflect the nature of the work, as agreed between the parties, and the amount done. Employers will, in any event, need to take account of their statutory obligations as regards pay. But the minimum that must be paid for any week during the maternity pay period is the SMP rate the woman is entitled to. Where an employer and employee agree that a keeping-in-touch day is to be worked they will need to agree how contractual payment for that day should work alongside any SMP due. As before, the employer will be able to reclaim the SMP from the government, funding any additional amount paid to the employee him/herself. It is therefore very important that both parties agree in advance and are clear how contractual payment for [keeping-in-touch] days will work, and how much pay the woman will receive in respect of that week, as the normal offset rules - allowing the employer to count the first £108.85 of any contractual pay as meeting his or her SMP liabilities - will continue to apply. For this reason - and because in many cases the attractiveness of keeping-in-touch days will depend on financial considerations - the agreements reached by employers and employees will need to be very clear about the actual amount of pay an employee receives in respect of a week."

The Regulations stipulate that they do "not confer any right on an employer to require that any work be carried out during the statutory maternity leave period, nor any right on an employee to work during the statutory maternity leave period". To underline this point, the Regulations add to the list of reasons for which an employee is entitled under the Employment Rights Act 1996 to protection from detriment, and as an unfair ground for dismissal, that they "undertook, considered undertaking or refused to undertake work" in respect of a keeping-in-touch day.

Reasonable contact

The Regulations make clear that "reasonable contact from time to time" between an employer and employee during maternity leave does not bring the period of leave to an end. As the government minister, Lord Sainsbury, explained when the Regulations were approved by the House of Lords on 18 July 2006: "We recognise keepingin-touch days will not be everyone's preferred option. Employers and employees may simply wish to make contact with one another without the employee actually doing any work; for example, to talk about the woman's plans for returning to work or simply for an update on developments at work while she has been away."

The regulatory impact assessment noted that "the purpose of this measure is to enable employers to initiate contact with women on maternity leave in order, for example, to discuss whether or not her planned date of return to work has changed or is likely to do so, or to discuss any special arrangements to be made to ease her return to work (for example, whether she wishes to request the right to work flexibly)".

"Reasonable contact" is therefore distinct from keeping-in-touch days, and is a further measure designed to enhance communication and contact between employer and employee during maternity leave periods. The meaning of "reasonable contact" will be set out in further detail in guidance.

Additional paternity leave and pay

Statutory paternity leave following the birth of a child or its adoption is currently available only for two weeks. The Work and Families Act introduces a new statutory right to additional paternity leave (APL) and additional paternity pay (APP) for employees during the second six months of the 12-month maternity leave period. This will allow a father "to be absent from work on leave for the purpose of caring for the child" when the child's mother has returned to work from maternity leave. This new right was undoubtedly influenced by the decision of the European Court of Justice in the Sass case, which could be read as distinguishing between maternity leave intended to ensure the physical recovery of the mother following the birth, and parental leave.

APL and APP will be introduced by Regulations at the same time that paid maternity and adoption leave is extended to 12 months, ie by the end of this parliament. The DTI consultation document issued in March 2006⁵ makes the point that: "Bringing in the scheme alongside the extension of maternity pay and adoption pay to 52 weeks will provide an opportunity for an equal division of paid leave for mothers and fathers and provide an opportunity for them to have equal caring responsibilities for their child during the first year of its life. This would mean that (depending on when a mother began her maternity leave) a mother and father could each take six months' paid leave to care for their child in its first year of life, if the parents choose to do so." This is not strictly accurate because maternity leave normally starts six weeks before a child is born, not on the date of childbirth, so that 52 weeks' maternity and paternity leave will end well before the child's first birthday.

According to the government, the consultation on its original proposals showed that there was a broad consensus that the first six months of the maternity leave period should be reserved for the mother. "If leave could be taken at any point during maternity leave there is a risk that the mother could return to work shortly after giving birth and endanger her health." Accordingly, the response to the consultation says: "We will ensure that this first half of the mother's maternity leave will be reserved for the mother alone, to ensure that the health and safety of mother and child is not affected and that we conform to the World Health Organization's guidelines on breastfeeding within the first six months of the child's life." The government is proposing to implement this by not allowing fathers to start APL until the child is 20 weeks old. "This provides a reasonable proxy for reserving the first six months of leave for the mother."

As its name indicates, APL is in addition to the current two-week paternity leave entitlement (which in future will be called ordinary paternity leave) that a father or partner must take within eight weeks following the birth of the child or its placement for adoption. APL and APP will apply only during the second six months of maternity leave, and will have to be taken before the child's first birthday. This has been criticised as being insufficiently flexible, in that it means that if a woman returns to work after, say, three months, before the father could take his entitlement to paternity leave, there would be a further period of three months during which there would have to be another carer for the child. The government response was given by Gerry Sutcliffe, the government minister, during the House of Commons committee stage: "Introducing the possibility of mothers returning to work at an earlier point to allow for fathers to take additional paternity leave could mean a greater risk of women changing their minds, which would cause disruption to her employer and possibly the father's employer. There would be a risk that if her early return to employment did not work, she may leave the employment and possibly be absent from the workforce for a longer period of time."

The intention is that there will be a minimum period of two weeks' additional paternity leave, and the government has indicated that APL will have to be "taken in one continuous block. This will assist the employer in planning for the absence of an employee." There will be a maximum entitlement of 26 weeks' leave and all the paternity leave must be taken before the end of the period of 12 months beginning with the birth.

The new rights will be conditional on other eligibility criteria that will be laid down in regulations. For a start, the right applies only where the mother is employed and on statutory maternity leave. Moreover, for the father to qualify for APP, the mother or adopter will have had to have returned to work and have some of her entitlement to SMP, maternity allowance or statutory adoption pay left at the time of her return to work. It is not intended to encourage both parents to be out of the labour market at the same time for a long period.

The consultation leaves open the circumstances that will constitute a mother having returned to work. "One approach could be to require the mother to have actually recommenced work with her employer. There may be circumstances where a mother has ended her statutory entitlements, but not recommenced work with her employer. For example, a mother may wish to take parental leave or another form of leave when she ends her maternity entitlements. If she still had some of her entitlement remaining at this point in time, should a father be able to take up additional paternity leave and additional statutory paternity pay? This would mean both parents would be out of the workplace even though only one parent is receiving statutory pay."

The government is also consulting on the minimum service requirement with the employer that will be required of fathers to qualify for APL. Three options are put forward. (1) To require fathers or partners to have been eligible to take ordinary paternity leave and to continue in employment with the same employer up to the intended date of taking APL. In practice, this would mean a requirement for the father to have completed at least 60 weeks' service with the employer if he were to take APL when the baby was 20 weeks old. (2) To require an employee to have completed one year's service with his employer before the earliest date on which he could take APL. This would mirror the current qualifying period for parental leave. (3) To require an employee to have completed 26 weeks' service with his employer before the earliest date on which he could take APL. This would mean a length of service requirement that is shorter than the current requirement in respect of ordinary paternity leave.

The government is also consulting on the terms and conditions that should apply during additional paternity leave. The consultation document points out: "It could be argued that a father will be taking additional paternity leave and pay in what would be the second six months of the mother's maternity leave period and therefore that he should be entitled to the same benefits as a mother who would have been on additional maternity leave… Alternatively it could be argued that this is the first period of significant leave that a father is entitled to take and that he should therefore be eligible for the same benefits as a mother who would be on ordinary maternity leave (ie in her first six months of maternity leave)." Accordingly, the consultation asks whether a father taking APL should be entitled to the benefit of his terms and conditions to the same extent as a mother who is on OML, or as a mother who is on AML.

Based on an estimate of mothers whose current behaviour indicates that they wish to return to work at the earliest opportunity, and an estimate of fathers whose current behaviour indicates that they have a strong desire to take part in the upbringing of their child in its first year, the DTI has estimated that between 10,000 and 16,000 fathers will take up APL in its first year if 26 weeks' service is required, while between 9,000 and 13,000 will take up APL if 60 weeks' service is the qualifying period⁶.

Flexible working

The right to request flexible working currently applies to parents of children under the age of six and of disabled children under 18. According to the June 2006 regulatory impact assessment, research undertaken since the law was introduced in April 2003 "shows that the law has had a positive impact. Over a fifth (22%) of parents with children under six requested to work flexibly over the last two years. The majority of employees (81%) who had made a request had their request either fully or partly accepted." This compares with 77% of requests that were said to be accepted before the right to request was introduced (so it is scarcely a seachange).

The Work and Families Act extends the right to request flexible working by allowing applications to be made by employees who have caring responsibilities for adults. This change will apply from April 2007, and will be brought into effect by the Flexible Working (Eligibility, Complaints and Remedies) (Amendment) Regulations 2006, which have been issued as a consultative draft.

The government's original proposals (Work and Families Bill) set out six options for defining a "carer": caring for partner only; caring for an immediate relative (either a partner,
parent/parent in-law or an adult child); caring for an immediate relative or anyone living at the same address; caring for a near relative or anyone living at the same address; caring for any relative or friend; and caring for any disabled dependant.

Following consultations, this has been narrowed down. The latest consultative draft proposes that the definition of "carer" should include an employee who is, or expects to be, caring for an adult who:

"(i) is married to, or the partner or civil partner of the employee; or

(ii) is a relative of the employee; or

(iii) falls into neither category (i) nor (ii), but lives at the same address as the employee."

Two options for how "relative" is defined are now proposed. Option 1 would be restricted to an "immediate relative". This would include mother, father, adopter, guardian, parent-in-law, son, son-in-law, daughter or daughter-in-law. It is estimated that around 1.1 million carers would be covered by this option.

The second option would cover "a near relative". In addition to those relatives included in option 1, this would include brother, brother-in-law, sister, sister-in-law, uncle, aunt or grandparent. It is estimated that around 1.5 million carers would be covered by this option. Both options would include adoptive relationships and the second option would also include "relationships of half blood" (for example halfbrother or half-sister). Under either option, partners of the employee or those living at the same address are included.

The government is estimating that there will be a 24% take-up rate by employed carers, which will lead to 260,000 new requests a year by carers caring for an immediate relative, and a further 90,000 if the entitlement is extended to those caring for a near relative.

A simpler definition of "partner" is to be used, replacing the definition in the 2002 Regulations, which refers to those in an "enduring family relationship". The new definition says that "partner" means "the other member of a couple consisting of (a) a man and a woman who are not married to each other but are living together as if they were husband and wife, or (b) two people of the same sex who are not civil partners of each other but are living together as if they were civil partners".

The government has decided not to have an explicit definition of "care" for adults in the legislation because it is considered that a definition might act as a disincentive to people to apply for flexible working and might entail the employee having to have detailed conversations about personal aspects of their caring responsibilities.

Bank holidays

The Work and Families Act is also being used as a vehicle to give power to the secretary of state to make regulations "conferring on workers the right … to a prescribed amount of annual leave". This will enable the government to meet the commitment in its 2005 election manifesto to extend the entitlement under the Working Time Regulations to four weeks' paid annual leave, by making it additional to the eight permanent bank and public holidays in Great Britain (or, to put it another way, preventing employers from including bank/public holidays in the four weeks).

A consultative document was issued by the DTI in June 2006 and will close on 22 September 2006⁷. This says that the government proposes to increase the annual paid holiday entitlement under the Working Time Regulations from four weeks "to 5.6 weeks, pro rata for part-timers and expressed as weeks to reflect the differing work patterns that many staff work where daily patterns of work may vary considerably. The statutory right to paid holiday will be subject to a maximum of 28 days' paid leave per year."

It is proposed to phase in the introduction of the additional holiday entitlement, with the statutory entitlement increasing from four weeks to 4.8 weeks (equivalent to 24 days' holiday for someone working five days a week) from 1 October 2007. The timing of the introduction of the remaining additional holiday entitlement will be decided following the end of the consultation. Draft consultative regulations are expected to be published in December 2006.

Note that the government does not propose to introduce a statutory right for the paid holiday to be taken on a bank or public holiday. The consultation notes that "in an increasingly globalised world market, many businesses require some or all of their staff to work on bank and public holidays".

In FNV v Staat der Nederlanden [2006] IRLR 561, the European Court of Justice ruled that the Working Time Directive precludes days of annual leave that are carried over to a subsequent year being bought out by an allowance in lieu, but indicated that carrying over some of the minimum four weeks' leave is not necessarily contrary to the Directive.

The Directive requires only four weeks' paid holiday per year and the consultation points out that the proposed increase from four weeks to 5.6 weeks' holiday (up to 28 days) would not be subject to the requirements of the Directive. Accordingly, "the legislation could provide an option to carry over the additional 1.6 weeks (eight days for a five-day week) to the following holiday year, subject to the employment contract". The DTI notes: "Providing this option would increase the complexity of the regulations and potentially add to the administrative burden for businesses and the complexity for staff. However, it may give businesses greater flexibility in managing holiday requests and may enable staff to 'bank' holiday to take an extended holiday, something staff might value."

The consultation also raises for consideration whether or not to allow the extra holiday not required under the EU Directive to be bought out. The government could "in drafting the regulations provide an option for the additional 1.6 weeks to be 'bought out' by the employer - that is, a payment (at no less than 'single-time' rate) made in lieu of the actual holiday being taken, subject to contract."

A "week's pay"

The Act will also enable the secretary of state to increase, on one occasion only, the maximum amount of a "week's pay" that is used for the calculation of statutory payments, such as a redundancy payment and the unfair dismissal basic award. The statutory maximum is currently £290.

Statutory redundancy pay and the basic award are now age-related. The new power was seen as necessary if the government decided as a result of age discrimination legislation to remove the age-banding and equalise the maximum amount of a "week's pay" regardless of age. That was the government's original announced intention. Following consultation, it was decided to keep the age bands and multipliers on grounds that the difference of treatment is objectively and reasonably justified by the legitimate aim of assisting older workers (Age Regulations 2006: Part 3 - Retirement and dismissal).

Raising the weekly limit, however, was also a commitment in the Labour manifesto in the last general election. That is because the limit is linked to changes in the retail prices index rather than to average earnings. As such, its relative value has fallen.

During the committee stage debate, Lord McKenzie of Luton assured the House of Lords that "the government do not expect the increase to be dramatic… Without wishing to restrict the government's room for manoeuvre, I suspect that an increase of 10% may be rather closer to the mark than 100%."

¹ SI 2006 no.2014.
² Work and families: choice and flexibility. Draft Regulations on maternity and adoption leave and flexible working, DTI, January 2006.
³ Work and families: choice and flexibility. Regulatory impact assessments, DTI, October 2005 (URN 05/1585).
⁴ Work and families: choice and flexibility. Maternity and adoption leave and pay Regulations: summary of responses and government response to consultation, DTI, June 2006.
⁵ Work and families: choice and flexibility. Additional paternity leave and pay, DTI, March 2006.
⁶ The Maternity and Parental Leave (Amendment) Regulations 2006 and the Paternity and Adoption Leave (Amendment) Regulations 2006. Full regulatory impact assessment, DTI, June 2006.
⁷ Success at work: increasing the holiday entitlement - an initial consultation, DTI, June 2006.