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February 8, 2022
Should you offer enhanced maternity or paternity pay to your employees?
Data shows that nearly two thirds of UK businesses offer maternity pay above the statutory minimum, and three-fifths offer enhanced paternity pay. But would it be effective – and cost effective – in your business?
Families have faced many challenges in the past few years, with childcare labelled the leading cause of stress by people working from home during the pandemic. And during this, many businesses are facing recruitment and retention issues as employees look for stable roles with better benefits.
Supporting colleagues taking maternity and paternity leave might just be the golden ticket to solving these issues.
With 63.5% of UK businesses enhancing their maternity pay – and counting – is it time yours did too?
What are the options for enhanced pay?
How you decide to enhance your benefits is up to you as an employer. For example, some employers may pay full pay for the first six weeks, half pay for the following 10 weeks and statutory maternity pay for the remaining 23 weeks.
The most common option for employers is to offer full pay for the first six weeks or more when the employee takes maternity leave, instead of 90% of their average weekly earnings (before tax) for the first six weeks.
Alternatively, 45.9% of businesses offered financial benefits to those returning from maternity leave, such as a bonus.
As statutory paternity leave is only two weeks (in comparison to 52 weeks for maternity leave) some employers are lengthening it to match their maternity provision. This can be tied in with enhanced pay, such as the arrangement above, to better support fathers.
Why offer enhanced maternity or paternity pay?
Retention and recruitment
It goes without saying that enhanced maternity and paternity pay is hugely attractive to an employee who may be thinking about growing their family. In this challenging hiring landscape, stand-out benefits like this give you the competitive edge to hire the talent you need in your business.
Not only does this make your company look more appealing to new recruits, it can also improve staff retention. Ultimately this reduces staff turnover and recruitment costs.
Employers confirm the benefits from offering enhanced maternity and paternity leave outweigh the additional costs.
Company culture and morale
By showing you’re serious about supporting your employees in this area, you can improve your brand reputation, staff morale and career satisfaction. And as we know, happy employees are more engaged and productive – meaning better quality work and a better bottom line for your business.
Closing the gap
Making your paternity leave and/or pay match your maternity provision could also help close the gender pay gap in the UK.
Becoming a mother and taking maternity leave has a lasting impact on women’s earnings, known as the “motherhood penalty”. Offering men and women an equal opportunity to be the primary caregiver of their child means either partner has the option to take leave or return to work and keep earning.
Of course, there are many other factors that contribute towards the gender pay gap. But if closing it is a priority in your business – which, hint, we think it should be – then introducing this benefit could help.
Giving enhanced pay may seem like a huge cost for your business, but in fact could be less costly than the alternative.
Indeed Kirstie Axtens, Head of Employer Services at Working Families, says: “Employers tell us they find the benefits boost engagement, employee wellbeing, recruitment and retention outweigh the additional costs.”
To sum up
The figures show that employers are making a significant and sustained effort to support the working parents in their organisation. Offering this benefit could see you offset the growing costs of recruitment and retention whilst nurturing a supportive company culture.
Stephen has over 25 years experience in private sector HR and management roles, working as a Manager for over 10 years and eventually moving into the financial services industry. In his current role as an HR Policy Review Consultant he develops, reviews and maintains our clients’ employment documentation.
With extensive knowledge of management initiatives and HR disciplines Stephen is commercially focused and supports clients in delivering their business objectives whilst minimising the risk of litigation.