Do we need a review of SMP, Maternity Allowance and paternity pay rates?

Virgin Money was in the press this week when the Mirror ran a story about calls for an overhaul of parental leave pay.

Although the research came out late last year, it is worth revisiting in light of staffing shortages – it shows 60% of working parents would consider leaving their company because of the poor parental leave on offer. One in seven (14%) said they had already left a job due to being unsatisfied with the parental leave on offer and almost a third (29%) of working parents feel maternity and paternity leave in the UK is generally outdated. The UK has a very low level of statutory parental pay. A recent TUC study found that it has one of the lowest statutory maternity pay rates in Europe. SMP may be paid for 39 weeks, but that doesn’t mean much if you are forced back to work because the rate is so low – currently £151.97 a week for 33 of the 39 weeks [the same as for statutory paternity pay]. That is well below the weekly National Living Wage [for a 40-hour week] which is currently £356.40 a week. The rate is in large part responsible for the very low uptake of paternity leave.

It just makes no financial sense to take time off, unless you are a woman, when you need at least a few weeks off and often many more to fully recover from the birth.

Enhanced parental leave pay

Many employers now offer to enhance parental pay as they recognise that it is an important feature of their attraction and retention policies, but should it be down to employers to do this, given that there are still a significant number that cannot afford to do so? Not to mention the parents who are ineligible for statutory payments due to being self employed or not working enough hours in any one job to qualify or various other reasons…Maternity Allowance is only £151.97 for the full 39 weeks whereas with SMP you usually get at least six of the 39 weeks at 90% of your normal pay.

The same goes for Statutory Sick Pay, which is currently just £96.35 a week which means that some people who test positive for Covid have to choose between eating or isolating.

At a time when the cost of living is rising fast and set to increase sharply in April there is an urgent need to look at statutory payments and ask if they are adequate for the purpose for which they were designed. While there will be a reluctance to increase, say, SMP and bring it into line with the National Living Wage for 39 weeks, there certainly needs to be a review of what is paid and to whom.

Some women are on very good salaries with comprehensive maternity packages from their employers – maybe up to six months on full pay followed by slightly less in the weeks after – while others are expected to exist on significantly below the National Living Wage. Moreover, there is no point in having a longer period for SMP, Maternity Allowance or Shared Parental Pay generally if people can’t afford to take it. Would it not be better to slightly reduce the number of months covered but provide a higher rate and/or to target the money at those who need it most? It’s certainly a debate we should be having.