Disparate pay for maternity and shared parental leave may be indirect discrimination

Following the EAT’s recent ruling, in Capita Customer Management Limited v Ali, that a father who wished to take shared parental leave was not directly discriminated against in not being entitled to the higher maternity pay rate which the employer paid to employees taking maternity leave, the EAT has handed down judgment in Hextall v Chief Constable of Leicestershire Police.  The appeal in this case related to indirect discrimination, and provides a useful contrast to the previous judgment on direct discrimination.

In Hextall, the Respondent Police Force’s maternity, paternity and shared parental leave policies were such that the only option for men taking leave after the birth of their child was shared parental leave at the statutory rate, while women had the additional option of taking maternity leave on full pay.  The Claimant brought both direct and indirect discrimination claims, which the Employment Tribunal dismissed, concluding that women on maternity leave were not valid comparators for men on shared parental leave in respect of either the direct or indirect discrimination claims.  The Claimant appealed the decision in relation to the indirect discrimination claim only.  In appealing this decision, the Claimant also clarified the nature of the indirect discrimination claim, namely that the rate of pay for shared parental leave being at the statutory rate while maternity pay was offered at an enhanced rate disadvantaged men because they, unlike women who could opt for maternity leave on enhanced pay, had no other choice than to accept statutory pay if they wished to take leave to care for their child.

On appeal, the EAT found that the ET had erred in the application of the appropriate test for indirect discrimination. While the ET had correctly identified the PCP relied on by the Claimant, the EAT found the ET had erred in identifying a logically relevant pool in order to undertake a comparative exercise to decide whether the PCP put men at a particular disadvantage compared with women in circumstances which were not materially different.  In particular, the ET had failed to identify the disadvantage relied on  by the Claimant.  This was that the difference in pay rate disadvantaged fathers because they, unlike mothers, would be deterred from taking leave.  On this basis, the EAT held that the relevant pool should have been comprised of men and women with a present or future interest in taking leave to care for their new-born child.  The ET had therefore been incorrect to exclude women on maternity leave from the relevant pool, which it had done on the same basis for its correct rejection of the same comparator in relation to the direct discrimination claim.

While the EAT allowed the appeal, they concluded that they did not have sufficient facts before them to accurately identify the relevant pool, and as such returned the case to a differently constituted ET for re-consideration. Hextall does not therefore provide a definitive answer to the question of whether disparate pay under maternity and shared parental leave policies will give rise to indirect discrimination.  The position should, however, become clearer after the ET issues its decision, which will necessarily incorporate the consideration of any objective justifications for the alleged indirect discrimination.  In light of the recent ruling in Ali, it will be informative to observe the extent to which the ET gives weight to the contrasting purposes of maternity leave and shared parental leave in the context of justifying any indirect discrimination.