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Why parental leave policies should be used to attract the best candidates

As the competition for the best talent intensifies, companies need to upgrade their family leave policies, because candidates’ expectations for paternity and maternity leave have grown rapidly in recent years, writes Christine Caffrey.

Recent research commissioned by Vodafone has found that one in five of 18-34 year olds has quit their job because of poor parental leave policies, with a further 25% saying they decided not to apply for a particular role because they thought the employer’s parental leave policies were inadequate.

As it stands, statutory maternity, paternity and adoption pay are only available to employees with six months’ service. This immediately puts new starters at a disadvantage and may dissuade prospective parents from changing jobs.

Statutory maternity and adoption pay is paid for 39 weeks at 90% of your average weekly earnings for the first six weeks, followed by £151.97 a week for the following 33 weeks (or 90% of your average weekly earnings if lower).

Statutory paternity pay is payable for a two-week period only at the same rate of £151.97 (or 90% of your average weekly earnings if this is lower). The arrangements are slightly different for shared parental leave but the statutory rate of pay is the same. As for parental leave, the statutory position allows parents to take up to 18 weeks’ unpaid leave to look after a child up to their 18th birthday.

It has become increasingly apparent that the statutory provision does not go far enough to replace income during periods of family leave, often leading to parents feeling they have little option but to return to work before they feel ready, or choosing to take annual leave to supplement their income before returning to work. For example, an employee receiving statutory maternity pay only, with normal earnings of £20,000 a year gross, will receive about 50% of their usual net income during a 12-month period of maternity leave.

This considerable shortfall can place a huge financial pressure on new parents in circumstances where their existing financial commitments (for example, mortgage payments) remain unchanged.

Public sector family leave policies are typically more generous (often thought to make up for the apparent pay gap between the private and public sector). In the experience of the law firm I work at, SA Law, family leave policies in the private sector are far from consistent, with many companies offering only the statutory minimum, while others opt for more generous packages.

Vodafone is among firms leading the way in this area, offering a minimum of 16 weeks’ fully paid maternity leave and a 30-hour week at full pay for the first six months after their return to work. In addition, all employees are offered 16 weeks’ fully paid parental leave. There now appears to be an increasing pressure on private companies to improve their offering and increase transparency in this area if they want to attract and retain the best talent.

The past two years has seen a noticeable shift towards flexible, hybrid and remote working.

Internationally dubbed “the Great Resignation”, 2021 saw record numbers of employees considering leaving their jobs to maintain the positive impact of the improved work-life balance they had built during the pandemic.

Some UK companies have agreed to trial a four-day week, adopting an 100-80-100 model whereby employees receive 100% pay for 80% hours, for 100% productivity. This may be attractive to parents but if 100% productivity requires longer hours over four days, there may be little to gain when additional childcare costs are factored in. Having said that, similar trials have been conducted abroad with generally positive outcomes, so it will be interesting to see the response in the UK.

At the very least, it is prudent for employers to review family leave policies to ensure they are legally compliant. However, it may also be timely to review their offering so as to ensure they retain the best talent and do not lose employees as a result of inadequate family leave policies.

The benefits to an employer of offering enhanced family leave policies are potentially far reaching. If a company promotes good parental leave policies and benefits as part of any recruitment exercise, it should have a positive impact on the number and type of candidates. The Vodafone research found that “more than a third (37%) of people, and more than half (55%) of 18-34 year olds, would be more likely to apply for a job if they knew the employer had good parental leave policies.”

It would certainly appear to be a positive marketing strategy for Vodafone. Over time this marketing strategy would undoubtedly increase an employer’s credibility and visibility in the marketplace as a good place to work. In contrast, the negative press and reputational damage surrounding poor family leave policies may affect the calibre of future candidates for employment and has the potential to create more significant problems for the business in the context of mergers and acquisitions, whereby other companies may be reluctant to align with a company that does not commit to the same ethos and values.

Of course, it may not be financially viable for all companies to improve upon the statutory offer for parents but for those that can, it can lead to a more diverse workforce, enabling them to attract and retain the best talent.

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