Employers improving maternity benefits to recruit and retain women

MATERNITY BENEFITS

Employers improving maternity benefits to recruit and retain women

Companies are increasingly offering maternity benefits over and above the statutory minimum, according to new research from Incomes Data Services.

Statutory maternity benefits were increased from April 2007 and following the changes, many of the organisations monitored by IDS are paying significantly above the legal entitlement level.

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From April 2007, legislation states that women qualifying for maternity pay are entitled to 39 weeks’ paid leave, the first six on 90% of average earnings, while the remaining 33 weeks at a rate equal to a standard amount of £112.75, or 90% of average weekly earnings, whichever is the lower.

Under the old system, the rules for the first six weeks were the same but the second period of reduced pay lasted just 20 weeks.

Many offer above-statutory rates

Examining details from the most recent pay agreements, however, IDS found that more and more companies are offering above these statutory levels. In fact, the researchers found that 25 organisations had made amendments to their maternity provisions above the basic entitlement in the past year while many of the other companies it featured already offer higher than statutory levels to their female employees.

IDS also stated that most of the organisations making improvements were generally large, employing significant numbers of women workers.

Various approaches adopted

The research found that companies have responded to the raised floor in a number of ways because while statutory requirements for maternity pay are fixed, employers are free to offer benefits over and above the specified levels.

As a result, some companies offer maternity pay at higher-than-statutory levels while others make payments over longer periods than is required by law.

• At the Civil Aviation Authority, for example, women are offered an extended period of 26 weeks at full pay.
• Rates at BMW in Oxford and Warwickshire are set at higher levels than statutory maternity pay (SMP) over the same term as specified under the legislation.
• In contrast, Ford takes an alternative approach offering a whole year on full pay.

Reasons for improving benefits

• The extension of maternity benefits is commonly used as a retention tool, a way of getting women back to work after a period of maternity.
• The National Assembly for Wales, for example, offers return-to-work bonuses whereby female employees return on the salary point they would have reached had they not taken a career break.
• Improvement to maternity provision is also seen as a way of tackling the gender pay gap, the difference between men’s and women’s earnings, which currently stands at 17.2%.

A final word

“We are seeing a continuing trend across the economy towards offering maternity benefits substantially above the minimum entitlement. This trend is likely to widen into other sectors as the government continues its emphasis on improvements in this area.” - Ken Mulkearn, editor of IDS Pay Report.

Want to know more

Availability: The article on improved maternity benefits appears in issue 981 of IDS Pay Report.

The report can be ordered by calling customer services on tel: 0845 600 9355 or visiting the IDS web site at www.incomesdata.co.uk.

IDS is an independent research organisation providing information and analysis on pay, conditions, pensions, employment law and personnel policy and practice. To find out more visit www.incomesdata.co.uk.