Where an employer pays enhanced maternity pay, are they obliged to enhance shared parental pay to the same extent in order to avoid discrimination claims? While the position on whether this constitutes direct discrimination appears to be largely settled (following the recent case of Capita v. Ali which we reported on last month), the latest judgment on this topic has potentially opened the door to a wave of indirect discrimination claims from men who believe they have been short-changed compared with their female counterparts.

In Hextall v. Chief Constable of Leicestershire Police, a male police officer claimed both direct and indirect discrimination. His claim was based on his employer's policy of not paying those on shared parental leave (SPL) the same rate as women on maternity leave. Those on SPL were paid the statutory minimum, while maternity pay was enhanced.

Following the same reasoning as the Capita case, the tribunal found that it was not direct discrimination to offer men on SPL a lower rate of pay than women on maternity leave, on the basis that the appropriate comparator to a man on SPL was a woman on SPL, and not a woman on maternity leave. The tribunal also extended this reasoning to reject the indirect discrimination claim and so rejected both claims.

On appeal to the EAT, however, it was found that the tribunal had erred with regard to its judgment of indirect discrimination. The EAT found that the "particular disadvantage" relied upon by the claimant was that, although the rate of pay for SPL was the same for both males and females, the rate had a disproportionate impact on males because, unlike females, they have no choice but to take SPL (and cannot choose to take maternity leave instead). The EAT therefore said that the relevant pool for considering whether men suffered a disadvantage was those who had an interest in taking leave to care for their new-born child.

The case has now been remitted to a fresh tribunal to hear the claim again. Although it is not clear what will ultimately be decided in the case (and we suspect there will be numerous appeals), it is a key decision for businesses since it is common for employers to pay enhanced maternity pay but only statutory shared parental pay.

In light of the uncertainty, now may be a good time for employers to reassess their approach to family rights and associated pay, particularly against the UK backdrop of gender pay inequality which has been highlighted by the recent gender pay gap reporting exercise.

Putting the UK's shared paternal leave into the EU context, the Swedish model has been recognised as one of the most family-friendly and equality-focused systems in the world, with the European Commission inspired to propose a new work-life balance directive, part of which would aim to firm up paternal pay across the EU.

Swedish parents are given 480 days to split between themselves, however they see fit, at any time until the child is 8 years old. It is a "use it or lose it" system, where each parent must keep at least 90 days each. Parental leave in Sweden is paid at around 80% of normal salary (subject to a cap) for 390 days, then at a flat rate for the remaining 90 days. Swedish employers report that, while there are challenges around resourcing and cost, there are also key benefits such as boosting morale and retention of talent. Of course, Swedish employers have the advantage that the generous enhancements are met, at least in part, by government subsidies.

We will be watching the progress of the Hextall case so please look out for future updates. If you would like any advice or guidance on your organisation's family leave policies, please contact a member of the team.