What is the Business Case for Enhanced Parental Leave?
What Is the Business Case for Enhanced Parental leave?
This is article we explore these 4 key areas:
✅ Improves Employee Retention and Recruitment.
✅ Boosts Productivity and Engagement
✅ Supports Gender Equality Goals.
✅ Generates Long-Term Financial and Reputational Benefits
Why Is Enhanced Parental Leave More Important Than Ever?
In this post I’ll be examining how enhanced parental leave policies benefit UK businesses from an economic and cultural standpoint. But, before we get into the details of benefits for companies, let’s first explore what we mean by ‘Enhanced Parental Leave’ and then look at the big picture benefits for societies and families.
a) What is ‘Enhanced Parental Leave.’
The statutory requirements in the UK are very modest, amongst the worst in Europe…
Maternity Leave
“Statutory Maternity Pay (SMP) for eligible employees can be paid for up to 39 weeks, usually as follows:
the first 6 weeks: 90% of their average weekly earnings (AWE) before tax
the remaining 33 weeks: £184.03 or 90% of their AWE (whichever is lower)”
https://www.gov.uk/employers-maternity-pay-leave
Paternity leave
“Employees can choose to take either 1 week or 2 consecutive weeks’ leave…
Statutory Paternity Pay for eligible employees is either £184.03 a week or 90% of their average weekly earnings (whichever is lower). Tax and National Insurance need to be deducted.”
https://www.gov.uk/employers-paternity-pay-leave
Shared Parental Leave
In 2015, the UK introduced a shared parental leave policy allowing eligible parents to split up to 50 weeks of leave and up to 37 weeks of pay between them. This pay is at the statutory rates describes above.
The answer in literal terms: Enhanced Parental Leave could be anything above these Statutory levels.
1 week at 50% of pay would, for many men, be an enhancement to their current pay.
Not all enhanced leave is equal
The Inspiring Dads’ Parental Leave Database highlights organisations with:
Equal Leave - the same leave regardless of how you become a parent.
Equal Via SPL – where the shared parental leave pay and length of time matches maternity leave time and pay.
6 weeks for Dad – leave that matches an organisation’s paternity leave with the statutory maternity provision.
b) The Macro-economic benefits
A Pregnant Then Screwed and Centre for Progressive Policy report in 2023 found that countries with more than six weeks of paid paternity leave have a 4% smaller gender wage gap and 3.7% smaller labour force participation gap. Their analysis also suggested that closing gender employment gaps could increase economic output by £23 billion.
In findings of a similar vein, the World Economic Forum's Global Gender Gap Report 2022 found that 80% of the gender pay gap was driven by Maternity leave. Leave is important for the well being of mothers and babies alike, but inequalities in the length of leave can entrench societal norms, reducing choice and the fuelling the gender pay gap.
c) Societal shift
The Pregnant Then Screwed and Centre for Progressive Policy report also found that just 18% of Brits think 2 weeks paternity leave or less is enough, but one in five (22%) dads and partners that are eligible for paternity leave take no leave at all.
Why would dads not be taking leave? When, according to the research from Zurich of 1,000 new dads, three quarters said they’d like to take up to 12 weeks off work at this time?
d) Because paternity leave doesn’t pay
Crucially it’s about finances.
As Tom Cruise’s character once said – “Show me the money!”
The Fatherhood Institute asked “What price for time with dad?” and calculated that a full-time employed father in the UK, on average earnings, can lose £1,021.04 when they take two weeks of statutory paternity leave.
The Business Case
1) Improves Employee Retention and Recruitment
Research by Working Families and Bright Horizons shows that 48% of UK parents who have access to enhanced parental leave report higher job satisfaction and engagement, contributing to better long-term employee performance.
Bright Horizons found that 80% of UK employees feel more committed to their employer if they have access to flexible family-friendly policies, including enhanced parental leave.
A global parental leave Report by Mercer shows that employees who take advantage of enhanced parental leave policies are more likely to stay with their employer, reducing turnover and maintaining workplace continuity
“when looking for a new role, 43% of new dads look for paid paternity leave above bonus (42%) and salary (27%)”, which isn’t surprising when the same data showed that “of those that take no time at all, seven out of 10 can’t afford to”, while “a third of new dads were forced to take holiday while 12% resorted to unpaid leave in order to spend time with their new babies.”
2) Boosts Productivity and Engagement
Lisa S. Kaplowitz and Kate Mangino
The CIPD found that companies offering enhanced parental leave see improved mental health and well-being among returning employees, leading to higher productivity and lower absenteeism.
Further nuggets from the Pregnant Then Screwed and Centre for Progressive Policy report:
“We find that a woman’s partner taking parental leave is associated with a 34% increase in the likelihood of a woman being physically read to return to work”
Lisa S. Kaplowitz and Kate Mangino, researching at Rutgers University identified a wide range of workplace skills that are developed through the process of care giving. Find out more in the HBR article “Caregiver Employees Bring Unique Value to Companies”
3) Supports Gender Equality Goals
The Fawcett Society reports that equitable parental leave policies help reduce the gender pay gap, which stood at 14.9% in the UK in 2022.
A study by the Institute for Public Policy Research (IPPR) found that companies offering enhanced parental leave, especially for fathers, experience better gender balance in leadership roles, improving retention of women in senior positions.
Research by McKinsey (2020) showed that companies with a strong focus on diversity and inclusion, including robust parental leave policies, are 25% more likely to have above-average profitability, driven by diverse leadership teams that enhance innovation and decision-making.
4) Generates Long-Term Financial and Reputational Benefits
According to PwC’s UK Family-Friendly Policies Report, businesses that invest in enhanced parental leave save on recruitment and training costs because employees who feel supported are less likely to leave. Replacing an employee can cost up to 200% of their annual salary, depending on the role.
A YouGov survey (2020) found that 61% of UK consumers are more likely to purchase from companies with strong family-friendly policies, demonstrating the positive impact on brand reputation.
The British Chamber of Commerce (BCC) reports that companies with progressive parental leave policies are viewed more positively by the public and attract top talent, helping to sustain long-term growth and competitiveness.
In Conclusion
Creating opportunities for your new parents to access well paid extended parental leave, regardless of how they become parents is being increasingly seen as a core part of the employee benefit offer.
At the time of writing The Inspiring Dads’ Parental Leave Database captures over 270 UK organisations
👏 123 Equal Parental Leave offers.
👏 a further 33 organisations equalising via Shared Parental Leave.
👏 171 organisations in the UK who offer 6 weeks full pay for dads (ringfenced, not hidden within Shared Parental Leave)
The reason those numbers are rising every month is laid out in the evidence above - enhanced and equal parental leave positively impact employee retention, productivity, diversity, and long-term business growth in the UK. Crucially a fairer, better society has to include equality at choice around caring responsibilities. It’s the route to gender equality.
Campaign to Make Things Better:
PS If you think that Men don’t Want to Take Leave?
Stats around the low update of shared parental leave paint a picture that could easily be misinterpreted but when organisations get the culture and pay ‘right’ and remove the issue of transferring leave men will take the leave they are entitled to.
Two thirds of new dads at Zurich UK took their full 80 days paternity leave in 2023.
80% of men Aviva have taken at least five months out of work when a new child arrives, and 79% of men have taken over five months for subsequent births
Extra Resources
If you are considering introducing an Equal Parental Leave policy, here is a brilliant guide from Business In The Community which explores costs, benefits and tips for successful implementation. Plus see measurement tips and tricks from Careers After Babies.
Photo Credit Vitolda Klein @little_klein via Unsplash
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