rose to move, That the Grand Committee do report to the House that it has considered the Adoption and Children Act 2002 (Consequential Amendment to Statutory Adoption Pay) Order 2006.
The noble Lord said: As Members of the Committee will be aware, the Work and Families Act 2006 achieved Royal Assent last month. The Act seeks to deliver a number of the Government’s commitments set out in the Pre-Budget Report of 2004 and in the Government’s response to the work and families consultation in 2005.
The regulations on maternity and adoption leave represent the next step in that ongoing process. Before turning to the detail of these regulations, I would like to say a little about the work and families package in general. This is a significant programme, designed to offer practical and very real support for working families, while bringing forward a number of measures which employers have told us would be helpful for them.
We all recognise that families today face increasing challenges in balancing their home and working responsibilities. It has to be right to offer children the best start in life, but this also has to be achieved against the demands of creating an increasingly competitive economy. The result is that many families struggle to find this balance. This problem will become more acute as we are likely to see more and more of our workforce needing to take time out of the labour market during their careers to care for children or elderly relatives, or both.
Business knows that to succeed it needs to employ the most talented workforce it can. Many employers now realise that an integral part of any strategy aimed at achieving this includes giving employees the opportunity to strike the right balance between work and family life. This gives employers access to a wider pool of talent to recruit from in the first place, and there is increasing evidence showing that a healthy work-life balance reduces staff turnover, reduces absenteeism and raises morale.
The regulations before us today respond to these changing patterns of employment and seek to provide genuine choices about balancing work and family life in the crucial first months, and genuine support for employers in ensuring that the balance works for them too.
I am very proud of the Government’s track record in introducing measures to support working families. We have already created more than 1 million additional childcare places; guaranteed all three and four year-olds a free part-time nursery place; and improved financial support through increased child benefit and working tax credits. Working families have benefited from improved maternity leave and pay, new rights to paternity and adoption leave and the right to request flexible working.
These regulations deliver a number of measures which will benefit both working families and their employers. They result from the close consultation with stakeholders, including parents’ groups, trade unions, businesses and their representative organisations, and individuals.
The Government also worked closely with an advisory group of human resource experts, set up to look at how we could introduce these changes whilst minimising any additional burden on employers. A clear objective throughout the planning of the work and families legislation has been to establish a framework of rights and responsibilities for both employers and employees, consistent with the Government’s better regulation agenda.
Some elements of the regulations derive from powers in the Work and Families Act, while others depend on prior primary legislation. The regulations are due to come into force in October this year, in line with our commitment to common commencement dates for new employment legislation, and will apply to women whose babies are due on or after 1 April 2007 and to adopters whose children are expected to be placed with them on or after that date.
Turning to the detail, the new regulations will mean that all pregnant employees can take up 52 weeks’ maternity leave. At present, all pregnant employees are entitled to 26 weeks’ ordinary maternity leave, and most to a further 26 weeks’ additional maternity leave. However, around 20,000 women per year are excluded from additional maternity leave because they have not worked for their employer for long enough to qualify.
This means that if the Government took no action to remedy the situation, when maternity pay is extended to nine months from April 2007 those women would be entitled to the extended pay but not the leave that would allow them to benefit from it. These regulations remove this inconsistency by removing the existing qualifying criteria for additional maternity leave so that all women will be able to take up to 52 weeks, if they wish, and to make full use of the 39 weeks’ maternity allowance. The extension of maternity and adoption pay from 26 to 39 weeks will be achieved via a separate set of maternity and adoption pay regulations. The pay regulations are subject to negative resolution and will be laid before the House shortly.
With the introduction of these new regulations, more employees are likely to choose to spend longer periods away from work on maternity or adoption leave. This should be of very significant benefit to working families, but in making these changes we also recognise that employers will need to managethose periods of time. Taking that into account, the new regulations introduce a number of measures specifically aimed at benefiting employers. Prior to 2003, a woman was required to give only 21 days’ notice to her employer before starting her maternity leave. When we talked to employers about this issue, they told us that that was too little and that it caused real difficulties in arranging and managing cover.To counter this, we extended the notice period to15 weeks before the baby was due.
In the same way, during the work and families consultation in 2005, employers told us that the28 days’ notice an employee needed to give when changing her date of return from maternity or adoption leave was simply not long enough to allow them to plan ahead properly, particularly given the proposed extension to the pay period. We have listened to that concern, and these new regulations will extend the period of notice that the employee must give to eight weeks if she wishes to return to work earlier or later than previously agreed.
During the consultation, we also heard from some employers that they sometimes felt unable to make contact with employees on maternity leave and that there was a need for a stronger framework to support communication between parents and their employers during leave periods. The regulations are therefore introducing the so-called “keeping in touch days”. These are designed to allow employers and employees to agree that up to 10 days’ work may be done under the contract of service during the maternity leave period. Keeping in touch days will be entirely voluntary and will only take place by mutual agreement. They are essentially a mechanism to allow employers and employees to arrive at their own decisions on how best to prepare for the return to work. The corresponding pay regulations will also allow up to 10 of these days to be worked without the employee losing a week’s statutory maternity pay, as would be the case under the current rules. In consultation discussions, we heard that keeping in touch days are likely to be of particular use for things such as training events and important annual conferences.
We recognise that keeping in touch days will not be everyone’s preferred option. Employers and employees may simply wish to make contact with one another without the employee actually doing any work; for example, to talk about the woman’s plans for returning to work or simply for an update on developments at work while she has been away. The regulations clarify that this type of reasonable contact during maternity leave continues to be not only allowable but also encouraged.
Additional measures to help employers, particularly with regard to the administration of statutory maternity and adoption pay, will be delivered by the pay regulations I referred to earlier.
It is obviously crucial that new legislation is accompanied by clear and helpful guidance. With that in mind, I am grateful to the Equal Opportunities Commission for its helpful recommendation that we should produce a written statement of maternity rights and responsibilities for employers and employees. We are taking that idea forward, and it will help to underpin the legislative changes we are introducing.
The regulations before us today also remove the small employers’ exemption. This move clarifies the rules on the right of return after additional maternity leave, making it clear that a woman cannot be selected for redundancy or dismissed simply because she is pregnant or on maternity leave, regardless of the size of the organisation.
I would like now to speak very briefly on the other statutory instrument before us today. The order makes a technical amendment to the statutory adoption pay legislation, bringing the provisions for unmarried couples jointly adopting a child into line with the existing provisions for married couples and civil partners. The effect will be to ensure that only one member of an unmarried adopting couple is able to receive statutory adoption pay.
The order applies to adopters whose child is expected to be placed with them for adoption on or after 1 October 2006. We expect the number of adopters and employers affected to be very small. In total, about 4,000 adoptions are eligible for statutory adoption pay each year. Only a very small number of those will be affected by this order.
Although the order is not part of the work and families package, we have laid it before the Committee alongside the regulations simply in order to make more efficient use of time, and also to ease implementation for the very small number of people and employers potentially affected.
I commend both the regulations and the order to the Committee. I beg to move.
Moved, That the Grand Committee do report to the House that it has considered the Adoption and Children Act 2002 (Consequential Amendment to Statutory Adoption Pay) Order 2006.—(Lord Sainsbury of Turville.)
I am most grateful to the Minister for his detailed introduction to the regulations and the order. The Explanatory Notes to the adoption and children order highlight that the change will close a potential loophole which could have allowed both members of an unmarried couple to receive statutory adoption pay. The order makes provision for unmarried and married adopters to be brought into line and, as such, will make life easier for employers. This is an order of little controversy to which we have no objection.
The maternity and parental leave regulations essentially make welcome changes to the maternity and adoption provisions of the 1999 and 2002 regulations respectively which, as the Minister said, will apply to parents of children expected to be born or placed for adoption on or after 1 April 2007. Among other things, the regulations extend the period of notice that the employee is required to give the employer of her intention to return to work earlier than the end of her additional maternity leave from 28 days to eight weeks. They also increase flexibility by allowing an employee to work for up to 10 days during the statutory maternity leave period without bringing that period to an end as a result of carrying out that work. That is most welcome.
I will not rehearse the debates that we had so recently during the passage of the Work and Families Bill. Suffice it to say that, welcome though these measures are—we genuinely welcome them—we had and still have some concerns regarding the administration and working of the new arrangements, especially with regard to small businesses.
During the passage of the Bill, my noble friend Lady Miller questioned the Government as to why they had seen fit seemingly to back away from agreed proposals with the CBI that, in order to reduce the administrative burden on employers, that function would be returned to the Inland Revenue. I should be most grateful if the Minister could comment on that.
My noble friend also pointed out that 95 per cent of small employers have five employees or fewer. They do not have personnel departments or HR resources and the more regulation we put on them, the more difficult their position becomes. We also raised concerns about the complexity of additional paternity leave that we feel could be open to fraud. Therefore, can the Minister tell us what further discussion the Government have held or what representations they have received on the changes following the passage of the Work and Families Bill and whether they are satisfied that they have addressed any concerns raised?
As I said, we welcome the changes, but we are conscious of the concerns of various organisations and will take care to keep an eye on the development of these proposals. I very much agree with the Minister that it is essential that we provide families, parents and carers with genuine choice and flexibility, so that they can balance their family life and work commitments as best they possibly can, and, as the Minister said, in a way that allows employers access to the widest pool of talent. But we also need to provide business with legislation that does not tie it up in acres of red tape and does not cost it its competitive edge.
I welcome the clear explanation given by the Minister on these new orders. I was supportive in the other place, as my party is and has been, of the importance of giving people in the workplace the opportunity to meet their need for maternity and paternity leave, so it is to be welcomed that that is going forward. I hope it will justify what we on these Benches feel is the importance of work-life balance, which the Minister has referred to. That can only be good.
In the past, I have always referred—as did the noble Baroness a moment ago—to the importance of small businesses. It is important that the guidance is good. The Minister has referred to the fact that there is good guidance to support these regulations. I urge him again to ensure that it is good and clear, because many small firms have such a burden to deal with in terms of bureaucracy and red tape, as it is called, and anything that can be done to help them understand the regulations is to be welcomed. It is satisfactory that the Government have listened to the people who asked, during consultation,that the time for notice be amended.
I support the order. It is extremely importantthat there is clarity and agreement, and I think that that will be the result of this regulation, provided that the information given to all firms is clear and to the point.
I thank noble Lords for their general support. I shall deal with the specific points raised.
We dealt in great detail with the question of whether we could pass some of the administrative costs back to the Inland Revenue. We discovered that there were no very significant savings to the employer, and that there would be enormously heavy costs to the Revenue and Customs. We reckoned that that would take up to £75 million in set-up costs and£50 million in annual running costs. That makes perfect sense, because effectively all the information would have to be passed backwards and forwards between the Revenue and the company, which would add a lot of cost to the system and save very little for the individual business.
Regarding further discussions with the industry, we have listened to the concerns of business. We have recently completed a public consultation on the details of the scheme. A government response to that will be issued in due course, which will lead to the development of further regulations. The regulations show that we have carefully consulted industry throughout on the easiest way to do this, and we will continue to do so.
I agree with the noble Lord that guidance and clarity are essential. We will ensure that small businesses have all the information and guidance they need so there is a clear statement of what maternity rights, and so on, are. We have always sought to balance the giving of further rights with spending a lot of time thinking how we can reduce the cost of that to business. Noble Lords can see from the notification periods that we have taken that very seriously. On that basis, I commend these regulations.
On Question, Motion agreed to.