Maternity rights can cost some companies dear

Arguably, the need to procreate is the sole reason why people exist at all. Yet evolutionary necessity is often cited as a reason why the glass ceiling remains in place for women that want to reach the highest echelons of their profession.

The decision to take a break to have children, whether for 12 months or five years, can work against women striving to reach the top. This could be a personal life choice, or – all too often – the result of the perceived risk and associated cost risk of employing a woman in a senior position.

Business leaders such as Lord Sugar have been vocal in their criticism of the pressure equal opportunity employment regulation puts on growing businesses, recently commenting that many employers think twice before hiring a woman – because she might have a child and take time off.

However, there have been improvements to what deputy prime minister Nick Clegg described as an “Edwardian” paternity leave system that has no place in modern Britain. As part of the overhaul, a woman returning before the end of her maternity leave can transfer the remaining entitlement to the baby’s father, up to six months.

Though that has been welcomed as a way of providing more equal treatment, with the onus now as much on the father as the mother, the overhaul does add more red tape for finance directors of small businesses.

Luke Johnson, chairman of private equity company Risk Capital Partners and former chairman of Channel 4, says a balance must be struck.

“It is a very difficult area with no perfect solution. Inevitably, there has to be a trade-off,” Johnson tells Financial Director. “Clearly, it is a good thing to have more women in the boardroom, but the new laws on paternity leave increase the red tape of employment legislation.”

Small business exemptions

According to Johnson, a possible solution is to exempt small businesses from the more onerous forms of employment law.

He is not alone in considering ways to alleviate the burdens faced by small businesses as a means to kick-start growth.

Leaked details of chancellor George Osborne’s growth strategy revealed plans that small companies would indeed be exempted from strict maternity leave regulations.

While the details did not emerge in the Budget and Labour’s suggestion that the government was set to scrap some maternity rights was denied, the coverage highlighted the need for a trade-off between spurring growth in the private sector and equality rights in the workplace.

“The country is suffering a bad recession with record youth unemployment and public sector job cuts. The general belief is that the only way out is job creation in the private sector through startups,” says Johnson. “I am a great believer in an exemption on maternity rights for a limited period of time and a limited company size.”

However, Dawn Nicholson, HR consulting partner at PwC, says that small businesses should not be given the go-ahead to restrict maternity rights as it could put many women off working in small businesses altogether. It could also limit chances of promotion in small businesses that are growing quickly.

“The concern is that the relaxation of the red tape governing these rules could have unintended consequences,” says Nicholson. “The pendulum could swing the other way. If maternity rights are restricted, women will feel their position is jeopardised.”

Despite her concerns, Nicholson is wary about suggestions that supporting women’s careers through employment law is something that can be mandated for.

“We have to be careful about embodying positive discrimination in employment law,” she says. “Gender is only one subset of a very diverse group.”

Read our article on paternity leave here