Redundancy protection to be extended to cover pregnancy and return from family leave

Under the current law, employees on maternity leave, shared parental leave or adoption leave already have special protection in a redundancy situation. They have the right to be offered a suitable alternative vacancy, if one is available, before being made redundant. This gives employees on these types of leave priority access to redeployment opportunities over other redundant employees.

The Protection from Redundancy (Pregnancy and Family Leave) Act 2023 extends the priority status to pregnant employees and those who have recently returned from maternity/adoption leave and shared parental leave. The government has now published the regulations setting out how the new rights will work in practice and bringing the rights into force from 6 April 2024.

Who is protected and when?

Many will be surprised to see that a parent needs to take only a minimum of 6 weeks’ consecutive shared parental leave before becoming eligible for 18 months of protection. The government’s response to the consultation had accepted that it did not make sense to give a new parent six months’ redundancy protection after taking just a week of SPL, for example, but had promised a protection that is proportionate to the threat of discrimination.

It is also interesting to contrast the position on shared parental leave to the absence of protection for employees taking paternity leave. Whilst statutory paternity leave is only two weeks long, many fathers choose to add on annual leave or other entitlements to extend their leave. An employee taking statutory paternity leave and four weeks of other types of leave (such as additional company paternity leave, annual leave or parental leave) would still not be eligible for any protection as the leave was not taken under the shared parental leave regime.

Note, however, that the protection only gives employees priority for redeployment opportunities – it is not a ban on making employees redundant during the special protected period. Employees with priority status can still be selected for redundancy. The protection kicks in when it comes to the allocation of alternative roles.

Key implications for employers

• Imminent restructuring

Any employers considering or planning restructuring in 2024 will need to ensure they have properly thought through the implications of the new protections and the issues that may arise. The new protection applies to pregnancies notified to an employer on or after 6 April 2024 and maternity/adoption leave ending on or after 6 April 2024. In respect of shared parental leave, the new protection applies to employees taking at least six weeks of shared parental leave which begins on or after 6 April 2024.

The legislation doesn’t address the position for employees who have notified employers of their pregnancy before 6 April 2024. It would be curious - and unfair - if someone who notified their employer of their pregnancy on 5 April 2024 would not be protected from 6 April 2024 for the rest of their pregnancy, yet someone at the exact same stage of pregnancy who notified their employer on 6 April 2024 would be protected immediately. Such a gap in protection would also be at odds with the fact that employees returning from family leave from 6 April 2024 onwards are protected immediately. As drafted, the legislation leaves it open to an employee to provide a second notification to their employer after 6 April 2024 and argue that they should be protected on the basis of that notification. If the legislation was intended to exclude anyone who had already notified their pregnancy to their employer, it could have expressly stated the notification on/after 6 April 2024 must be the ’first’ notification to the employer. . It would be for an Employment Tribunal to determine what would count for protection.

Given the uncertainty, it is possibly safest from a risk perspective to assume that any employees known to be pregnant may be protected from 6 April 2024. The government has promised to update its guidance before 6 April, so we may see some clarification of this particular issue.

• Increase in priority numbers

 While employers should already be familiar with managing some employees with priority status, these changes look set to materially increase the numbers with protection. New and expectant mothers will be able to double their period of redundancy protection to a period of about two years (assuming they tell their employer about their pregnancy at 12 weeks, take a year of maternity leave, and are then protected for a further six months afterwards). Fathers taking sufficient shared parental leave will also be protected for 18 months. This means that the numbers with priority status at any one time are likely to increase, causing possible practical headaches for employers.

There is no legal authority on how to proceed where there are more employees with priority status than there are suitable alternative vacancies. The regulations only state the employee’s entitlement to be offered the suitable alternative vacancy where there is one available. There is no exception to cover the circumstances of the role being offered to an employee with the same priority right.

In terms of selection, it is likely that employers would need to undertake a further selection process between the employees with priority status. In making these decisions, employers will need to be careful not to discriminate against employees who are pregnant or on maternity leave, by treating them unfavourably during that specific time (which is shorter than the new special protected period). That particular protection for discrimination does not apply after the end of maternity leave.

• Calculating, recording and triggering of protection periods

Employers may also face difficult practical issues here. Women may, in some cases, feel under pressure to inform their employer of their pregnancy very early (before their 12-week scan, for example) if there is an impending redundancy exercise. The regulations are not clear as to the form of notification required, but it seems likely that oral notification to a manager or HR will count. There may also be practical issues in pinpointing exactly when a period of protection ends. For example in maternity cases it will be 18 months from the date the child is born if the employee notified this, but from the expected week of childbirth if they did not. In miscarriage cases, calculating the applicable dates will be particularly difficult and sensitive. If facing a restructuring exercise, employers will therefore need to ensure they have accurate and up to date records regarding pregnancy notification and sadly, any miscarriages, to calculate protection periods accurately.

• Uptake in SPL

Take up of SPL has traditionally been very low. Whilst this new protection is unlikely to prompt a drastic change in uptake, it would not be surprising if more employees were interested in doing so, particularly in difficult economic times where restructuring is rumoured, and especially if their employer offers enhanced pay during SPL.

• Fairness, awareness and manager training

From a policy perspective, there are strong arguments in favour of protecting new and expectant parents from discrimination and avoiding them having to compete for redeployment opportunities at a vulnerable time. There are nonetheless likely to be individual instances where the rules will feel unfair to managers and employees on the ground, such as where it results in the loss of a particularly high-performing employee in favour of an employee with priority status. Equally, there may be instances where employees feel that they should have had greater priority – for example, it is possible to envisage women returning from 12 months’ maternity leave feeling that they are more disadvantaged than men who took a relatively short period of shared parental leave many months ago, and that their protection has been unfairly diluted. All of this will need to be managed carefully, and employers may need to ensure that managers are aware of the rules and have the training they need to improve their skills and confidence in managing these situations.

• Identifying suitable vacancies

With an increase in the number of employees who could be eligible for priority status, employers will need to adopt systems for identifying potentially suitable vacancies across their operations, including any other companies in their group. This may prove challenging, especially since the Covid-19 pandemic has demonstrated the potential for many roles to be worked on a remote basis, which could considerably widen the scope of potentially suitable roles.

• Penalties for getting it wrong

A failure to offer a priority employee a suitable alternative vacancy would mean the employee has a claim for an automatic unfair dismissal, which would mean a compensatory award that is not capped (and does not require two years’ qualifying service). In some cases, they would also have a claim for discrimination. Given the significant penalties, this is therefore a material change in the law and employers will need to take note of it.