The Cost of Pregnancy and Maternity Leave Discrimination
The Equality Act 2010 states that it is unlawful to discriminate or treat employees unfavourably because they are pregnant, have recently given birth, or are on maternity leave. Unfortunately, the reality is that many women still have negative or discriminatory experiences during or after pregnancy, and often incur hefty costs and losses as a result.
Many employers also bear a significant financial burden in these situations, while the costs to the State are also considerable, albeit much smaller. Of course, we must not forget that women also bear some of the costs too: both financial and non-financial. Though unknown, some estimate the cost of pregnancy and maternity-related discrimination to be as high as £100 million per annum.
A ‘zero-tolerance’ approach promised by the government
In January 2017, business minister Margot James said the government would introduce a ‘zero tolerance’ approach to pregnancy- or maternity-related discrimination, promising to provide a new consultation on how to protect women from losing their jobs.
In 2016, the Department for Business, Innovation and Skills also published two nationwide reports which surveyed 3,034 employers and 3,254 mothers on issues related to pregnancy, maternity leave, and when mothers return to work. The reports considered pregnancy- and maternity-related discrimination in relation to women who felt forced to leave their jobs because of compulsory redundancy, dismissal, or being treated badly at work. It also considered women’s financial losses such as salary reduction, employers’ costs such as statutory redundancy pay, and State costs such as Statutory Maternity Pay. Research published last year by Adams et al. (BIS/EHRC Survey of Mothers, 2016a), provided a break-down of the cost.
Costs to the employer and the state
The total cost to all women being forced to leave a job because of pregnancy or maternity is estimated to be between £46.6 million and £113 million, depending on factors such as the stage of the pregnancy and maternity, or the time the women returned to work. The cost to employers was significantly higher, however, at an estimated £278.8 million, mainly due to the cost of training and recruitment, lost productivity, and Statutory Maternity Pay. Interestingly, the cost to the State was much lower at between £14 million and £16.7 million, and most of the cost is related to lost tax revenue and increased benefits payments. Therefore, the reports suggests employers pay more than half of the financial costs.
Women bear the greatest cost burden
Women endure by far the greatest proportion of financial loss as a result of such discrimination. Their median cost is estimated at between £28.9 million and £34.2 million. Twenty percent of mothers said they had experience other financial losses such as a reduced pay increase, bonus, salary reduction or the failure to receive a promotion. Surprisingly, only 1 percent went to an Employment Tribunal, suggesting most of the women surveyed were unwilling to bring a potentially eligible claim before the courts.
Burden on employers and the State is smaller
The employers’ loss is estimated at £7.1 million to £8 million, while the State incurs roughly twice the financial loss of employers, paying between £15.1 million and £18.6 million. Therefore, it would appear that the estimated financial losses for women are higher than employers and the State combined.
Total financial costs could be close to £100 million
The reports also showed that the vast majority of women who felt forced to leave their job at weeks 13 and weeks 26 of their pregnancy did so because they felt they were being treated so badly they had to leave. This meant the net cost of being treated so badly and having to leave a job in the 13th week of pregnancy was around £6,000 per woman for the 12 months after the negative or potentially discriminatory experience.
The average cost to women of being treated so badly they felt they had to leave was around £2,400 to £6,000 for the period between week 13 and 26 of the pregnancy, assuming a negative or potentially discriminatory experience would be unlikely outside of this time frame. Consequently, the total median impact across all at risk of this experience ranges from £39.3 million to £98.5 million, a substantial cost.
And non-financial costs?
It is important to bear in mind that this report only analysed the direct financial costs incurred by women, their employers, and the State, for the 12 months following the negative or potentially discriminatory experience. The wider implications of pregnancy- and maternity-related discrimination on family life and health, for example, were not examined.
Could the financial costs be even higher than these figures suggest?
As much of the analysis is based on estimations, the cost and loss figures have a very broad range. This is because information such as employment history, pay and employee benefits, and the timing of the negative or potentially discriminatory experience were not available to the researchers of the BIS/EHRC Survey of Mothers or other sources. Therefore, it cannot be ruled out that the financial costs and losses could be even higher than what these figures suggest.
In 2016, the House of Commons Justice Committee published a report which recommended that fees for employment cases should be reduced substantially, and that cases in relation to maternity or pregnancy discrimination should have special consideration.
This could achieve two things: incentivise women to claim for potentially discriminatory acts, and deter employers from disadvantaging or discriminating against women who are pregnant or on maternity leave. As the report concluded, improved treatment of pregnant women and new mothers could have a positive financial impact not just for the women themselves, but for employers and the State as well.