Employment Rights Bill

Baroness Penn Excerpts

Committee stage
Tuesday 13th May 2025 Lords Chamber

This is not just about fairness in the workplace; it is about supporting families in those precious first days, allowing both parents to share the load, bond with their child and begin family life on an equal footing. The current system entrenches outdated assumptions about who provides care. Making paternity pay available from day one would send a powerful signal that we value fathers’ roles in early childhood. Every child, regardless of their parents’ employment history, deserves a supported start. On that basis, I hope the Government will consider this amendment thoroughly, as we continue to debate this Bill.

[Baroness Penn (Con)]

My Lords, I will speak to Amendments 127, 128 and 139 in my name. Before doing so, I would like to add my support to all the amendments in this group, in particular Amendment 76 of the noble Baroness, Lady Lister, to which I have also added my name.

As we have heard already, our current system of parental leave is in desperate need of reform. For some of that reform, I accept a review is necessary. How can we improve shared parental leave? This is something that I was proud to have worked on during the coalition Government, but I and the noble Lord, Lord Palmer, have to accept that this has not delivered the change we want to see. Also, how do we extend parental leave to self-employed people—mums, dads and adoptive parents—at a proper rate of pay?

As the noble Baroness, Lady Lister, knows, I believe she is being too generous to the Government with her timelines. When this Government first took office, the Employment Rights Minister, Justin Madders, committed to the review of parental leave being completed within their first year; now, it is meant to be launched within their first year. On Report in the Commons, the Minister committed only to a launch ahead of Royal Assent of this Bill, which even on the most optimistic timetable will be after 4 July.

As well as giving important clarity to the points that the noble Baroness, Lady Lister, has made—calling for the review to cover key issues, including measures designed to improve fathers’ take-up of parental leave, such as a dedicated period of leave, adequate payment and the inclusion of self-employed fathers—could the Minister give us some reassurance on timelines? Will the review be launched within Labour’s first year in office? How long will the review take? To me, six months seems a reasonable period of time to report back on its outcomes, but I look forward to hearing from the Minister what the Government’s plan is.

While reviews are perhaps necessary in some areas, it is important not to confuse a review with action. The Minister kindly met with me last week to discuss my amendments, and it was clear at that meeting that the review would not be a consultation on specific proposals; those would have to come later. Added to any timelines for action would be a consultation on the outcomes of the review, and then, subject to its findings, further legislation. In reality, we are talking about a timeline extending over several years.

I am afraid that is not good enough on an area where there is clear evidence to support action now, and that is on improving paternity leave. It has been said that we are an outlier on how bad our paternity leave is in the UK and how unequal provision is between mums and dads or second parents. And yet, if you increased paternity leave to six weeks’ pay at 90% of salary, capped at average earnings, as my Amendment 127 does, the evidence for the benefits is overwhelming.

As the noble Baroness, Lady Lister, has said, it would improve things for dads. This week is Mental Health Awareness Week. According to research by the Dad Shift and Movember, nearly half of new dads report experiencing multiple symptoms of depression in the first year after their baby is born; 82% of them agree that better paternity leave is the number one thing that the Government could do to protect new dads’ mental health. We have heard how it will support new mums and kids too. And it will support economic growth—and that is meant to be this Government’s number one priority.

This last point is really important. In our discussions on this Bill, I am acutely aware about the concerns employers have expressed about many aspects of the Government’s plans, but, in the context of our earlier debate on statutory sick pay, it is important to remember that statutory paternity pay is reimbursed for businesses at a rate of 92% for larger businesses and 108.5% for those which qualify for small business relief. Of course, it is not only the pay that affects business but also the prospect of more administration and disruption, which can be a concern. This is why for smaller businesses the government compensation rate is at over 100%.

As we are so far behind many other countries when it comes to paternity leave, we can look at whether those concerns have been borne out in practice when leave is more generous. The short answer is that they have not. A study by the National Bureau of Economic Research in the US on Danish parental leave showed no reduction in firms’ output or decline in the wellbeing of other employees at the firm when parents took time off at the birth of their child.

One of the reasons that better paternity leave has the potential to bring such significant economic gains is that, although you lose the dad's economic output for the time he is off, the loss is limited to that period only, whereas for mothers you see an increase in labour market participation and hours worked on a sustained basis, increasing the level of economic activity overall. Reimbursing paternity pay would come at a cost to the Government, but again increased economic activity as a result of the policy would offset four-fifths of that.

It might also be argued that it is not a priority for employers or employees when there are so many other issues that need our attention. However, only 18% of the public think that two weeks is enough paternity leave and 81% agree with the statement that “I believe that giving fathers a decent amount of paid paternity leave so they can be a bigger part of their children’s lives is good for families and good for the country too”. That includes a majority of support from voters from all political parties across the spectrum, including Reform.

As I mentioned, many employers already offer enhanced pay and leave, because they see the benefits for their employees but also, as companies, for recruitment and retention of staff. According to CIPD data from 2024, around 30% of organisations enhance paternity leave beyond the statutory two-week minimum, and around 37% enhance paternity pay beyond the statutory provision.

If this is the case, why is government action needed? For two reasons, I think. First, we are talking about a culture shift. Our system of paternity leave does not reflect many people’s attitudes and plans for starting a family in today’s society. None the less, moving away from the current system is a big shift for our society, and it is one that will not happen on its own. At the moment, the statutory system tells employers that two weeks is enough, and it tells employees that that is all they can expect.

The second reason, as I have said, is that the Government reimburse employers for the statutory system. If a firm wants to go further than the statutory entitlements, they bear the burden of all the costs. That is particularly difficult for smaller businesses. While there are long-term benefits for employers, we also get benefits as a society for supporting people to start and grow their families, and we should recognise that. The CIPD asked employers about their views on paternity leave in 2022 and 2024, and almost half supported extending the statutory paternity leave and pay system, with only 24% opposing it.

Finally, I turn briefly to my other amendments in this group, which would make smaller, but none the less important, improvements to our system of paternity leave. Amendment 139 takes the new day one right to paternity leave included in this Bill and makes it paid. I have to confess that, from everything the Government had said, I thought it would be paid, as they always talk about extending the right to paternity leave and unpaid parental leave. Well, parental leave is always unpaid, so specifying it for one but not the other feels a little misleading.

It also makes no policy sense. We know the biggest barrier to take up of paternity leave is financial. The current statutory rate may be low, but it is far better than nothing at all, particularly at such a point of financial stress in families’ lives. It makes no sense to me that Ministers and the Government acknowledge that paternity leave should be a day one right but are introducing it in a way that makes it hard, if not impossible, for those who most need it to actually take it up. On the subject of costs to businesses, this would be minimal. As I have said, they are reimbursed for this cost.

Amendment 128 would require businesses with 250 or more employees to publish their leave policies on their websites. That would help people thinking about a job move to have transparency on what their entitlements are, and it would help create a race to the top, where companies would need to keep pace with their competitors to attract the best talent.

Unlike almost every other measure in the Bill, this policy has actually been consulted on. It showed that 98% of respondents supported the proposal, including 96% of businesses and business representative organisations. One of the consultees could be considered to be Sir Keir Starmer. He was asked about this policy by Mumsnet in 2020 and said:

“I completely support this. In fact I’m really surprised it hasn’t already happened … I will wholeheartedly support this”.


Perhaps, in responding to this debate, the Minister can explain to the Prime Minister why this has not happened already and why his Government do not want to take the opportunity of this Bill to correct it.

[Baroness Morrissey (Con)]

My Lords, I am also pleased to support Amendment 76 in the name of the noble Baroness, Lady Lister, and add my voice to others in the Chamber asking the Government to review paid parental leave in this country. I confirm, as someone who is involved with a number of multinational businesses, that Britain certainly has fallen behind the modern practices of other countries.

I appreciate that, as my noble friend Lady Penn has already said, some Members of this Committee might consider this to be a matter best left to businesses rather than government policy or law. Unfortunately, in my experience, many British employers—not the ones cited by my noble friend Lady Penn, but the others—take a rather old-fashioned view of paternity leave, leaving the UK at risk of continuing with this unusually gendered approach to parenting and childcare, which is ultimately detrimental to society, to women, to men and to the economy.

As set out in my registered interests, I chair the Diversity Project, which seeks to future-proof the investment industry’s ability to attract and develop the very best talent. We have been working with almost 120 member firms on enhanced paternity leave and pay. There are a number of early adopters, including Aviva, Mercer, Janus Henderson and Julius Baer, which have all reported positive impacts on culture, retention and staff morale. In a “Dragons’ Den”-style competition —I do not see the noble Lord, Lord Sugar, in the Chamber—at our International Women’s Day event earlier this year, somewhat ironically, enhanced paternity leave was voted overwhelmingly by the audience as the single biggest game changer for women’s progress. I endorse the point made by the noble Baroness, Lady Lister, and others that this would help drive gender equality.