How Parental Leave Differs Around the World
May 21, 2019 | Topic: Country Payroll
Imagine it’s 1899, and as a young woman, you have had the temerity to get married. Your employer summons you to the office, reminds you that the company operates a “marriage bar” prohibiting the employment of married ladies, and says therefore your services are no longer required. Perhaps even more difficult to imagine is that a marriage bar was operated by 70% of US School Boards up to the 1950s, and Ireland only outlawed the practice in 1973. One reason for this discriminatory practice was to help employers avoid situations where employees required time off for prenatal care, to give birth, or to nurse children.
The right to maternity leave (paid or unpaid) has been a basic objective of trade unions globally for many decades, and some form of provision is now available in every country. The payment of maternity grants was one of the earliest features of social insurance schemes, with the UK National Insurance Act of 1911 providing a one-off grant of 30 shillings in cases where the expectant mother had been insured for at least a year. That equates to around £120 today, compared with the minimum maternity pay in the UK today covering 39 weeks of approximately £5,800.
In 1919 the International Labour Organization created the first global standard for protecting working women before and after childbirth: the Maternity Protection Convention. Last revised in 2000, the Convention calls for a minimum of 14 weeks of maternity leave. The World Health Organization sees the ability to take paid maternity leave as a prerequisite to encouraging breastfeeding and recommends that countries mandate a minimum of 26 weeks paid maternity leave.
Despite international and regional guidelines, parental leave allowances vary substantially around the world. Here, we take a look at the different requirements around maternity, paternity, and adoptive leave, and how they affect employers and global payroll teams.
The European Union sets the minimum period of paid leave at 14 weeks, with a mandatory leave of at least two weeks taken immediately before or after childbirth. However, any payment need only be an adequate allowance as determined by individual national governments. Consequently, there are significant differences between the entitlements of different countries within the EU.
|Country||Total Maternity Leave||Mandatory Prenatal Leave||Mandatory Postnatal Leave||Pay|
|France||16 weeks||3 weeks||13 weeks||100%|
|Germany||14 weeks||0||8 weeks||100%|
|Ireland||42 weeks||2 weeks||4 weeks||Flat-rate benefit for first 26 weeks, nil thereafter|
|Italy||20 weeks||4 weeks||16 weeks||100%|
|Spain||16 weeks||0||6 weeks||100%|
|United Kingdom||52 weeks||0||2 weeks||90% for first 6 weeks, then flat-rate benefit for 33 weeks, nil thereafter|
A simple analysis of the table above might lead you to conclude that the UK has significantly better maternity leave provisions than its neighbours, but the full picture is more nuanced. Many countries deem the period of “maternity leave” to be a relatively short period of time immediately before and after the birth of a child — which is often followed by a much longer period of family leave. In Germany, for example, the 14-week maternity leave may be followed by a period of parental leave that can last for up to 36 months. The first 28 months of this is paid by the state at a rate of 67% of net pay, capped at a maximum of €1,800 per month. This provides significant financial support to new parents and helps to ensure that most new mothers do not return to work after just 14 weeks.
The United States
According to ILO figures, the United States is the only developed nation with no provision for paid maternity leave under federal law, although four individual states — California, Massachusetts, New Jersey, and Rhode Island — have enacted legislation requiring paid maternity leave. At the national level, the Family and Medical Leave Act of 1993 provides for up to 12 weeks of unpaid leave for mothers of newborns or newly adopted children, during which their employment cannot be terminated or altered. However, mothers working for an employer with less than 50 employees are not entitled to FMLA protection.
In the absence of federal mandates, some employers offer paid leave as an added benefit. A recent survey by Mercer showed that approximately 40% of US employers offer some form of paid leave. Statistics gathered by the ILO show that, on average, US maternity leave lasts for 10 weeks and the average period of paid leave is only four weeks.
By contrast, many Asian countries offer generous maternity leave provisions. India passed an updated Maternity Benefit Act in 2017, which entitles a employees to 26 weeks of paid maternity for their first two births. Once baby number three arrives, subsequent maternity leave periods are limited to 12 weeks each. To qualify, the mother must work for an employer who has at least 10 employees, and she must have completed at least 80 days of work for the employer in the 12-month period immediately preceding the birth. The mother receives her full pay during this leave, based on average daily wages, at the cost of the employer with no reimbursement made by the state. In addition to paid leave, the employer is also expected to provide free medical care (both pre- and postnatal) to the employee. If this is not provided, the employer must pay a bonus of INR 3,500 (about $50) to fund the employee’s medical care. Additionally, this comprehensive law requires employers to consider home working requests from employees after their maternity leave, and for employers with more than 50 employees to provide crèche facilities.
Nationally, the People’s Republic of China has adopted the minimum ILO recommendation of 14 weeks maternity leave (98 days), with flexibility for the provinces of China to add their own rules. Mums who give birth at age 24 or older are considered to be “late childbirth” and are awarded additional days of maternity leave, from 30 days depending on the province. Further additional leave may be available in the event of a difficult birth, such as a caesarean section. Leave is paid by the local social security bureau, at a rate determined by comparing the employee’s average wages over the previous 12 months to the average salary within the company. The bureau then pays the higher of these two amounts, capped to no more than three times the average salary within the geographical area the bureau has responsibility for.
New mothers in South Africa are entitled to unpaid maternity leave for four months. Workers who are covered by the Unemployment Insurance Fund receive a top-up benefit directly from the fund, paid at a rate between 38% and 60% of pay, capped at a maximum of ZAR 5,651 per month and payable for 121 days. Although there is no general right to paid maternity leave from employers, many of the country’s collective bargaining agreements include provision for some form of pay. For example, the agreement covering the Kimberley Corporation provides for either three months of full pay with the final month of maternity leave unpaid or four months at 75% of pay.
Many countries extend parental leave benefits to parents who are adopting children, which tend to mirror maternity leave allowances but with subtle differences. For example, the leave granted to an adopting mother in Ireland is limited to 40 weeks rather than the 42 weeks for those giving birth. The logic behind the difference is that Irish law requires expectant mothers to cease work at least two weeks before the expected date of birth as a health and safety measure, which wasn’t deemed necessary for adopting parents.
South Africa takes a more contradictory position. The Unemployment Insurance Fund allows for the payment of adoption benefits at the same rate and for the same period of time as allowed for maternity, however the Basic Conditions of Employment Act does not allow for any leave from work for those adopting. So while the adopting parent would receive some income during their absence, there is no guarantee that their employer will let them take the time off.
Dad is often (but not always) entitled to a form of paternity leave. In many countries, “Dad” does not need to be the biological father of the child, but merely the partner of the mother, regardless of gender. However, other countries require the father to be exactly that, and there may also be a requirement that he be legally married to the mother before benefits are available. For example, Singapore mandates for two weeks of government-paid paternity leave with one condition stipulating that the parents were married at some point between conception and birth.
Where offered, paternity leave typically ranges from a couple days to two weeks, with the window for taking leave generally limited to a narrow period of time at or after the birth. Some countries offer the father or partner the chance for further leave, often referred to as parental or family leave. The UK offers up to two weeks of paternity leave, but then allows the couple to share some of the maternity leave. Of the maternity entitlement, the mother is only required by law to take the two weeks off immediately following the birth as a health and safety measure. The remaining 50 weeks of leave, with 37 of those weeks paid under statutory arrangements, may be shared.
Some of the most generous provisions for family leave are found in the Nordic region, where Sweden in particular stands out as an example of how countries are trying to break gender stereotypes through family leave and pay policy. Sweden allows for up to 480 days of paid parental leave, provided both parents take at least 90 days each. The first 390 days are paid at a rate of 80% of salary, with a reduced rate for further days. The policy has resulted in a phenomenon known as “latte papas” — the large number of baby-wearing and stroller-pushing Swedish dads popping confidently into the local café — as well as a drop in the gender pay gap. Since designating 90 days of leave for dads, Swedish society has embraced the shared entitlement, and it would now be frowned upon if the father did not take up a generous portion of the leave on offer.
Beyond satisfying obligations and supporting employee wellness, the main consideration regarding parental leave for employers is the impact on payroll and the employee’s payslip. In several examples above, payment for the leave comes from the state. However, it may be expected that the employer administer this payment.
France and the UK, for example, expect the employer to calculate state payments and disburse them to the employee. The nations differ, however, in how they reimburse employers for those payments. In the UK, the employer claims reimbursement of 92% of the Statutory Maternity Pay (thus bearing the remaining 8% cost) by netting the recovery against the gross National Insurance Contributions collected from all employees’ pay. Meanwhile, France requires the employer to make a separate reimbursement claim under which monies are paid back to the company bank account — meaning the sums then need to be identified and allocated back to the cost center which bore the original charge.
Where state payments are paid directly to the employee, consideration should be given to how these might interact with the employers own pay policy. For example, progressive employers may offer paid family leave as a benefit of contract employment. However, where a government body has paid the employee directly, the global payroll team will usually need to verify this payment and reduce any company pay accordingly, so that a combination of state benefit and reduced company pay equal full pay.
This adjustment may take on a further complexity. In many countries, the state benefit provided for family leave is free of income taxes and social insurance, but the pay that it replaces would not have had the same treatment. A generous employer providing full pay above and beyond what the law requires may well want to limit this so that the employee is in the same net position they would have been had they been at work. To ensure everyone understands how pay is calculated and what benefits are available to them, it’s advisable for employers to clearly document the policy document for employees. The patter of tiny feet is certainly a blessing bestowed on any family — and a lot of potential work for the payroll department as well.