EU maternity proposals will cost small businesses an extra £7000

EU plans to extend maternity leave to 20 weeks will cost small businesses an extra £7000, according to the Federation of Small Businesses (FSB).

Ahead of the EU vote on proposals to extend maternity leave to 20 weeks from 14, the FSB is concerned that the additional cost to the UK – estimated to be £2.5 billion – will be passed onto small businesses and could act as a deterrent for small firms to take on new members of staff.

Under the current maternity and paternity system operated in the UK, an employer would pay an employee on maternity leave out of businesses funds and claim the full cost back from the Government, but the FSB is worried that these costs will have to be shared.

This means that a small business with a full-time employee on an average wage of £25,428 could be spending an additional £7,140 under these proposals.  The FSB is concerned, that while a flexible maternity and paternity leave system is paramount, these proposals will add payroll costs for already over-burdened companies.

The FSB is urging the European Parliament to reject these proposals when the vote takes place this week and is calling for maternity and paternity to be reformed by introducing a ‘flexible leave’ system to allow parents to choose their leave arrangements.

The FSB firmly believes it should be up to member states to decide how parental leave works. In the UK, the FSB believes parents should be able to receive the full entitlement to statutory maternity or paternity over the time they want off, to help to instil employer confidence as to when their skilled workforce will return to work. This will also help clarify the confusing and burdensome systems currently in place – without adding any extra costs to the business.

Chris Spies, Peterborough branch chairman of the Federation of Small Businesses, said, “Small businesses are known to be flexible employers and it is unfortunate that maternity and paternity leave is one of the biggest barriers for them when looking to take on staff.”

“The FSB fears that that these changes will result in an increase in the cost of maternity and paternity leave and will mean these costs have to be shared between Government and the employer, at a cost of more than £7,000 to a small business – placing a further strain on cash-flow.

“We all know it is important to have adequate, flexible maternity and paternity leave but it should be for elected Governments to decide how much their economy can afford to give on leave and pay, and how it is to be delivered.

“These proposals should be about setting minimum EU standards for the health and safety of pregnant workers – not adding new payroll costs for overburdened businesses.

“This well-intentioned EU employment law will not help small firms take on new members of staff – vital at this time of high unemployment. In the present economic climate we should be making it easier for people to gain employment, not placing obstacles in their way.

“The FSB is urging MEPs to reject these proposals when they come before the European Parliament in October.”