A European Parliament committee has passed a draft legislation which would extend maternity leave to 20 weeks on full pay.
In the current European legislation, women are given 14 weeks of maternity leave on full pay, but the UK legislation requires employers to give up to a year off, with 90% of full pay for the first 6 weeks, and statutory pay for the rest of the year.
The Daily Mail reported this could cost UK businesses up to £2bn, and would treble statutory maternity leave pay.
The Institute of Directors said the move would also encourage women to take much longer off work.
A spokesman said: ‘The directive is a massive worry to us. We estimate that the UK will be hit with a bill of £1.5billion to £2billion a year – a very substantial cost.
‘Given the state of the public finances there has to be a strong risk that employers would end up being forced to pay.’
Employment minister Lord Young admitted the Government had serious concerns about the plans :
‘A substantial increase in maternity leave at full or near-full pay risks undermining this delicate balance at a time when economies across the EU can least afford it.’
Meanwhile, John Wright, national chairman of the Federation of Small Businesses, said the tidal wave of employment legislation from Brussels was damaging firms’ competitiveness.
He said: ‘We desperately need a moratorium on changes to legislation until employers have found their feet again. We need to be left alone to get on with creating jobs and helping take Britain out of recession. EU law is actually exacerbating our unemployment crisis.’
David Yeandle of the EEF manufacturing organisation said: ‘We are very concerned that the poor state of the UK’s public finances will mean that, either directly or indirectly, a future government will pass on these additional costs to employers.’
Along with changing priorities for 2010, over half of those surveyed (53%) also predict that salary spend is going to increase this year, with only 15% saying it will decrease and over a fifth (21%) saying that it will stay the same as 2009. The breakdown of sectors reveals that public sector employers are more likely to predict a decrease in their salary pay bill (18%) compared with the private service sector (13%) and manufacturing and production sector (16%). However, over half (51%) of the respondents from the public sector are still expecting an increase this year. In the private service sector 56% expect a rise and 52% in the manufacturing and production sector.
The survey also reveals that employers intend to better reward those employees who contribute most to the organisation. This is particularly true in the private sector services and in manufacturing and production, where employers are most likely to direct a greater percentage of the overall pay pool to their top talent. One in five (22%) private service sector firms and 17% of manufacturing and production companies also intend to increase bonus payments between ‘normal’ and ‘high-performing’ staff.
Charles Cotton, Reward Adviser, CIPD says: “The survey results show a distinct shift in the approach to reward. Employers seem more confident about the economic outlook in the months ahead and have refocused their thinking with that in mind. Many will be going back to the drawing board to revisit their reward strategies in the wake of the recession and may be keen to link pay more with performance. The rise in the number of employers increasing the pay award differentiation confirms that employers want to ensure that whatever profits they reap in 2010, a better proportion should go to those who have added the most value.”
Other findings reveal that there has been a sharp rise in the number of employers operating recognition and non-cash incentive schemes. Four in ten employers (41%) now have recognition schemes such as employee of the month, this is up from 31% last year. The number using non-cash incentive schemes has also jumped from 17% to 30% this year.
Charles Cotton continues: “It’s not surprising that these non-cash schemes have gained popularity last year when many employers had limited resources to reward staff. Most will be reviewing their non-cash incentive and recognition arrangements in 2010 and it will be interesting to see if these fall by the wayside when the economy picks up.”
