As of yesterday, businesses in the UK are claiming that new maternity leave reforms will leave them with a hefty £2 billion bill. While the changes extend the period of paid leave for new mothers from six to nine months, lobbyists argue that it will have a negative impact on businesses. The increased cost will come from the need to recruit and train workers to cover the longer absences.
In contrast, family groups are welcoming Labour’s extension of maternity leave, asserting that it will encourage women to stay home with their children for a longer period of time.
However, the Forum of Private Business expresses concern over the changes. Chief Executive Nick Goulding highlights that small businesses face a major challenge due to the extension of maternity leave. These companies, which make up 99% of all UK businesses, struggle to find replacements for absent workers easily. While they can reclaim the cost of maternity pay, the expenses associated with recruiting and training an employee to provide cover for nine months can still have a detrimental effect.
The average cost of filling a job vacancy is £10,000, including both direct and hidden expenses. Angela Mortimer, a recruitment consultancy, emphasizes the need for business leaders to be aware of the true costs associated with hiring new employees. The longer leave period means that many small firms, who in the past would have relied on employees covering for colleagues on maternity leave, will now have to recruit temporary staff.
With a record number of women in the workforce, the cost of these reforms is expected to rise further. Approximately one-third of the country’s workers are women of childbearing age, and nearly 730,000 babies are born each year.
A survey by law firm Browne Jacobson reveals that three-quarters of bosses believe these reforms will discourage the hiring of women of childbearing age. They describe the changes as an additional burden that UK businesses cannot afford. A recent report from the CBI shows that Labour’s employment law reforms have already cost businesses £37 billion since 1998, leading to concerns about the growth of businesses being hindered by excessive red tape.
On a positive note, companies do welcome some of the other changes, such as the requirement for women to provide two months’ notice before returning to work instead of the previous 28-day requirement.
The Department of Trade and Industry assures employers that they were consulted extensively on the extension of paid maternity leave. Employers can claim back 92% of the additional pay, with small firms being eligible to receive more than 100% reimbursement. The government sees this as a positive package for both employers and employees.
