Why should employers consider the needs of working parents?
What should be covered in a strategy for working parents?
What benefits are available to assist working parents?
How do childcare vouchers work?
What are the implications of providing nursery care?
Preparing for an emergency
How to help working parents achieve a work-life balance
Strategies in practice…
Contributor: Victoria Furness
Family-friendly policies and benefits have been creeping up the employment agenda for several years. What began with a woman’s right to return to work after having a baby has spread to encompass the rights of fathers to spend time with their children and for workers as a whole to enjoy a better work-life balance.
Inevitably legislation has been the driving force behind many changes – and this year will be no exception when various provisions in the Work and Families Act 2006 come into force in April 2007. At the same time, progressive employers have come to acknowledge that they must consider the distinct needs of working parents if they are to reach out to the widest pool of talent possible.
Certainly, working parents comprise a significant proportion of the workforce. “In two-thirds of families with children in the UK, both parents work,” says Jonathan Swan, policy and research officer at campaigning charity, Working Families.
Statutory rights now extend beyond working mothers to include two-weeks’ paternity leave paid at the statutory rate, which was introduced for fathers in April 2003, and the right to leave and pay for adopting parents. Furthermore, changes to the rules on tax and national insurance contributions for employer-supported childcare in April 2005 gave employers more options in supporting working parents through the benefits package.
Some employers have gone beyond their legal obligations and implemented a raft of policies and benefits that support working parents in a range of ways. PricewaterhouseCoopers, for example (see case study below PricewaterhouseCoopers: Meeting the needs of a diverse workforce), gives mothers returning from maternity leave an extra 20% of their base pay in the form of childcare vouchers for 12 months and offers free emergency nursery places if an employee’s childcare arrangements break down.
It’s rarely altruism that drives employer policies on working parents, however, as Sarah Churchman, director of diversity at PricewaterhouseCoopers (PwC) explains: “We invest a lot in the development and education of our people so it’s critical to achieve a return on investment and retain them.”
Advocates of family-friendly policies also claim such initiatives make employees more motivated and productive. BT, for example, says that home workers are 20% more productive than office-based colleagues and prone to fewer sick days – they take three days on average each year compared to the UK average of ten days.
That said, many working parents still struggle to juggle work and family commitments. According to the British Social Attitudes Report – Perspectives on a changing society, published in January this year by the National Centre for Social Research (NatCen), 69% of full-time men and 58% of full-time women found the demands of their job interfered with their family life.
Many campaigners in this area argue the government could do more through legislation. For example, many parents of disabled children still struggle to combine care commitments with work, and a lot of fathers often cannot afford to lose two weeks’ full salary to take their paternity leave paid at the statutory rate.
However, with several aspects of the Work and Families Act yet to be finalised before the end of this Parliament, there could still be some surprises in store for working parents and employers alike (see below in What should be covered in a strategy for working parents?).
Benefits of flexible working
Under current legislation, parents of children aged under six years or aged up to 18 years if disabled, have the right to request to work flexibly. According to Work Wise UK, a not-for-profit initiative, flexible working or ‘smarter working’ offers several advantages for employees and employers
Source: Work Wise UK
Many employers have arrangements in place with working parents on an informal basis – perhaps letting them leave early during summer holidays or work from home when their child is sick – but it’s not yet common practice in a lot of workplaces for this to be embodied in a formal written policy.
Laura Williams, senior researcher at not-for-profit think-tank the Work Foundation, says: “Much of it comes down to line managers and how an organisation works. The problem with informal practices is that they’re not always consistent; a formal arrangement gives people certain rights and employers can use it to outline their contractual obligations.”
A formal policy for working parents should encompass all aspects of a working parent’s employment rights – from their legal position with regards to maternity or paternity pay, through to policies for time off work in emergencies, processing requests for flexible working, and setting out family-friendly employee benefit entitlements.
Many HR departments have struggled to keep up with family-friendly legislation – and this year will be no exception when provisions under the Work and Families Act 2006 come into effect in April 2007 – but it is vital employers update any policies for working parents in line with forthcoming changes to employment law.
The main changes in the legislation are the extension of maternity and adoption pay from six-to-nine months (by the end of this Parliament it will have increased further to a year), and a broadening of the right to request flexible working to carers of adults (including parents of disabled adults over the age of 18 years). The right to request flexible working was previously limited to parents of children younger than six years or disabled children under 18 years.
Also included in the Act is a new right for fathers to take up to 26 weeks additional paternity leave, some of which could be paid if the mother returns to work. The details of how this shared leave arrangement will actually work have yet to be finalised. According to a Labour market outlook quarterly survey for autumn 2006 from the Chartered Institute of Personnel and Development, almost half of employers that responded were concerned that the paternity leave provisions of the Act would cause them some problems, while 57% thought the maternity and adoption pay provisions would cause difficulties.
What should become easier for employers, however, is managing the return to work for women after maternity leave. Justin Beevor, partner in the employment law department at solicitors firm Mace & Jones, says: “Maternity returners are required to give eight weeks notice to return whereas previously it was 28 days.” There is also provision for employees to have up to ten ‘keeping in touch’ days with their employer without losing their entitlement to statutory maternity pay. “Previously if a woman returned to work for the odd day during her maternity leave – perhaps for training – she would lose her entitlement,” adds Beevor.
All these changes need to be written into an employer’s policy and communicated to staff, so everyone knows what rights working parents are entitled to.
Some employers fear that promoting their strategy for managing working parents will alienate members of the workforce that aren’t parents.
Lynne Keeble, product manager for childcare vouchers at Accor Services points out that family commitments of one employee can have an impact on others. “Someone going on maternity leave and not coming back has an adverse effect on her colleagues,” she says.
Yet many policies, such as flexible working, can be applied equally across the entire workforce.
In some sectors an employer’s policy for working parents could be the deciding factor for an employee in choosing one company over another. By clearly communicating its policy to staff, an employer can at least ensure its own workforce is aware of what’s available to them if their circumstances change, rather than investigating what the competition has to offer instead.
In April 2005, the government changed the tax exemptions on employer-supported childcare to encourage more organisations to help working parents with their childcare responsibilities. Childcare vouchers are now exempt from tax and national insurance contributions up to £55 per week, and workplace nurseries can receive a full tax break if the nursery has active involvement from the employer.
Some employers also offer working parents emergency childcare. Jacqueline Otten, principal at Towers Perrin, says: “It’s not a general trend as it is quite expensive for employers – they have to buy it in advance and commit to a number of places – so it tends to be offered by employers trying to recruit talent.”
Employers wanting to attract working parents might also consider extending benefits such as private medical insurance to every member of an employee’s immediate family. “In addition, some childcare voucher providers offer a telephone helpline as part of their service for information on childcare in their area,” adds Otten.
Outside the benefits package, employers can help parents who have children under the age of six years or 18 years, if disabled, to manage their childcare responsibilities by accommodating any requests for flexible working. From April 2007, carers of disabled dependants over the age of 18 years will also be eligible to make a request for flexible working under the Work and Families Act 2006.
Employees wanting to take extra time off to spend with their family might buy extra holiday if their employer offers this benefit. This is typically provided through a flexible benefits plan, as are childcare vouchers. By offering both of these benefits on a salary sacrifice basis, whereby employees waive a certain amount of salary in return for the benefit, employers and employees can reap the maximum tax and national insurance savings. Other benefits such as private medical insurance, emergency childcare and employee assistance programmes are usually offered through the core benefits package.
|Popular family-friendly benefits:
39% of employees ranked flexible working as their favourite benefit
38% of employees chose more than 21 days holiday
11% valued creche or childcare payments
Source: ‘What do employees really want?’ Employee Benefits survey, November 2006
It might come as a surprise to learn that childcare vouchers have been in existence since 1989. But it was only two years ago when the government made vouchers worth up to £50 a week exempt from tax and national insurance contributions for employees and exempt from national insurance contributions for employers that the benefit increased in popularity. In 2006, the Chancellor increased the tax and national insurance exemption limit to £55 a week or £243 a month.
Childcare vouchers provide a cost-effective way of helping working parents manage the financial burden of childcare. According to Employee Benefits/Towers Perrin Flexible Benefits Research 2007, 84% of employers offered childcare vouchers through flex, making it the most popular benefit to include in a scheme.
Childcare vouchers can be offered to employees on top of existing pay, as part of a flexible benefits package or through a salary sacrifice scheme, whereby a parent elects to sacrifice some of his or her salary in the form of childcare vouchers. However, employees near the national minimum wage should be careful when using salary sacrifice to purchase childcare vouchers in case it takes them below this level of pay. Likewise, families using childcare vouchers may find that they are better off claiming the childcare element of working tax credit instead. The credit can not be claimed if vouchers are also being taken on a tax-efficient basis.
Childcare vouchers only extend up to the first September after a child’s 15th birthday or their 16th birthday if the child is disabled, therefore many parents of disabled children in particular are left struggling to juggle work and family. But providers are looking at rolling out carer vouchers, and a coalition of employers and charities are lobbying the government for tax breaks to enable parents with a disabled child over the age of 16 years to purchase care services using these vouchers on a tax-efficient basis.
Advocates of the scheme say employers would also benefit: not just from lower absenteeism, but also from having more dedicated employees.
• Childcare vouchers have to be made available to all staff.
• Employees cannot purchase vouchers on behalf of grandchildren or relatives.
• Childcare vouchers can only be used at government-approved nurseries or with registered nannies and au pairs.
The cost of childcare in the UK is the highest in Europe, according to the charity Working Families. So for many employees, the cost of returning to work after having children can outweigh the salary benefits. It’s therefore little surprise that in areas where there are particular skills shortages, employers have been examining how they can help staff with nursery provision.
Essentially, employers have three options in offering support: they can provide an on-site nursery exclusively for staff; buy a number of places with a childcare provider or nursery through a partnership scheme; or offer childcare vouchers.
Kwik-Fit Insurance Services choose the first option and opened the doors to its on-site nursery, ‘Little Fitters’, in Glasgow just over a year ago. Most of the company’s staff are working parents and places are heavily subsidised for employees. The day-to-day running of the nursery is sub-contracted to Bright Horizons, but the nursery itself is heavily influenced by Kwik-Fit. The opening and closing hours are based on the shift patterns of staff, for instance, and all the children receive Kwik-Fit overalls when they join.
Set up at a cost of £500,000 to Kwik-Fit, an on-site nursery was not the cheapest option, but the company believes it was the right approach for its organisation where women make up 60% of the workforce. Martin Oliver, managing director of Kwik-Fit Insurance Services, says: “I see the centre as being a recruitment tool; having a world-class working environment gives us a chance to cream off the best talent. We would like to see mothers back earlier after maternity leave and we appreciate that having on-site childcare may help people come to that conclusion more readily.”
Where organisations provide a nursery on their premises staff benefit from tax and national insurance exemptions, while employers save on national insurance contributions. The exemptions cover the whole subsidy, potentially saving employees more than other childcare-supported benefits. Employers can also set their capital expenditure cost against corporation tax. And to provide a further incentive, the Chancellor announced capital grants in the 2006 Budget, worth £8 million a year for the next two years to assist small- and medium-sized employers in establishing workplace nurseries.
Alternatively, employers can buy a number of places at government-approved nurseries through a workplace nursery partnership scheme. As with childcare vouchers, the first £55 per week is exempt from tax and national insurance contributions for employees, and the childcare has to be provided by a registered or approved childcare provider. Employers can also claim tax relief on the day-to-day costs of providing or subsidising nursery care. The tax savings might be lower than if they were providing onsite nursery care which comes with significant capital outlay and management costs.
Employers wanting to help their employees with emergency childcare can also buy places at nearby nurseries. As with workplace nursery partnership schemes, there are exemptions from tax and national insurance contributions for employees.
David Post, vice president of client services at Bright Horizons, says: “We operate a full-time back-up childcare centre for an investment bank in the heart of London. The way most organisations use back-up care is to limit the places to 20 days per year per dependant, so it covers all those breakdowns in care one might have, but it doesn’t become a substitute for a full-time service.”
The centre is also used for women returning from maternity leave to help their transition back into the workforce. “Maybe they only need care once a week until they feel comfortable coming back full time. But it’s a terrific way for organisations to support women who want to return to the workforce,” he adds.
Post estimates that a third-to-a-half of its employer sponsors also offer out of school care in the form of holiday playschemes for employees’ children. The same tax and national insurance contributions savings apply as for workplace partnership schemes. This type of childcare is particularly useful during the long summer holidays, when a lot of parents are at a loss as to how they will juggle work with looking after their children. “I do think we’ll see more employers offering it,” he adds.
The Daycare Trust, the national childcare charity: www.daycaretrust.org.uk
HM Revenue & Customs: http://www.hmrc.gov.uk/
WorkSmart from the TUC: http://www.worksmart.org.uk/
Investing in emergency childcare is a similar experience to buying insurance – you only ever need it when something’s gone wrong.
By law, employees have the right “to take a reasonable amount of time off work to deal with certain unexpected or sudden emergencies and to make any necessary longer-term arrangements.” A breakdown in childcare arrangements – such as a childminder failing to turn up – qualifies as an emergency providing the working parent does not know in advance that his or her childminder will be unable to work. Otherwise, an employee might want to consider taking parental leave instead.
Parental leave gives a working parent 13 weeks’ unpaid leave to care for their child, as long as he or she has completed one year’s service with their employer. Thereafter, it can be taken at any point until the child reaches five years or 18 years if the child is disabled, in which case parents also qualify for an extra five weeks’ parental leave.
Employers are under no legal obligation to pay an employee for the time they take off work to deal with an emergency. Likewise, parental leave is unpaid. To help with these emergency situations, some employers offer staff the option of buying a few days extra cover through a voluntary benefit package, which can be exercised at short notice.
Some employers have gone one step further and reserved extra nursery places to ensure that even when an employee has a breakdown in childcare, it does not keep them out of the office.
Likewise, some childcare voucher providers include emergency cover with their vouchers. Julia Roberts, corporate sales manager at Leapfrog Day Nurseries, explains: “It means that if a parent uses a childcare voucher to pay a registered childminder, we can find a place for the child in the nearest Leapfrog nursery if their childminder is then off sick.” Another option is to give employees access to employee assistance helplines that will search on an employee’s behalf for suitable replacement childcare.
None of these are long-term solutions, but in the short-term they ensure that employees can focus on their day-to-day job, without worrying about the safety and care of their child while they’re at work.
For most working parents the prospect of achieving the ideal work-life balance is a distant dream, but many employers are trying to help employees move one step closer with policies designed to make it easier to juggle work and family commitments.
The right to request flexible working for parents with children under six years or disabled children under 18 years was introduced in April 2003 specifically to help working parents. In April 2007, the right to request to work flexibly will be broadened to carers, including parents looking after disabled dependants above the age of 18 years.
As with the right to request flexible working by parents of small children, the employer must pay serious attention to the employee’s request, but is under no obligation to agree to it. That said, the charity Carers UK says the majority of requests from parents of disabled children have been granted. It estimates that more than 1.5 million carers could take advantage of this new right to request flexible working – and claims that it will end up helping employers as much as carers by keeping people in work.
Emily Holzhausen, head of policy and public affairs at Carers UK, says: “The reality is that people are struggling without this support – or they are having to pay for it and can’t really afford it – so some people give up work to care. You’d never expect a parent to go back to work without adequate childcare, so why are we not thinking about care services in the same terms?”
With the change in flexible working legislation, work-life balance is moving away from being seen as a woman’s prerogative to a more general right for working parents of either sex. However, Jonathan Swan, policy and research officer at the charity Working Families says men are still in a minority. “It has something to do with keeping income levels the same, but I also think there are lots of cultural barriers for men. So if companies are serious about men working flexibly, they need to point to some role models,” he says.
Some employers have extended the right to request flexible working to all employees, which can help to appease members of the workforce who aren’t parents. Laura Williams, senior researcher at the Work Foundation, says: “Ultimately that’s the way a lot of organisations are going as work-life balance is not just about people with caring responsibilities but also people who have different commutes, who want to work different hours, study outside work and so on. But it does make it a difficult situation to manage.”
In smaller organisations, HR is often responsible for managing flexible working requests, whereas in larger organisations the employee’s line manager is also likely to have some input. Working Families’ Swan suggests: “Alternatively an employee might talk to other members of the team to try and produce their own solution.”
While advocates of flexible working believe it has improved the situation for working parents – and their employers – Professor Rosemary Crompton, co-author of the British Social Attitudes Report from the National Centre for Social Research, says flexible working may not be the best means of improving work-life balance. “There needs to be more focus on reducing stress and pressure at work rather than simply promoting ‘flexibility’,” she adds.
To this end, some employers have introduced employee assistance programmes that give working parents free access to specialist care services, stress counsellors and help with finding childcare in the local area through specialist telephone helplines.
James Bradley, director of service delivery at employee assistance programme provider, Employee Advisory Resource, explains: “It is about easing the burden for people.” From an employer’s perspective, providing employees with access to a counselling helpline can also help it demonstrate duty of care in looking after the welfare of its employees.
|Employees can ask for a variety of different work patterns, which could include:
• Part-time – working less than the normal hours, perhaps fewer days per week.
• Home working – working from home.
• Job-sharing – sharing a job designed for one person with someone else.
• Term-time working.
• Compressed hours – working agreed hours but over fewer days.
• Flexitime – choosing when to work (there’s usually a core period during which an employee has to work).
• Staggered hours – different starting, break and finishing times for employees in the same workplace.
• Annualised hours – an employee’s hours are worked out over a year.
Source: Directgov – www.direct.gov.uk
Learn from employers that have already implemented policies for working parents:
Sarah Churchman, director of diversity at PricewaterhouseCoopers (PwC), is proud of the fact that staff turnover is the lowest it has ever been at the accountancy firm. “It’s currently running at 10%, which is also the lowest in our profession,” she claims.
A key element of PwC’s strategy in retaining employees is providing family-friendly policies to working parents, the largest group in its 15,000 workforce. Employees can receive help with childcare through childcare vouchers and have access to free emergency nursery places if their childcare breaks down. In addition, mothers returning from maternity leave receive an extra 20% of their base pay in the form of childcare vouchers for 12 months.
Parents looking for emotional support have access to an employee network devoted exclusively to parents. It has just produced an informal guide for new parents and holds regular lunchtime sessions on different aspects of parenting. There’s also a special needs child support network, which is run by PwC’s disability employment expert who has a son with cerebral palsy.
Many of the company’s employment policies, such as the right to request flexible working, are also available to employees who aren’t parents. “Our aim is that flexible working isn’t just seen as being for working parents as that can lead to stigmatisation,” says Churchman.
Bristol University: Enticing female academics back to work
In common with many other higher education institutions, Bristol University suffers from an under-representation of female academics. Christian Carter, personnel manager (policy development) at the university, says: “At the junior academic level, the male/female ratio is 50:50, but it tails off as you get higher up, and at professor level, the number of women drops off dramatically.”
The HR department is working hard to redress the balance with a range of family-friendly policies, including flexible working (available to all staff), nursery provision for children up to the age of five years and a Women Returners Scheme, which relieves female academics from the science faculties of all teaching duties for six months after returning to work.
The initiatives form part of the University’s Positive Working Environment (PWE) agenda, which was launched three years ago as a recruitment and retention tool.
An employee’s hours are worked out over a year.
Based on the same model as childcare vouchers, carer vouchers would give employees access to care services. A coalition of employers and charities are lobbying the government to provide carer vouchers with the same exemptions from tax and national insurance contributions as childcare vouchers in order to make them a viable benefit for employees.
A benefit offered to employees to reduce the cost of childcare provision. Childcare vouchers are exempt from national insurance contributions for employers, and exempt from tax and national insurance contributions for employees up to the value of £243 a month or £55 a week if the employee is paid weekly.
An employee works his or her agreed hours but over fewer days.
Employee assistance programme
An employee assistance programme (EAP) can be as basic as a confidential telephone helpline for employees that want information and advice on a number of personal or work-related issues, or as comprehensive as face-to-face counselling services and back-up support for management.
A working pattern or arrangement created to suit the employee’s needs.
An employee chooses when to work, however, there’s usually a core period during which he or she has to work.
Working from home.
An employee shares a job designed for one person with someone else.
Nursery provision offered at an employer’s workplace to its staff. Employers can sub-contract the day-to-day care to a specialist provider of nursery childcare.
This entails working less than the organisation’s standard hours, which ar