Pay and Benefits

Prime Minister David Cameron has said that he wants to speed up the adoption process after it was revealed that only 60 children under the age of one were adopted out of local authority care last year.

With the prospect of an increase in the number of adoptions, employers need to be aware of their obligations. This article looks at the leave and pay entitlements of these staff members.

 

Since April 2003, employees who satisfy eligibility criteria have had a statutory right to take up to 52 weeks’ adoption leave. Adoption leave is intended to reflect the right to Statutory Maternity Leave.

 

While it is common for employers to offer enhanced maternity terms, it is fairly unusual for employers to offer enhanced rights and benefits on adoption, perhaps reflecting the fact that adoption is relatively rare.  

 

Like maternity leave, adoption leave is split into the first 26 weeks’ Ordinary Adoption Leave and the second 26 weeks’ Additional Adoption Leave. An employee is only entitled to one period of adoption leave if they adopt more than one child as part of the same arrangement.

 

Although it is possible for single people to adopt, where a couple is adopting the partner of the person who elects to take adoption leave may be eligible to take Statutory Paternity Leave. This would include a same-sex partner.

 

Adoption leave is only available to employees, ie those working under a contract of service or apprenticeship, and not other workers or the self-employed. In addition:

Given this last requirement, it is clear that adoption leave is only available for those who have been newly matched with a child; those who are adopting a child who are not newly matched, for example a step-parent adopting their partner’s child who lives with them, would not be eligible. Perhaps surprisingly, employees who use a surrogate to have a child would also be unlikely to be eligible for adoption leave and pay. This is because any legal adoption would probably not be through an adoption agency (and only the birth mother of a surrogate child may take maternity leave).

 

Those who adopt from outside the UK are also eligible to take adoption leave but some of the procedural requirements are modified in those circumstances.

 

Once an employee has been notified that they have been matched with a child they must give their employer notice of their intention to take adoption leave within seven days (or as soon as reasonably practicable thereafter). Such notice must state the date on which the child is expected to be placed with the employee, and the date on which the employee wishes to start their adoption leave.

 

The employer can then, if it wishes, request evidence in the form of documents issued by the relevant adoption agency confirming the name and address of the agency, the date of the matching, and the date on which the agency expects to place the child with the employee. A standard “matching certificate” is available from the Department for Business, Innovation & Skills (BIS) website which provides a framework for the agency to provide all the prescribed information.

 

An employee can choose to start their adoption leave on the date that the child is placed with them or no more than 14 days before such date.

 

An employer must write to the employee within 28 days of receiving an employee’s notice informing them of the date on which their adoption leave will end. A standard letter for this purpose is available on the BIS website.

 

Employees who are entitled to take adoption leave will also be entitled to be paid Statutory Adoption Pay (SAP) for the first 39 weeks of such leave if they earn more than the Lower Earnings Limit. However, eligibility for SAP extends to some individuals, such as office holders and other employed earners such as agency workers who are not entitled to take Statutory Adoption Leave (SAL) because they are not employed under a contract of employment.  

 

Since 3 April 2011 the standard weekly rate for SAP is £128.73. An employee must be paid either this amount or 90 per cent of their normal weekly earnings, whichever is lower. Note that this is in contrast to Statutory Maternity Pay where the first six weeks are paid at 90 per cent of the employee’s average weekly earnings with no upper limit.

 

The Adoption (Leave, Pay and Allowance Arrangements) Bill is currently going through Parliament. The aim of the Bill is to equalise leave, pay, and allowance arrangements for adoptive parents with those of parents whose children are born to them. The Bill includes a provision equalising the rates of pay for the first six weeks of maternity leave and adoption leave. A second Commons reading is due in January 2012 but as this is a Private Member’s Bill it is unlikely to become law without Government support.

 

The amount of SAP payable is unaffected by the number of children adopted. Employers can recover 92 per cent of the SAP they pay from HM Revenue & Customs. Small businesses, whose total National Insurance (NI) payments are £45,000 a year or less, are entitled to recover 100 per cent of SAP paid and an additional amount of three per cent to compensate them for employer’s NI contributions paid on the SAP.

 

During adoption leave the employee’s contract of employment remains in force as regards to all terms and conditions, except those in respect of remuneration (unless there is a contractual right to continue to receive remuneration during such leave). Non-cash benefits such as gym membership, participation in share schemes and insurance benefits should continue to be provided and contractual holiday will continue to accrue. 

It looks inevitable that the current right to SAL and SAP will only be with us in its current form for a few more years. In May 2011 the Government announced plans to introduce a system of flexible parental leave to be shared between parents as they wish from 2015. The Government’s aim is to give parents greater choice and facilitate truly shared parenting.

Under the proposals parents will be able to split parental leave between them but also take leave together, at the same time. The Government has sought views on the possibility of allowing greater flexibility over when leave is taken, for example, splitting it into two or more periods of leave or taking it on a part-time basis. The consultation closed in August and the Government is yet to respond with further details of its plan. However, it has confirmed that there would be parity within any new scheme for adopters.

 

While the current form of SAL and SAP is not widely taken up due to the relatively low numbers of adoptions which take place in the UK, it does have the advantage of being relatively simple to operate and understand.

 

Whatever the eventual shape of shared parental leave, greater flexibility for parents is certain to involve additional complexity for employers.

 

Katy Meves is an Employment Specialist at Shoosmiths