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Contractor Doctor: Can I claim shared parental leave through my umbrella company?

Dear Contractor Doctor

I’ve been an IT contractor for over five years and am currently working through an umbrella company. My latest contract has lasted just over nine months, and I have been with the same service provider the whole time.

My wife is expecting a baby and we are going through the process of planning how much maternity leave she would like to take. During our research online, we have come across the concept of shared parental leave (SPL). It sounds like my wife and I might be able to share the time we take off to be with our new baby.

Can I claim shared parental leave through my umbrella company?

Thanks,

Dominic

Contractor Doctor says:

Shared Parental Leave (SPL) and Statutory Shared Parental Pay (ShPP) is available for eligible parents whose baby is due, or whose child is placed into adoption, after 5 April 2015,” explains Kerry Harvey, senior HR advisor at professional employment service provider Parasol.

“It is designed to allow parents the flexibility to consider the best arrangements to care for their new child in its first year. Mothers have always had the opportunity to take maternity leave. SPL now extends both the opportunity and legal right to both parents.”

Umbrella company contractors employed by compliant umbrella services providers should receive all the benefits that any other employee will receive. This includes SPL and ShPP.

Shared Parental Leave allows fathers to be more involved in childcare

According to Harvey, SPL and ShPP were introduced as part of the Children and Families Act 2014 and represent the legalities surrounding maternity catching up with the times: “Decades ago, fathers were excluded from many of the activities associated with childbirth and childcare, from being banned from scans and the delivery room to taking little or no part in nappy changes and feeding.

“That is no longer the case, nor has it been for many years, but the focus of maternity leave and pay has been largely on the mother. Increasingly the mother is the main breadwinner in the household, so SPL enables parents to consider what’s best for the child and for the family’s finances in the first year.”

How does SPL work?

Traditionally, maternity leave has enabled the mother to take up to 52 weeks off to care for the new baby. SPL enables eligible parents, including spouses and civil partnerships, to share 50 of the 52 weeks between them. ShPP is the same as maternity pay, £138 per week (correct at the time of writing).”

“A mother is required to take two weeks of maternity leave after the birth of the baby, but after that she can return to work fulltime,” continues Harvey. “The remaining 50 weeks can be shared between the parents. They will be able to take it in turns to have periods of leave and/or take leave at the same time as each other.”

According to Harvey, SPL goes a step further than maternity leave as it allows what are known as shared parental leave in touch, or SPLiT, days which are ideal for contractors: “Previously, if a mother returned to work then maternity leave was lost.

“Under SPL, using their SPLiT days, a parent can work up to 20 days continuously or on an ad hoc basis without bringing parental leave to an end.

“They can also book blocks of SPL, rather than taking it all in one go, although the parent must give their employer eight weeks notice and the blocks must be discussed and agreed. This flexibility enables a contractor to keep contracting.”

Contractors must be eligible for SPL to qualify for SSPP

An understanding of the eligibility requirements is essential for an umbrella company contractor to determine whether they qualify for leave. Harvey explains: “For an umbrella company contractor to be eligible, they must have been in continuous employment for at least 26 weeks by the end of the 15th week that the baby is due.

“The contractor must still be in employment during the week before any shared parental leave is due to start. They must also be employed by the same service provider when they take SPL. If they cannot satisfy these conditions, then they are not eligible. These conditions apply to both parents.”

Because many umbrella contractors change service provider as often as they change contract, many would fail the eligibility criteria. However, Harvey highlights that there are alternative eligibility conditions.

“If a contractor’s partner qualifies for SPL, and they have been working for at least 26 weeks (in the 66 weeks leading up to the baby’s expected due date), which do not have to be consecutive, and earning on average £30 per month, they will pass the ‘employment and earnings’ test for SPL and could be eligible.

What do I need to do to take my SPL?

Harvey urges any contractor considering taking SPL to talk to their provider at the earliest opportunity: “When one of our contractor clients is considering SPL, our first step is to discuss their options over the phone. Then, assuming they are eligible, they will complete a form booking their time off.

Of course, each parent is likely to be working for a different employer, so both sets of employers need to be informed: “We would only be concerned with the eligibility of the contractor who is our employee, not the other parent. Eligibility and payment for the other parent is the concern of their employer.

“Having decided with their partner or spouse how they planned to take SPL, a contractor would typically complete a form and submit it to their service provider employer. If they change their mind, they would need to submit a ‘variation of leave period notice’. Contractors taking SPL can do this three times, but must discuss the change with their employer and provide reasonable notice.”

ShPP is government funded, so is not funded by the service provider or by the contractor.

Harvey concludes: “In the vast majority of cases of contractors taking SPL, the mother still takes the bulk of the time off. However, as parents become more aware of their entitlements, we anticipate that its uptake will become much greater allowing both parents to play a primary carer role for their new child.”

Published: Thursday, April 9, 2015

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