Shared Parental Leave and Pay – what do the changes mean for contractors?

Last year the Government announced the introduction of a new statutory entitlement of shared parental leave and pay came into effect from 5th April 2015. So, what will these changes mean for contractors?

Caroline Barnes, Head of Resources at Outsauce, explains more about how these changes will affect umbrella contractors, in particular.

What does the new legislation mean?

In short, the incoming shared parental leave (ShPL) and statutory shared parental pay (ShPP) will allow eligible parents to request more flexible leave from work in the first year of their child’s life, giving both mothers, fathers and partners more opportunities to take on child care responsibilities and enabling families to take time off together.

When the new rules come into force, mothers will have the option to return to work earlier (ending maternity leave early) and share their remaining entitlement with their partner – providing they’re also eligible for ShPL.

Eligible parents will also be able to request to mix work with leave, taking it in discontinuous blocks and returning to work between periods of time off if they wish. Two weeks statutory paternity leave and pay will continue to exist, however, ShPL will replace additional paternity leave and paternity pay will no longer be available for fathers of babies due after 5th April.

How does it work for contractors

To qualify for ShPL you must have been employed continuously by your employment service provider for at least 26 weeks by the end of the 15th week before the baby is due.

You must also still be in employment in the week before any shared parental leave is due to start and be employed by the same provider while you take ShPL.

Some contractors may find they don’t fit into the above criteria. However, if your partner qualifies for ShPL, and you have been working for at least 26 weeks (they don’t need to be in a row) earning at least £30 a week on average – you will pass the Employment and Earnings test for ShPL and could still be eligible.

There is also an individual allowance of up to 20 shared parental leave in touch (SPLiT) days within ShPL. The SPLiT days enable you to work up to 20 days, either on odd days or continuously, without bringing an end to your ShPL or pay.

For contractors, this potentially could be used to take on short term contracts (say, for two weeks) without breaking leave. It could also provide the flexibility to complete a short contract which may come into conflict with previously arranged ShPL.

Work closely with your service provider

Contractors thinking about taking leave will need to work closely with their employment provider and relevant recruitment agencies to plan and agree arrangements.

All parties should be involved and fully aware of all arrangements to ensure leave is fully understood. The first step should be to get in touch with your provider to collaboratively plan any leave and ensure there is effective management of ShPL and any SPLiT days – should they arise.

And it is important to be aware of the deadlines for confirmation of leave. For example, contractors must give at least 8 weeks’ notice before they plan to take shared parental leave and/or pay. While a continuous block must be automatically accepted, discontinuous blocks of leave need to be discussed and approved by all parties involved.

Additional benefits of ShPL for contractors

ShPL could potentially open up more opportunities for contractors, as increasing numbers of permanent male employees start to take longer periods of leave than previous legislation enabled.

While statistics have shown that only 1% of fathers have taken the additional paternity leave that came into force in 2011, this new legislation points to a more systemic shift that could fundamentally change how fathers’ leave is perceived and used in practice.

And therefore, many businesses may find themselves with various members of staff taking extended periods of time off. Consequently, this will increase the demand for skilled contractors who can quickly fill any workforce gaps.

So contractors should maintain strong relationships with their professional contacts and preferred recruiters to ensure they are always aware of these opportunities as they arise.

Make sure you know the ShPL score

For further general information on the changes, the Government will be providing online tools to check eligibility and has published detailed guidance on the rules around ShPL here.

Partner Contractor Accountants

Last updated: 14th May 2023