Plans by the European Union (EU) to introduce full pay for the first 20 weeks of maternity leave could cost £2bn a year.
The proposed changes, backed yesterday by a European Parliament committee, to the pregnant workers directive are designed to boost the minimum statutory benefits for new mothers, which currently vary across the EU’s member states.
Pregnant women in the UK currently receive a full year off with six weeks paid at 90% of the mother's average pay, followed by 33 weeks on Statutory Maternity Pay (SMP) of £123 a week. The remaining period is unpaid.
While the brunt of the cost of this increase in maternity pay will probably lie with the Teasury, which currently reimburses businesses for the cost of SMP, small business groups expressed concern that, if the law is passed, the government will pass some of the cost on to employers. It has also been suggested that the measures could put small businesses off employing women of child-bearing age.
Adam Marshall of the British Chambers of Commerce (BCC) said: "This vote introduces complexity and uncertainty, which are totally unnecessary, as the UK and other EU countries already have well-developed national maternity pay systems.
"Companies need to be given the space to deliver growth and jobs, without being hamstrung by new and costly maternity rules."
Forum of Private Business (FPB) chief executive Phil Orford said: “We believe the existing arrangements are generous enough. If they go ahead, these plans will impose yet another major cost on small businesses when they can least afford it. I would urge MPs to do everything they can to make sure they don’t make it into British law.
Recent research found that almost half of FPB members (46%) believe maternity and paternity laws seriously hinder their businesses.
The government has said it will “lobby hard” against the proposed change.
Lord Young, the employment relations minister, said: "The commission's proposals are only at an early stage, but we do have concerns and are lobbying hard to get the right deal for the UK. We already have a generous system … balancing the needs of business and workers."
The proposals will go before the full European Parliament early next month.
© Crimson Business Ltd. 2010