Ahead of the EU vote on proposals to extend maternity leave to 20 weeks from the current 14 weeks, the Federation of Small Businesses (FSB) is raising concerns that the additional cost to the UK economy – estimated to be some £2.5bn, or £7,140 per new mom – could act as a deterrent for small firms to take on new members of staff.
Tina Sommer, EU and international affairs chairman at the FSB explains that while a flexible maternity and paternity system is paramount, these proposals will add payroll costs for already over-burdened companies: “These costs will be shared between government and the employer, at a cost of more than £7,000 to a small business – placing a further strain on cashflow.”
Under the current maternity and paternity system operated in the UK, an employer would pay an employee on maternity out of business funds and claim the full cost back from the government. The worry is now that these costs will have to be shared.
For a small business with a full-time employee on an average wage of £25,428, the new proposals could therefore add an extra £7,140 to payroll costs.
“This well-intentioned EU employment law will not help small firms take on new members of staff – vital at this time of high employment. We should be making it easier for people to gain employment, not placing obstacles in their way,” adds Sommer.