Guinness paternity leave game changer – should SME’s follow suit?

Alan Hickey, Associate Director of Advisory at employment law consultancy Peninsula.

Diageo, the company behind Guinness and other leading drinks brands this week announced that all employees across its Irish operations will enjoy 26 weeks’ fully paid leave under an ambitious new family leave policy.

So why are Diageo making this move and should SME’s follow suit?

Diageo described its decision to equalise maternity and paternity leave benefits as ‘a significant step for us and shows our commitment to leading the way with progressive employment policies by supporting gender equality in the workplace’.

With the Irish economy nearing full-employment, the biggest challenge facing employers in the coming years will be attracting and retaining employees.

Against this economic backdrop, staff retention is a key priority for employers and the move by Diageo which the business hopes will support all employees with the challenges of raising young children may be viewed as part of a wider strategy to become an employer of choice.

Is fully paid parental leave realistic for the SME sector?

While a large multinational will be sufficiently resourced to manage a 26-week absence without the need to recruit a temporary replacement, the priority for small businesses when managing a period of maternity leave is finding temporary replacement staff. Paying the absent employee’s salary along with a temporary employee’s salary just isn’t as sustainable for a typical SME as it might be for a large multinational.

As the SME sector accounts for over two-thirds of employment in the country, there is little to no chance of the majority of Ireland’s employers following Diageo’s lead.

The only equalisation of the state maternity and paternity benefits would allow the country’s biggest employment sector to help mothers and fathers of young children achieve a more balanced division of childcare duties, a position Peninsula has long advocated as being an essential policy objective if the Government is intent on narrowing the gender pay gap.

Diageo’s announcement comes shortly after the news that the government has paved the way for its new paid parental leave scheme to commence in November.

The European Parliament and Council have also reached a provisional agreement on proposals for a new EU Directive on work-life balance for parents and carers. There appears to be political will both at EU and domestic levels to foster a more family-friendly work culture.

While not all employers will be in a position to match Diageo’s policy, equalising state maternity and paternity leave benefits would almost certainly contribute to the workplace as a work/life balance initiative, a means of tackling the gender pay gap and a way to minimise the negative impacts of existing maternity leave benefits on women’s long-term contributions to their employer’s business.