Vodafone announced last week that it is introducing a global minimum maternity policy for its worldwide staff.
Vodafone announced last week that it is introducing a global minimum maternity policy for its worldwide staff. Mothers will be entitled to 16 weeks’ maternity leave on full pay and, for the first six months on returning to work, to do a 30 hour working week, while still receiving full-time pay. This news has caused worldwide interest.
The new policy provides a minimum entitlement, which may be less generous than the statutory entitlements in some Vodafone countries. Where local law provides greater benefits, local employees will of course continue to receive them. There are, however, many countries where local law does not provide benefits as generous as those proposed by Vodafone. Indeed, some countries do not have any statutory maternity rights. Mothers in these locations will clearly benefit significantly.
Very few (if any) global companies offer maternity benefits in this harmonised way. So why has Vodafone made this move? It gives two reasons: (i) talent retention; and (ii) cost savings on the recruitment and training of staff to replace mothers who don't return to work after maternity leave.
A KPMG study commissioned by Vodafone estimates the savings achieved from staff retention will significantly exceed the direct cost of the more generous maternity policy. In addition, Vodafone believe the generous return to work terms will attract more mothers back, and in so doing, enable the company to retain talent. They note that while 35 per cent of the workforce is female, women only make up 21 per cent of their senior leadership team.
What are the implications?
First, harmonisation of global employment terms and policies is not new. Many companies have these. When a global company seeks to harmonise its international employment terms, there is always a key question; to what extent does the company offer more generous employment terms than those required by the rules of a particular country? There might be a number of reasons for doing this. The most common is to strengthen the global company ethos and the sense of being a part of a single global enterprise. Harmonised employment terms can significantly help this and, in turn, improve the company's recruitment power or employer "brand". It is very common, for example, for companies to provide better notice provisions than local rules require or more paid annual leave or to provide enhanced health insurance benefits. However, it is less common to provide enhanced financial or maternity benefits other than on a local market basis. Vodafone's initiative is unusual and possibly ground breaking.
Secondly, while the benefits may be more limited in countries that already have generous maternity rights Vodafone believes that all of its mothers will benefit at least to some degree, particularly from the six month back to work provision. Vodafone employees in the US will especially benefit, as the US has no guaranteed maternity rights.
Thirdly, Vodafone may be an outlier for now, but it is likely others will follow. If KPMG's study is to be believed, the total global cost of recruiting and training new staff to replace women who do not return after maternity is a staggering US$47bn annually. The total annual cost of the extra Vodafone style maternity benefits, is estimated to be US$28bn, giving a possible annual saving of US$19bn. These figures are estimates only but Vodafone point out that the idea for the six month transition back to work arose when they noted that their staff in Italy, Portugal and Romania had better maternity return rates than elsewhere. In these countries, return to work transition arrangements are obligatory.
Another reason this approach may catch on is the attention being given, especially in Europe, to the lack of female representation at the leadership level of large companies and the perceived need to take action to address this. For instance, the draft EU Gender Directive – not yet fully supported by EU members – would require boards of EU listed companies to have at least 33% female membership. However, Norway, which has had such a board level quota system since 2003, has not seen the hoped for trickle-down improvement for women in business generally. Board level quotas themselves will not keep mothers in the workplace. On the other hand, Vodafone's more practical initiative may help reduce the fall out rate and retain talent longer term.
What are the considerations for employers thinking of implementing a similar policy? Care will be needed to understand the appropriate implementation process in each country and to co-ordinate it with existing rules. Notwithstanding that this is an enhanced benefit, employee consultation may be required in some countries, which may involve works councils and/or unions. Employers will also need to consider whether, subject to local rules, there should be a qualifying employment period. They should be aware that there may be benefit creep, perhaps to paternity leave and shared leave arrangements. Will the policy apply to adoption leave, or even to surrogacy arrangements? These detailed issues will no doubt be considered in time.
Overall, Vodafone appear to have taken a bold and rational step towards both retaining talented women in their workforce and reducing the large cost of replacing them if they leave after motherhood.
Joanne Martin is a lawyer at iGlobal Law