Ministers said changing the system will “better support working families and help children get the best start in life”.
At the moment maternity leave is paid at 90% of a mother’s average weekly earnings for the first six weeks. Then, for the next 33 weeks, either the lower of that 90% figure or £187.18 per week.
New fathers can take two weeks’ paid leave at a rate of either £187.18 per week or 90% of average weekly earnings, whichever is lowest. Couples can share up to 50 weeks of leave and 37 weeks of paid leave between them.
The review will look at all types of leave – including maternity, paternity and shared parental leave – to make the system fairer and easier to use.
The Government admitted that the current system is “complicated” and doesn’t always give families the support they need. One in three dads don’t take paternity leave because they can’t afford to, and take-up of shared parental leave remains very low.
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A report by Maternity Action earlier this year found that low levels of maternity pay are pushing women into poverty.
Research shows that better parental leave can help close the gender pay gap and boost the economy by billions of pounds.
Jonathan Reynolds, Business Secretary, said: “The arrival of a child, whether through birth or adoption, is a life-changing moment. We want to make sure parents get the support they need to balance work and family life.
“Campaigners have long called for change, and this Government has listened. This review is our chance to reset the system and build something that works for modern families and businesses.”
Jane van Zyl, CEO of Working Families, said: “We’re pleased to see the Government take this important step forward and welcome the terms of reference set out in the parental leave review. It’s encouraging that several of the key asks in our open letter, signed by 22 leading organisations and 16 academics, have been taken on board, particularly the commitment to deliver a comprehensive review, which considers statutory pay levels and will consult the public.
“Backing up the Government’s findings, our own research shows the current system is falling short, with one in five fathers having no access to parental leave at all, and many others unable to take what they’re entitled to due to financial pressures. This review is a vital opportunity to build a parental leave system that supports the needs of families today.”
