In a significant announcement on July 1, 2025, the UK government launched a “landmark” review into the amount of time off and pay new parents can get after the birth or adoption of a child. This comprehensive review aims to modernise the existing system, which has been widely criticised as complex, inadequate, and out of step with the needs of modern families and businesses. For UK businesses, this signals a potentially transformative period for workplace policies, employee benefits, and talent management strategies.
The current statutory parental leave system in the UK has evolved incrementally, leading to a patchwork of entitlements that many find confusing. Currently, new mothers are entitled to up to 52 weeks of maternity leave, with Statutory Maternity Pay (SMP) paid for up to 39 weeks (the first six weeks at 90% of average weekly earnings, followed by a lower flat rate). Fathers and partners can typically take one or two weeks of paternity leave, with statutory pay often cited as too low to be financially viable for many. Shared Parental Leave (SPL), introduced in 2014 to offer more flexibility, has seen notoriously low uptake due to its complexity and the financial disincentives for partners to take it. The government itself acknowledged that “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.”
This review is set to scrutinise the entire system – including maternity, paternity, and shared parental leave – with the explicit goal of making it “fairer and easier to use” for both parents and employers. It forms part of the government’s broader ‘Plan to Make Work Pay’, aiming to boost growth, improve living standards, and ensure working parents feel supported during a life-changing time.
For businesses, the implications are multifaceted. While any changes would aim to support families, the financial and operational impact on employers will be a key consideration in the review. The government has stated that businesses will be “absolutely integral” to the review process and that the aim is not to impose extra burdens. However, it’s inevitable that changes to statutory pay and leave entitlements will require businesses to review their payroll, HR policies, and workforce planning.
One of the driving forces behind the review is the growing body of evidence suggesting that better parental leave policies can have significant economic benefits. Research indicates that more equitable and generous parental leave can help close the gender pay gap, boost female employment and working hours, and contribute billions to the wider economy. For example, some studies suggest that extending statutory paternity leave to six weeks at 90% of a father’s average weekly earnings could deliver a substantial economic uplift. This suggests that while there might be initial costs, the long-term benefits of retaining skilled workers, improving productivity, and fostering greater gender equality could outweigh them.
Businesses currently offering enhanced parental leave packages often report benefits such as improved employee retention, higher job satisfaction, and increased engagement. This review could encourage more businesses to align their policies with evolving societal expectations and potentially lead to a more competitive landscape for attracting and retaining talent, particularly among working parents.
The review will gather views from parents, employers, and experts across the country, culminating in a roadmap for possible reforms. This consultation period offers a crucial opportunity for businesses of all sizes, from SMEs to large corporations, to provide feedback on what works, what doesn’t, and how any new system can be designed to be practical and supportive for both employees and employers. Organisations like the Federation of Small Businesses, British Chambers of Commerce, and the Institute of Directors will undoubtedly be key voices in representing the employer perspective.
As this landmark review progresses, businesses should:
- Stay informed: Keep a close eye on official announcements from GOV.UK and updates from business advocacy groups.
- Review current policies: Understand your existing maternity, paternity, and shared parental leave provisions and compare them to statutory requirements.
- Consider internal impact: Reflect on how changes to leave entitlements might affect your staffing, budgeting, and operational continuity.
- Engage in the consultation: If possible, contribute to the review by providing feedback on your experiences and suggestions for reform.
This review represents a unique opportunity to shape the future of parental leave in the UK. By actively participating and preparing, businesses can ensure they are well-positioned to adapt to any forthcoming changes and harness the benefits of a more supportive and equitable system for working families