SME Chamber offers advisory on EU Funds
03 February 2023
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The Ministry for Social Dialogue gave a presentation on the proposed method of implementation of the Maternity Leave Trust Fund as had been put forward in the Budget 2015 Speech. The aim is to make engagement in the private sector more gender neutral through this fund which is intended to pay the 14 weeks paid maternity leave.
This fund shall be financed through contribution by private companies. The
premium contribution has been calculated at 0.3% of the basic wage of all employees to be collected to finance the provision of maternity leave in the private sector. The computation of the 0.3% has been based on the number of females engaged in employment, the annual basic wage, probability of maternity, probability of females who stop working before/during/after pregnancy and the number of female employees working in public sector. The revenue has been based on the total employers’ contribution with maternity leave as a percentage of wage bill.
The Trust Fund should be administered through the setting up of a Board of Trustees and overseen by the social partners. The Board of Trustees is envisaged to have a strong representation of employers’ organisations represented on MCESD, with the chairman being proposed to be an employers’ representative.
The proposal included that the system will be based on 3-month, 6-month or 12-month reimbursement system (which is yet to be established) to the employer having paid out the maternity leave following a request for refund. The Trust Fund will be effective upon an issue of the relevant Legal Notice which is envisaged for 2015. The contribution rate may be revised after two to three years.
During the meeting, GRTU described the proposal as positive in principle since it will further decrease negative preconceptions on women’s employment and career prospects. There are other concerns for employers such as the need for replacing the skills during maternity leave, but this alleviates the financial burden.
GRTU outlined that since the collection of the fund is envisaged to be linked to the collection of employers’ National Insurance Contributions, this should not develop into a precursor for future increases of imbalance on NI contributions against the employer. GRTU also outlined the fact that as a by-product of this fund, employers in female-dominated sectors shall benefit at the expense of employers in male-dominated sectors. It also has to be assured that the system does not incur additional unneccessary burdens on employers to implement this, such as expenses for payroll software.
GRTU also inquired whether the public sector will be involved in the fund since this may lead to situations where the bill for the private sector will be proportionally less and private employers might end up making up for the public sector. GRTU was assured that the public sector will not be included in this fund and will continue to pay its employees on maternity leave directly.
GRTU emphasized that the reimbursement system will create unneccessary cashflow concerns on employers which can easily be avoided if the scope of this system is to be reaped – otherwise employers will still see a financial burden of having women out on maternity leave, until the reimbursement is paid. This would also result in employers having to go through elaborate procedures and administrative processes. Therefore GRTU shall continue stressing that any form of repayment or reimbursement should be passed on to employers with immediate effect upon payment to the mother in question.
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