News

June 18, 2010

EU increases maternity pay to boost female entrepreneurship

EU member states have endorsed legislation aimed at encouraging more women to set up in business, by giving self-employed women the same maternity pay as employees, writes Kate Horstead.

The EU Directive will give self-employed women, and those who help their self-employed partners, the chance to claim an equal rate of maternity pay. Although the UK already has maternity pay legislation in place for self-employed women, the rules are different to those for female employees.

Everywoman training director, Toni Eastwood, said that the legislation would reassure younger women wanting to start their own businesses.

“With this flexibility, young women who would usually decide to have a job where they would get more maternity pay, rather than starting a business, will have more choice,” she said. “It also might make women feel more secure if they already run a business and are thinking about starting a family.”

However, Eastwood said there are questions to be raised about how the legislation will work in practice. “It would be very difficult to keep growing and maintaining your business while taking that time out, although that extra money might enable you to bring someone on board to help you,” she said.

National maternity charity Maternity Action spokeswoman, Ros Bragg, added: “Currently, the entitlement to maternity allowance in the UK is less than the entitlement to maternity pay, so self-employed women lose out – it would be great to see this rectified.”

The EU legislation must be introduced into UK law by summer 2012, or 2014 if there are “difficulties” bringing it in.

At present, self-employed women in the UK are entitled to ‘maternity allowance’ for a maximum of 39 weeks, from the date that they stop work, at the standard rate of £124.88 per week (or 90 per cent of their average gross weekly earnings, if this is less).

Female employees are entitled to ‘statutory maternity pay’, which gives them 90 per cent of their average gross weekly earnings for the first six weeks. This often amounts to more than the rate of maternity allowance. For the remaining 33 weeks they will get the same rate as maternity allowance.

“This new law makes real improvements to the rights of self-employed workers and their partners, in particular women,” said EU commissioner for justice, fundamental rights and citizenship and vice-president of the European Commission. “It will help them to better balance work and family life and encourage more women to become entrepreneurs – which is good for the economy too.”

The maternity leave allowance would be paid out of a social insurance scheme, requiring contributions from self-employed women, although national governments can decide whether to make joining it compulsory or voluntary.

Eastwood said that the social security scheme should have optional membership. “If I was self-employed and I knew I didn’t want to have children, I wouldn’t want to pay for it,” she said. “If people can just opt in, that gives everyone choice and flexibility.”

Currently, only 30 per cent of entrepreneurs in Europe are women, according to the European Commission.

• For more information on the current UK regulations on maternity leave and pay, visit the Direct.gov website