International Expansion Blog

Family Leave Trends Around the World

By Laura Marshall, Senior HR Consultant

Laura MarshallMaternity leave and other family-related employment laws differ greatly depending on the country. In some countries, for example, an employee may be eligible for paid leave to take care of a grandchild, a worker right that most US-based HR managers have probably never even considered. Any company that is looking to expand into a new country, or that has established operations abroad, must understand the leave rights of their overseas employees, including so-called “family friendly” laws like grandparental leave and any related customary benefits.

Achieving a balance in the area of family leave is critical for multinationals, but it can be difficult. HR leaders should ask themselves: How can we develop family friendly leave policies that comply with local labor laws and customs, and encourage a healthy work-life balance, all while ensuring that our growing business remains financially sustainable?

The policy-development process entails not only researching local statutory requirements, but also scrutinizing the policies of other similar companies operating in the host country. Given the increasingly competitive global economy, including a widespread emphasis on promoting work-life balance, it is more important than ever for multinationals to offer appropriate benefits if they hope to attract and retain top talent in all their countries of operation.

In order to illustrate the wide variation of family leave laws across the globe, the next section provides some country-specific examples.

Country Nuances: Real-World Examples

In Sweden, there is a common understanding that everyone, regardless of gender, has the right to work and support themselves while also achieving a work-life balance. The country also promotes quality formal education from preschool onwards for both men and women alike. Sweden’s teaching methods in fact frequently counteract traditional gender patterns and roles. In April 2015, for example, Sweden officially introduced the gender neutral pronoun “hen” to avoid promoting traditional gender roles in children.

Family leave trends

The income tax in Sweden is high, but a large share of the collected tax is used to promote the society’s work-life balance. In 2015, parental leave cost the Swedish state approximately USD$3.1 billion, mainly funded through payroll taxes. The state provides long paid parental leave, a monthly child allowance (barnbidrag) until the child is 16 years old, free schooling, free bus rides if parents travel with a pram or a pushchair, and paid time off to care for sick children. These benefits help make Sweden an ideal place to start a family, though employers must carefully account for these benefits when planning and budgeting.

It’s worth noting that Sweden was the first country to replace maternity leave with parental leave, effectively giving both parents the right to paid time off to care for their children. Initially dads could sign over their portion of leave to the mom, but in 1995 Sweden started earmarking a certain portion to the dad. Today, Swedish parents are entitled to 480 days of paid parental leave, and of those, 90 days are reserved exclusively for the dad.

In 2014, dads took 25% of the total parental leave in Sweden. Based on this number and others, Swedish paid parental leave should be divided equally between the parents by 2035. The Swedish government supports families further by providing a tax-free daily bonus of about USD$6 for 270 days to parents who share transferable leave allowance equally.

The welfare model is equally generous in Denmark, a country that has a strong flexible work ethos and social support networks. The country’s generous maternity leave requirements and state-funded childcare facilities help put it at the top of the international equality table and promote a high quality of life for its citizens. Danes are entitled to pregnancy leave starting from four weeks before the expected date of birth, and are entitled to a further 12 weeks maternity leave following the birth. In addition, each parent is entitled to 32 weeks of parental leave, which can be increased to up to 46 weeks in total.

Sweden’s and Denmark’s generous family leave laws could help explain why their residents are known to be amongst the happiest in the world. And the family-friendly rights and cultural practices of these countries will likely promote employee engagement for multinationals that operate there. Of course, for multinationals these laws and customs may be strongly at variance with those of the home country. As mentioned, these differences need to be accounted for not only in company policies, but also when planning and budgeting.

Moving further into Europe, employees in Germany receive 14 weeks of parental leave overall, as well as pay equivalent to their normal net monthly pay. After this initial period, parents are entitled to take additional, partially paid leave for a period of up to three years after the child’s birth. It is even possible to ask the employer to consent to deferring one of these years so it can be used between the child’s third and eighth birthday.

These three years of parental leave can be shared by both parents, either simultaneously or separately. Parents receive parental benefits from the state amounting to 67% of the previous net wage, or 100% for lower salaries. However, the maximum benefit paid is capped at approximately USD$2,050, so if parents elect to take leave after the initial 14 weeks, the great majority of that will be unpaid.

Interestingly, Germany is amongst the few countries that recognize the importance of other family members such as grandparents in raising children. As a result, under certain circumstances grandparents or other family members can take leave and will be entitled to claim benefits that are normally provided only to parents.

France offers similar provisions to Germany, with pregnant employees eligible for 16 weeks of maternity leave. This benefit increases with each subsequent birth, up to 26 weeks for three or more children. Maternity pay in France is not as generous as it is Germany, however. Under French law, the beneficiary’s daily salary is capped at about USD$95 (2016 figures).

Parents are also entitled to take leave until the child’s third birthday or can opt to work part-time for a minimum of 16 hours per week during that period. If the parent takes leave, he or she may be able to claim some financial assistance from the state through the social security system.

In addition to the above considerations, multinationals operating in France (and virtually all countries) should determine if a collective bargaining agreement (CBA) applies to its employees. A CBA may provide for enhanced parental rights, including leave and pay. For example, employees covered by the IT industry’s CBA — known as “Syntec” — will receive 100% of their salary during maternity leave. They will also be eligible for a 20-minute reduction in their working day form the third month of pregnancy after completing one year of service with their employer.

Lawmakers from the above-mentioned countries all recognize that both men and women contribute to childcare. The United Kingdom has also recently recognised the importance of encouraging broader parental leave policies. Effective April 2015, the UK introduced shared parental leave and pay. This law provides both parents with the opportunity to consider the best arrangement to care for their child during its first year.

After the first year it is common for the mother to work on a part-time basis. However, relative to Scandinavia and other European countries, the UK remains limited on child-related leave following the first year of birth. The statutory pay for employees also remains low, at 90% of the employee’s salary paid for the first six weeks. During the following 33 weeks, the employee is eligible for about USD$200 per week. The employee is entitled to an additional 13 weeks of leave, but they will be unpaid.

The UK government has also indicated that it may extend leave to grandparents as early as 2018. Multinationals operating in the UK that are keen on promoting work-life balance may decide to incorporate such policies sooner. The supermarket Asda, for example, recently introduced a policy to allow new grandparents to take paid time off to help the family adjust to its new arrival. (75 percent of Asda’s workforce is over the age of 50.)

Companies expanding into Asian countries such as Hong Kong and Singapore will generally speaking find that their family-leave obligations are not as onerous as those in most European countries. Employers operating in Asia are typically required to provide maternity leave only. However, in Singapore a father is allowed to share one week of the 16-week maternity leave, provided the mother agrees. The father may in some cases also be eligible for an additional week of government-paid paternity leave, for a total of two weeks.

In closing, it’s worth mentioning some family-friendly leave trends in the United States. The US is one of the few countries in the world which does not require employers to offer any paid maternity leave. In practice, most US companies provide some pay during that time through a short-term disability policy. In such cases, the employee may receive a portion of her pay for a specified period, normally six to eight weeks.

Any paternity leave taken is also unpaid under federal law. And generally, US market practice is behind European countries, with only large or progressive companies providing some paid parental leave, usually two to four weeks.

Some US-based tech giants have relatively generous, often well-publicized parental leave policies. Google, for example, provides 18 weeks paid maternity leave and 12 weeks of paid paternity leave. Following this policy change, “the rate at which new moms left Google fell by 50%.” Other companies like Facebook and Yahoo offer similarly appealing family-friendly leave policies to attract and retain top talent, particularly women.

The Trouble with Global Family-Leave Policies

Given the wide array of laws and customs across countries, multinationals often look to develop a global family-leave policy appropriate to all jurisdictions. This in theory is a great idea and would certainly make life easier for fast growing international businesses. Unfortunately, these kinds of global leave policies are rarely practicable. In order to remain fully compliant, the policy would need to offer the highest level of parental leave applicable in all countries where the business has employees. Such a policy can be costly and not necessarily required to retain talent.

That said, some multinationals have implemented leave policies that are consistent across jurisdictions. Generally speaking, however, these are companies (such as Vodafone) that have large headcounts and resources to match. Most multinationals will almost certainly find that such policies are not financially suitable.

It is therefore advisable to understand the statutory and customary leave requirements of each country of operation. In most cases, you’ll want to develop country-specific leave policies that are slightly more generous than what is required under local laws. This will not only ensure compliance with those laws, but typically will ensure that your parental leave policies are competitive. By taking this approach, you will generously meet the needs of your employees in each country of operation and promote a healthy work-life balance. This should go a long way towards building a respectable employee-retention rate and bolstering your organization’s global reputation.

 


 
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