Maternity proposal will cost SMEs £7,000

EU plans to extend maternity leave to 20 weeks will cost small businesses an extra £7,000, according to the Federation of Small Businesses (FSB).

Ahead of the EU vote on proposals to extend maternity leave to 20 weeks from 14, the FSB is concerned that the additional cost to the UK - estimated to be £2.5bn - will be passed onto small businesses and could act as a deterrent to them taking on new staff.

Under the current maternity and paternity system operated in the UK, an employer would pay an employee on maternity leave out of businesses funds and claim the full cost back from the government, but the FSB is worried that these costs will have to be shared.

This means that a small business with a full-time employee on an average wage of £25,428 could be spending an additional £7,140 under these proposals.

"Small businesses are known to be flexible employers and it is unfortunate that maternity and paternity leave is one of the biggest barriers for them when looking to take on staff," said Tina Sommer, of the FSB.

“The FSB fears that that these changes will result in an increase in the cost of maternity and paternity leave and will mean these costs have to be shared between government and the employer, at a cost of more than £7,000 to a small business - placing a further strain on cash-flow."