Britain’s small businesses left without adequate support to help working parents – finds new study

Major study led by Middlesex University surveyed thousands of small business employers and employees

Many small and medium sized enterprises (SMEs) – which make up 99% of UK businesses – can become overwhelmed by managing parental leave, according to new research.

SMEs urgently need a revamped package of Government support to help when their staff become parents, the study concluded. Findings have shown on average SME staff would take a pay cut of 8 to 9% to work more flexibly. 

This study, which drew on surveys of 2,000 SME employers and 2,000 employees, and 160 in-depth interviews with both managers and staff, found that:

• Many smaller organisations are unaware of their legal obligations to support expectant parents and can become overwhelmed by the need to manage this huge task. They may lack HR departments and written policies and have poor knowledge of statutory maternity, paternity and shared parental leave and pay entitlements. For example, SME employers and employees hugely over-estimate the amount of well-paid statutory pay available to both mothers and fathers.
• Most SME employers (57%) say they need more financial support from Government to cover the cost of staff taking parental leave, and only a small proportion can afford to enhance the statutory offers. Less than a third (30%) know about the smaller employers’ relief scheme and less than one in ten (7%) have used it and found it helpful.
• Bringing paternity leave to a minimum of 6 weeks paid at 90% of average earnings has the potential to reduce the gender gap in how much parental leave mothers and fathers would take.
• With flexible working arrangements, 44% of SME employees value ‘informal’ and 41% prefer ‘formal’ and would accept a pay cut of 8-9% on average to achieve it. Informal approaches to staff support can work well but require relationships of trusts, open conversations and ‘give and take’. 

The ‘Transition to Parenthood in SMEs’ study, funded by UK Research and Innovation  (UKRI), was a collaboration between Middlesex University, the University of Leeds and the University of Manchester, Working Families and the Fatherhood Institute.

They have also created a website toolkit for SME employers and employees, providing bite-sized information on pregnancy and future parenthood, parental leave, and the return to work, highlighting common concerns and providing good practice examples.

Case study

"My own transition to parenthood in the large corporate world was far from straightforward. For years I quietly navigated IVF treatment, often feeling that I had to hide such a big part of my life. When I eventually became pregnant, I worried about how it might affect my career and whether people would see me differently. 

"Like many working parents, I felt pressure to carry on exactly as before to prove that nothing had changed, even when everything had. Those experiences stayed with me and when I joined Better Connect as CEO, I knew I wanted things to be different. We are a smaller organisation, but the people in our team are what make us great. It felt important that we created an environment where life outside work is recognised and supported, not something people feel they need to manage in silence. 

"Parenthood is a huge transition, and knowing that your workplace understands that really matters. For me, this goes beyond policies. It’s about trust, openness and creating a culture where people feel valued as whole people. Being a smaller workplace may make some things easier, but I truly believe this is possible in larger organisations too it just needs to be embedded throughout the culture. I was very happy to be part of this important study for this reason.

"As the world changes and parents’ needs evolve, we’ll keep listening and adapting so we can continue to support people through every stage of life. My children also love what I do now as it means I spend more time with them and I am happy. "

Natasha Babar-Evans (pictured above), a mother and CEO of Better Connect which is a Yorkshire-based company that designs and leads innovative partnership projects

Based on their findings, the research team have identified recommendations that could improve outcomes for employers and staff in SMEs including reforming the Small Employers Relief Scheme, which allows small businesses to claim back parental leave. 

They have also called for a dedicated, non-transferable six weeks of well-paid paternity leave to support equal gender parenting.  

The researchers have also urged SME employers to consider flexible working options and clearly communicate policies and available support.

Bianca Stumbitz, a Senior Research Fellow at Middlesex University who led the research, said: “It is vital that SME employers receive more Government support to help when their staff become parents. They are really struggling with managing this massive task when they should really be focusing their energy on other low-cost support such as flexible working.  Employees in our study emphasised how flexible working could be real a lifeline and allow them to return to work in the first place.”

Sarah Russell, MP, said: “Small businesses are the backbone of our economy. This research makes clear how few SMEs know that they may be eligible for financial support from Government under the Small Employers’ Relief scheme, when they have a staff member on parental leave. Strengthening parental leave and enabling more flexible working isn’t just good for families, it’s good for the UK’s productivity and long-term economic health. It’s vital that Government is better at sharing information about the support that is already available. The toolkit is a fantastic development for employers and employees.”

Simon Kelleher, Head of Policy & Influencing at Working Families, commented: “At Working Families, we work with employers of all sizes every day, and we see the challenges smaller organisations with limited HR functions have to overcome to manage pregnancy, parental leave and return to work well. That’s why practical, accessible support for employers matters just as much as reforming the statutory framework.

“When fewer than one in ten small employers have found the Small Employers’ Relief Scheme helpful, it’s clear the current system isn’t working as intended. The Government needs to simplify and strengthen that support, alongside modernising parental leave and pay, so that small businesses can focus on what they do best, which is offering flexibility, building trust and retaining skilled staff.”

Case study

"As a second-generation CEO of a family business, I support the findings of the research, specifically that small and medium sized businesses need more support in managing parental leave. Whilst I back more Government intervention, increased awareness and practical support to manage what is a complex area, I also believe that a mindset shift is needed.

I fundamentally believe that building a workplace that is fully committed to supporting parents, is not only the right thing to do morally and societally, but importantly, creates a competitive advantage for the business.

In our business, at the time of writing, across 38 team members, we have 25 different, flexible working patterns. Further, for our size, we have generous parental leave packages. Many would see these as features that could hold the business back due to cost and disruption, when in fact, it is quite the opposite. Our business grows organically year on year, outperforming many in the market. We attract top talent and team members want to stay with us, creating a caring and high performance environment.

Being a father to 3 young children myself, alongside my co-Directors who are also parents, we know how difficult it can be balancing work and family life. That’s why we are committed to showing how with thought and care, creating a workplace where both the individual and the business benefits, can be done."

Gavin Howarth, (pictured above), CEO of Howarths HR

Dr Jeremy Davies, Deputy CEO & Head of Impact & Communications at The Fatherhood Institute, said: “The UK’s statutory parental leave system already treats dads as second-class parents. This study shows an urgent need both to improve the statutory leave and pay offer – and to revamp support for smaller employers when parents take it.” 

Phil Coxon, Managing Director of Breathe HR, said: “More must be done to end the 'parenting penalty' disproportionately impacting SME workers. SMEs aren’t merely corporate enterprises in miniature; they have distinct needs, often operate on razor-thin margins, and responsibility for HR often lies with business owners rather than specialist teams. They need SME-specific guidance and robust financial support to help them better access underutilised schemes (like Small Employers Relief), enhance their parental leave offerings and create workplaces where working parents can thrive. As a working parent, and through our work at Breathe HR supporting more than 17,000 UK SMEs, I’ve seen first-hand just how transformative proper provisions for parents can be - to them, the business, and the economy as a whole.”

Key project findings were presented by the research team in the House of Lords today (4 March), followed by a panel discussion with speakers including Chris Russell (Federation of Small Businesses), Judith Dennis (Maternity Action), Dr Jeremy Davies (Fatherhood Institute) and Phil Coxon (Breathe HR). The event is due to be delivered in partnership with the APPG for Flexible and Family-Friendly Working, co-chaired by Sarah Russell MP and Baroness Penn.

For more information visit the Transition to Parenthood project toolkit website.

Photo by Bethany Beck on Unsplash