Outside of maternity leave, there are 36 weeks’ leave available to parents in the State in the first two years of a child’s life. They can avail of a further 26 weeks each until their child is 12.
Many families could really do with the time, but much of the leave is expiring untaken because mothers, and especially fathers it seems, just cannot afford to take it. Parents wanting to spend time with their children have to count the cost.
Family-leave policies, such as paternity leave and parent‘s leave, are a good thing: it’s good for parents, for children and for promoting equality of caring responsibilities which helps the gender pay gap.
But take-up rates among men remain low, said a report published last month by the Irish Human Rights and Equality Commission (IHREC) and the Economic and Social Research Institute (ESRI).
In Ireland, two weeks of paternity leave is available to new parents (usually fathers) of children under six months. Nine weeks of parent‘s leave is available to each parent of children under two.
Both benefits are paid at a flat rate of €289 a week as long as you have sufficient Pay Related Social Insurance (PRSI) payments. Some employers top up the payment to full salary, but not all.
In addition, up to 26 weeks of unpaid parental leave is available to each parent as long as it is taken while the child is under the age of 12.
Despite paternity leave being available in Ireland since 2016, only half of fathers take their entitlement to two weeks off. And even fewer – just a quarter – take the nine weeks of parent‘s leave, compared to a two-thirds take-up rate by women.
One of the main reasons is that families often face a significant drop in income if they choose to take up this leave, said the IHREC/ESRI report titled Child-Related Leave: Usage and Implications for Gender Equality.
Sampling births between 2019 and 2022, the report looked at those who took the two weeks’ paternity leave. Higher-paid fathers, who were more likely to receive employer top-ups, took more paternity leave, the results showed.
Conversely, the uptake of parents’ leave by both fathers and mothers, available for up to nine weeks each, fell with lower earnings, This was likely a reflection of flat-rate payments affecting affordability, the report said.
In couples where the mother was the higher earner, fathers were more likely to use parent‘s leave, whereas single parents were less likely to take it up.
Forgoing salary, even for a period of weeks, to spend time with their children is a luxury many households just cannot afford to take.
Crunch the numbers
Many parents thinking of taking leave will have to crunch the numbers. Chartered Accountants Ireland tax experts provided a useful working example for this article in the shape of fictional couple, John and Mary.
Before one even considers the potential cost of taking paternity leave or parent‘s leave, maternity leave will put some families under pressure.
John and Mary are a married couple who had their first child last January. John earns €66,864 annually from his employment and Mary earns €43,680. They are jointly assessed and John is the assessable spouse.
The couple’s gross monthly income from earnings before the baby was €9,212. After PAYE, PRSI and USC, their net monthly income is €7,080. John has an assessable spouse effective tax rate of 24 per cent.
Some employers will top up the state maternity payment of €289 a week to part or full salary, but Mary’s employer does not. She is under the almost one-third of employees who started their maternity leave in 2021 who did not get their salaries topped up to the full amount by their employer.
The statutory maternity payment is subject to income tax, too, though it is exempt for PRSI and USC.
CSO figures for 2019 to 2022 showed accommodation and food services was the sector with the lowest rate of maternity benefit take-up while health and social work had the highest rates.
While Mary is on maternity leave, John’s effective tax rate on his monthly salary falls from 24 per cent to 22 per cent because the amount of his income subject to 20 per cent tax rate increases.
The upshot is the family’s household income is down by €1,705 a month. Their net income during Mary’s maternity leave is €5,375.
With a monthly mortgage repayment of €1,500, a car loan repayment of €450, as well as all the outgoings for groceries, utilities, motor fuel, car tax, vehicle insurance, private health insurance, GP visits, pharmacy expenses, mortgage protection, house insurance and everything else, their finances are tighter than usual.
Paternity leave
John is entitled to paternity leave from work for two weeks at some point in the first six months of his baby’s life.
As long as he has sufficient PRSI contributions, the State will pay paternity benefit of €289 a week. Those who are employed or self-employed are eligible. Spain leads Organisation for Economic Co-operation and Development (OECD) countries by offering 16 paid weeks.
The leave in Ireland applies to same-sex couples too. Whether you are a father of a new baby, or the partner, spouse, civil partner or cohabitant of the mother of the baby, or the parent of a donor-conceived child, you are entitled to paternity benefit. The leave also applies to adoption.
Farmers, forestry workers and people working in the fishing industry have the lowest take-up of paternity benefit; educators, health workers and civil servants – all public service roles – have the highest.
Some employers will top the benefit up to your full salary, John’s employer does not. In the month that John takes this two weeks’ leave – and it must be during Mary’s maternity leave – the family’s household income is down again, to about €3,264.
After the mortgage and car loan, this leaves the family with about €1,300 for all household expenses. It will take the family a few months to recover from the hit. It is little wonder that just half of fathers avail of this leave.
Extended maternity leave
Mary’s maternity leave will finish in July. There is no available childcare place until November, so the couple need a solution.
Mary has a statutory entitlement to further 16 weeks of maternity leave immediately after her paid maternity leave finishes. There is no state payment during this period, however.
The family opts to avail of the extra four months’ leave. Their household income now drops by €2,713 from the pre-baby position to a net monthly income of €4,367, Chartered Accountants Ireland calculations show.
Mary should remember to get her employer to complete an application form for maternity leave PRSI credits when she returns to work. She will have automatically been given PRSI credits for the period of paid maternity leave.
An alternative would be to take parent‘s leave. This entitles each parent to nine weeks leave during the first two years of their child’s life. Those with sufficient PRSI contributions are entitled to parents’ benefit of €289 a week.
The income levels of mothers and fathers has been shown to reduce the likelihood of taking up this entitlement
With a child born in January 2025, both parents will have to take their leave entitlement before January 2027.
If Mary takes parent‘s leave, their household income will continue to be down by €1,705 a month as it was during Mary’s paid maternity leave.
Mary plans to go back to work in November once childcare is available. To aid Mary’s transition back to work and their child’s transition to childcare, this would arguably be a good time for John to take at least some of his nine-week entitlement to parent‘s leave.
If Mary went back to work at the same time as John commenced parent‘s leave, paid at €289 per week, their net monthly household income would be down from a pre-baby figure of €7,080 to €4,079, a drop of €3,000.
The impact of the bigger earner taking leave entitlements will be too much for many households to absorb.
It was no surprise that take-up rates by fathers of parent‘s leave has continued to lag significantly behind that of mothers, the IHREC/ESRI report said. For children born in 2021, 26 per cent of fathers eligible and 69 per cent of mothers eligible availed of this leave, the report estimated.
“The income levels of mothers and fathers has been shown to reduce the likelihood of taking up this entitlement, again highlighting the issue of flat-rate benefit payments and lower general top-up rates for parent‘s benefit,” the report said.
Parental leave
Parental leave has a bit more elasticity to it. It enables both parents to take leave of up to 26 weeks for each child before their 12th birthday, or their 16th birthday in the case of a child with a disability. However, the catch is that this is unpaid.
It can either be taken as one continuous period of leave, or in two separate blocks of at least six weeks each with a minimum gap of at least 10 weeks between each period.
A good time to plan to take this could potentially be during school summer holidays. Each year school closures for midterm breaks in spring and autumn, two weeks at Easter and at Christmas and eight weeks in summer add up to about 14 weeks in total where parents must find a childcare solution.
In a month that John is on unpaid parental leave, the family’s net monthly income will drop to €2,821, Chartered Accountants Ireland figures show. This is unlikely to be sustainable for long.
Staying out of paid work would have consequences for Mary too. Women who take time off work from the age 30 to 36 could be looking at a reduced pension pot of about €118,000 than if they had taken no break at all, says Irish Life, the biggest life and pensions provider in the State.
Instead of taking parent leave in blocks, parents can break it down into working days or hours – if their employer agrees. For example, you can ask to take one day of parental leave a week until the entire 26-week allowance is used up. This might be a less financially punitive way to use it.
Joint assessment
For most married couples, it is generally more beneficial to be jointly assessed, but it does come down to personal circumstances, Chartered Accountants Ireland says.
Married couples can opt to be assessed separately where each retains their usual allocation of tax credits and bands. The key benefit of joint or separate assessment (versus being assessed as a single person) is the option to transfer a certain portion of one partner’s standard rate band as well as the option to transfer unused tax credits.
“When one partner goes on leave, this can produce a substantial tax saving,” Chartered Accountants Ireland says. “Where both spouses are working, the non-assessable spouse can still earn up to €35,000 and remain subject to the standard rate of tax.
“Where statutory leave is taken and one spouse remains working, the couple will see a reduction in the overall tax they pay, but this will not offset the potentially substantial reduction in monthly income.”
The impact on household income is clearly one reason for parents not taking their leave entitlements or why leave is not taken more equally by partners.
Company culture can be a factor too. Taking parental or family leave is still regarded as “career suicide” for men in some companies, an employers’ conference in Dublin was told last month.
“Unless we start to fix that for men, we won’t fix that for women either,” Kara McGann, head of head of skills and social policy at Ibec, told the organisation’s annual employment law conference in Dublin.
The research is clear: family leave is positive for both children and parents, and equality of caring responsibilities helps bridge the gender pay gap.
But if parents cannot afford to claim their family leave entitlements, those benefits are untapped, too.
