Guidance

Government review of the parental leave and pay system terms of reference

Published 1 July 2025

Applies to England, Scotland and Wales

Context

The plan to Make Work Pay is a core part of the mission to grow the economy, raise living standards across the country and create opportunities for all. It will help people stay in work, improve job security and boost living standards.

This includes helping working parents and supporting them to balance their work and home lives. Parental leave and pay entitlements play an important role in this.

Changes to improve the parental leave system are already underway and will be delivered through the Employment Rights Bill.

The bill will:

• make paternity leave a ‘day one’ right
• make unpaid parental leave a ‘day one’ right
• enable paternity leave and pay to be taken after shared parental leave and pay
• enhance dismissal protections for pregnant women and new mothers
• strengthen the existing ‘day one’ right to request flexible working

We know that the parental leave system still needs further improvement to better support working families, that is why the plan to Make Work Pay also committed to this review.

The review will form part of delivering the Plan for Change, linking to 2 of the government missions – to kickstart economic growth and break down barriers to opportunity. The work of this review will support the government’s commitments to raising living standards and giving children the best start in life. There is also a link to work being undertaken to alleviate child poverty.

This review presents a much needed opportunity to consider our approach to the system of parental leave and pay, giving due consideration to balancing costs and benefits to both businesses and the exchequer.

Aims of the review

The government’s aims for this review are to:

• articulate objectives for the parental leave and pay system – these may evolve during the review but set the foundation for considering what and for whom an improved system should deliver
• expand our existing evidence base and understanding of the current system, assessing what is and is not working well for families and employers – including looking at international models and drawing on stakeholder expertise
• consider the options and principles for a system of parental leave and pay that better supports our objectives, including identifying options with low or no cost to business and the exchequer
• develop a roadmap for how we could move to a system that better supports our objectives, considering the changes needed to deliver improvements within the fiscally constrained economic context

Objectives for the parental leave and pay system

The ‘system’ of existing parental leave and pay entitlements has grown incrementally over time, starting with maternity leave and pay. Subsequent additions have provided fathers, adopters and parents in other specific situations with statutory rights to take time off work to care for their children and receive pay while doing so in some cases.

This has created a complex landscape of employment and social security legislation – with parental leave and pay entitlements that were never holistically designed to operate as a single ‘system’. Instead, entitlements were added to support specific groups as needs emerged. This means that an overarching set of objectives for the system has not been articulated before.

This review presents an opportunity to reset our approach and understanding of parental leave and pay and what we want the system to achieve.

We will use the review to establish what Britain needs the parental leave and pay system to deliver – supporting our modern economy, and improvements for working families. These objectives will be our starting point against which to assess the current entitlements as we seek to develop what a ‘good’ system could look like. These may evolve and there may be trade-offs to make between these objectives as the work of the review progresses.

The objectives against which we will consider the current system and the case for change of any future reform are:

• maternal health: support the physical and mental health, recovery and wellbeing of women during pregnancy and post-partum by giving them sufficient time away from work with an appropriate level of pay
• economic growth through labour market participation: support economic growth by enabling more parents to stay in work and advance in their careers after starting a family, particularly to improve both women’s labour market outcomes and the gender pay gap, reduce the ‘motherhood penalty’, and harness benefits for employers
• best start in life: ensure sufficient resources and time away from work to support new and expectant parents’ wellbeing and facilitate the best start in life for babies and young children, supporting health and development outcomes
• childcare: support parents to make balanced childcare choices that work for their family situation, including enabling co-parenting, and provide flexibility to reflect the realities of modern work and childcare needs

This review will also focus on 3 cross-cutting considerations in all areas of its work:

• fairness and equality – building a fair system, between parents within a family, different types of parents (such as birth, single, adopters, kinship), and different employment statuses (such as employee, worker, self-employed)
• cost – balancing costs and benefits to both businesses and the exchequer and considering how the system can support economic opportunities for businesses and families. As part of this, the review will consider opportunities to make the process surrounding parental leave easier for both businesses and parents
• social – improving our society, for example in supporting the child poverty strategy, and shifting social and gender norms including around paternal childcare

Scope of the review

All current and upcoming parental leave and pay entitlements will be in scope of the review. This broad scope does not presuppose reforms being made to any or all of these entitlements, but it is important that they are considered to enable a comprehensive review of the system as a whole to ensure there are improvements for families.

Great Britain currently has 7 main parental leave entitlements with one in development. Employment policy is devolved to Northern Ireland.

The existing entitlements are:

• maternity leave and pay
• paternity leave and pay
• adoption leave and pay
• shared parental leave and pay
• parental bereavement leave and pay
• parental leave (unpaid)
• neonatal care leave and pay
• Maternity Allowance

Bereaved partner’s paternity leave (unpaid) is in development and the government aims to bring the entitlement into force in 2026.

In addition to looking at the individual existing entitlements, and how best to ensure improvements can be delivered for working families, the review will also consider wider and cross-cutting issues and themes. For example, whether support available meets the needs of other working families who do not qualify for existing leave and pay entitlements, such as kinship carers and self-employed parents, and considering how the pay system works more broadly.

There are a number of areas where there are clear links and interdependencies with the parental leave and pay system – these include enforcement of employment rights, employment status and childcare provision.

While we will carefully consider interdependencies with government’s ongoing work in these areas, this will be limited to accounting for and considering any potential impacts from possible reforms to the parental leave and pay system. Specific reforms to areas outside of the parental leave and pay system will not be within scope of the review.

Governance

This will be an internal government review, co-led by the Department for Business and Trade and the Department for Work and Pensions. The work of this review will report to the Future of Work Committee, chaired by the Deputy Prime Minister.

There will be extensive work and engagement with other government departments with an interest in the parental leave and pay system to inform the findings and outcomes of the review.

Timeline

The review launched on 1 July 2025. We expect the review to run for a period of 18 months.

The government will conclude the review with a set of findings and a roadmap, including next steps for taking any potential reforms forward to implementation.

Engagement

The government is determined for this to be an evidence-based review that reflects and considers the views and perspectives from the wide range of people who engage with the parental leave and pay system.

We welcome views from and intend to engage constructively with a wide range of external stakeholders, both from groups representing parents and families, including trade unions, and with employers or employer representatives.

There will be opportunities for stakeholders to contribute views and expertise throughout the review through government convened round tables, responding to a call for evidence and consultation.