Directors hit bump over parental leave
Directors in New Zealand are hitting a stumbling block when it comes to applying for parental leave because the current legislation does not cater for it, which they say is preventing proper diversity.
Louise Evans, who sits on the Invercargill Licensing Trust, and is pregnant with her first child, was shocked to find she could not qualify for any sort of leave because she was a board member of a trust.
In New Zealand legislation covering companies, trustees, directors of charities or directors of any non-profit organisations means it is hard to get official leave. And, a major concern to directors is that if they do take leave then they are still liable for decisions made in their absence.
To find a workaround, Evans will ‘‘volunteer’’ for the trust and has chosen to go without pay.
What was most surprising for Evans was that this issue, a hindrance to diversity, had managed to fall through the cracks over the years and nothing had been done to rectify it.
‘‘And that’s how I found out that it was a problem, it didn’t even occur to me because I hadn’t sat on a paying board before.
‘‘But, I find it pretty weird that if we’re trying to promote diversity on boards, and particularly younger female voices that this is a barrier that’s really unhelpful I guess. It’s just another one that adds to it as well,’’ Evans said.
She thinks even though women have found ways around the legislation, it would be easier if it had just changed.
‘‘I mean, there are ways around it, it’s just the legislation is so old I guess, and it gets muddled with the whole employee non-employee context,’’ Evans said.
Evans believed if it was truly important to have females on boards, barriers like this should not exist.
After finding out through the Inland Revenue Department website that it was not possible for her to get proper maternity leave because she is a board member, she started searching to find out if anyone else had the same problem.
Southland Conservation board member Claire Jordan joined the organisation in mid 2018, with a one-year-old and was pregnant with her daughter Grace during her first meeting.
While the board made sure to make provisions for her, she still had to work.
‘‘So, I didn’t have any leave as such, but it was about enabling my participation, it was more what was done for me,’’ she said.
In 2020, Institute of Directors commissioned a report to look into the matter, as some of its members had reached out with their concerns regarding the ability to take parental leave.
Directors general manager Felicity Caird said since directors were not considered employees,
‘‘This is a barrier that’s really unhelpful ...’’ Louise Evans Invercargill Licensing Trust board member
they were not covered by the same protections.
‘‘And as the paper outlines, that sort of responsibility of directors for matters that could happen while they were on leave it is sort of murky and not clear,’’ she said.
When Caird was asked how parental leave had fallen through the cracks, she said she looked at it as an evolutionary change, rather than a revolutionary one.
The laws covering this area include the Companies Act 1993, Health and Safety at Work Act 2015 and the Financial Markets Conduct Act 2013.
Lawyer Silvana Schenone, who was part of the team who wrote the paper for the Institute of Directors, said because it was not just one piece of legislation that had to be amended, it made the situation more complex.
‘‘Mainly because the concept of leave of absence doesn’t exist [for directors].
‘‘The ability for a director to sort of formally and obtain leave of absence is not a legal concept.
‘‘When the concept doesn’t exist, you need to start sort of building your own explanation or your interpretation around the different pieces of legislation,’’ she said.
The Health and Safety at Work Act 2015 assumes that duties and responsibilities of directors were in The Companies Act 1993, which was why it did not deal with it itself, Schenone said.
Schenone also thought due to the difference between the definition of an employee and a director, it could get complicated to change at a legislative level.
‘‘So, directors are not employees, and I don’t think it’s right to necessarily mimic the treatment of an employee for a director, it would bring a whole heap of complexities; that’s why I’m not sure what is the best answer here.
‘‘I do certainly believe that companies need to deal with it. Not at the legislative level, but each company needs to deal with it, so that they are clear about what they are proposing,’’ she said.
In July 2019, Lani Evans had to resign from her position as a director for Thankyou Payroll to be able to take 6 months of unofficial parental leave. She had secured a mutual agreement with the company, that she would be reappointed once her leave was over.
‘‘It just hadn’t occurred to me that we wouldn’t have good provisions in place, to ensure that we can continue to have people who were having children engaged as directors,’’ Evans said.
Lani Evans also had to resign and be reappointed to several other governance roles that she held.
She is now the head of the Vodafone Foundation.
As for Louise Evans, she feels lucky as the Invercargill Licensing Trust accommodated her to find a solution.
But she worries that for some female directors the only alternative might be to step back completely or resign from a board.