Why Developing a Maternity Leave Policy Matters

A company wishing to foster gender equality and earn a good ESG score, must take into account the specific needs of its employees. Here’s why developing a supportive maternity leave policy is crucial

By ESGgo TeamNovember 23, 2022 6 min read

Employee productivity is key to a company’s success, and a company that wants to foster gender equality in the workplace can’t do so without factoring in the specific needs of women and new parents.  

For many employees, paid maternity leave is essential. It fosters loyalty, goodwill, and retention and, for many, goes a long way to alleviate financial anxiety. With a robust, paid parental leave policy, team members don’t have to worry about pregnancies and childbirth negatively affecting their careers. 

In turn, companies have happy and healthy employees they can count on for the long run. When companies pay attention to this area, they show their commitment to the social aspect of ESG

Facts about maternity leave policy

When an employee gives birth, they aren’t looking for vacation time. New parenthood is challenging, and caring for a newborn is hard work — both physically and emotionally. At this point, a company’s support goes a long way.

There is research that supports the positive effects of maternity leave laws. A recent study by the Institute for Women’s Policy Research, a nonpartisan, not-for-profit organization, found that a state-paid maternity leave policy boosted labor force attendance by more than 6% in the 12 months following birth. New parents receiving maternity leave are more likely to stay committed to a company for the long term when they feel supported.

Caring for a new baby is a full-time job, and new parents need all the help they can get. Companies that provide essential benefits such as paid leave and continuing health insurance during that demanding time show their commitment to their employees’ overall well-being and long-term success. 

New mothers may have varying needs — while some may need to be away for an extended period, others may prefer reduced hours and a flexible schedule. If their partner is on paternity leave, they might be able to return to work sooner.

Eventually, they might want to first come back with a flexible schedule and later return full-time, but may require childcare services. The company that best meets those needs is most likely to retain that employee. 

When a company wants to retain loyal and happy employees, a paid maternity leave benefit is one of the best ways to do that. When new mothers leave the workforce because of a lack of options, companies deprive themselves of trusted employees. 

An example of that is in California and New Jersey, where 26–29% of new mothers leave during the 12 months following birth. Women who had paid maternity leave were 3–6% more inclined to return to work. 

The rise of remote work

The COVID-19 pandemic has made maternity leave even more critical. Since the pandemic began, there has been a decrease of 500,000 American female employees. 28% of out-of-work mothers with school-aged children opted for their unemployment for the sake of providing childcare, compared to 12% of out-of-work fathers. During that time, women’s stress and anxiety levels increased disproportionately compared to men, leading to more women leaving their jobs. 

It’s imperative to find ways to foster female employees’ health and well-being, both for their happiness and to increase retention. Companies that want to outperform their peers while being good social stewards have ample chances to do so when designing a maternity leave policy. 

But the ability to work from home could drastically change maternity leaves — for the better. With this newfound flexibility for remote work, new mothers may be able to ease their transition back to the office by resuming their duties from home. Even better, this style of work will allow them to return to work without needing to find full-time childcare or sacrificing valuable time to a commute.  

Going one step further

A maternity leave policy’s goal isn’t only to take care of employees and keep them motivated but to retain them for the long term. When a company shows its support in a time of need, such as when an employee has a baby, it fosters loyalty.

Caring for a newborn and raising a child can be daunting, with requirements such as constant feeding, childcare, and flexible hours. The more tailored a maternity leave policy is to those individual needs, the happier and more productive its employees will be. This benefits the company’s overall performance.

For most new mothers, breastfeeding is essential to their newborn’s nutrition and aids in bonding. But in the workplace, that can be a challenge. If a company wants to stand for its female employees, considering these details can make all the difference. 

Around 25% of new mothers in the U.S. return to work in two weeks. In such cases, a flexible schedule, the possibility of working from home and childcare, can provide the adaptability to perform parental and work duties. 

The nuances

Companies considering how to develop a maternity leave policy may find themselves asking questions such as how long is maternity leave or if it should be paid. The Family and Medical Leave Act (FLMA) is a U.S. federal law specifying that every employee at a company with 50 or more employees must receive at least 12 weeks of unpaid leave each year for childbirth, significant illness, or to care for a family member. 

Beyond the FMLA, company policies and state laws vary, with differences in eligibility requirements, the amount of time on leave, and whether it’s paid or unpaid. Companies have a great opportunity to show they care by providing an excellent maternity leave benefit. 

A worthy investment 

Paid maternity leave isn’t without financial impacts and other inconveniences. Paying employees on maternity leave costs money, and during that period, essential duties and schedules may need to be rearranged. That can temporarily hurt balance sheets and workplace synergy, but it’s worth it in the long run. 

While maternity leave is an essential benefit, paternity leave is also important. Today, there’s a noticeable movement toward fathers participating in childcare. While maternity leave laws may not address fathers, having a comprehensive paternity leave policy shows that a company values parents equally. 

With 90 of 187 countries now providing statutory paid maternity leave, it’s becoming more routine. Paternity leave also helps lighten the load on new parents, helping to keep them in the workforce. This is especially notable in the post-COVID-19 period of decreased participation. 

Companies increasingly offer a good maternity leave policy to increase loyalty and retain top talent. That also demonstrates a company’s commitment to new parents’ well-being and that they care about their workers. 

COVID-19 brought additional challenges in providing employees — men and women alike — the support they need, and a parental leave is an excellent way to do that.