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Statutory Maternity Pay

What is Statutory Maternity Pay and when should you pay it?

All  employees of yours, including you as the director, have a legal right to a minimum period of maternity leave, but they may also be entitled to a replacement salary which can cover up to 39 weeks of a potential 52 week leave.

It may on first glance appear confusing to differentiate between Maternity Pay and Maternity Leave, and to realise that the two are not mutually exclusive but don’t fret, it will all become clearer.

Note: It is mandatory to provide maternity leave to an employee, providing you have received the right notice period (see below), regardless of their time at the company, their hours or their salary, while Maternity Pay is subject to conditions.

How do you know if an employee is eligible for paid maternity leave?

Initially, for an employee to qualify for paid maternity leave they must prove they’'re pregnant, visual proof does not count! Written confirmation from their midwife/doctor or an MATB1 form submitted within at least 21 days of their proposed payment start date will be necessary.

Any employee applying for paid leave must do so at least 28 days prior to when they want their payments to start, which can be up to 11 weeks before the due date, and it’s at your discretion if you need this in writing.

Your employee also needs to have been in continuous work with you for at least 26 weeks up and into the 15th ‘qualifying week’ prior to the baby’s due date and be earning, on average, a weekly wage of £112.

For any forms you may need click here!

When and how to pay an employee?

Payment is fairly straightforward and will usually coincide with the day an employee takes their maternity leave, However, life can sometimes throw up complications and payments will automatically start, prior to the agreed start date, if an employee has been off work for a pregnancy-related illness within 4 weeks of the due date.

For the initial 6 weeks of leave the employee is entitled to 90% of their average weekly earnings before tax, and must be paid on the same day they would usually be paid, as SMP qualifies as a salary and is consequently subject to tax and national insurance payments.

For the subsequent 33 weeks employees will be paid whichever amounts to lower, be it 90% of their average weekly earnings or £139.58 a week.

Note: Your employees Employment Rights are protected when they take leave, which means that potential pay rises, accumulated holiday and their right to return to work are all maintained.

What if you want to reject a claim for Statutory Maternity Pay?

Unlike Maternity Leave you are fully entitled to refute a claim for Maternity Pay if you do not think the employee meets the aforementioned requirements.

You must however return a SMP1 form to your employee within 7 days of your decision, detailing why they do not qualify for Statutory Maternity Pay.

What can you claim back?

How much you can recover depends on the accumulative amount of Employer and Employee National Insurance you have contributed to HMRC in the relevant tax year, which is the year in which the ‘qualifying week’ of the pregnancy falls.  

This simply means if you’ve paid up to £45,000 in the relevant tax year you can recover 100% of your maternity payments and an added 3% compensatory pay out known as small employers' relief. However, if you’ve paid over £45,000 in contributions you’re only entitled to 92%.

If you can't afford to pay the initial payments you can apply for funding from HMRC,

What are possible problems that can arise with SMP?

In the event that an employee miscarriages or has a stillbirth, she is still legally eligible for maternity pay, but you would need to supply proof in the form of a certificate to make a payment.

If your employee becomes pregnant whilst on maternity leave she may be entitled to a further period of paid maternity leave, but it will depend on her average earning in the eight weeks prior to the 15th qualifying week.

Maternity Pay Calculator

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