25 Jul 2019
There’re a lot of articles on maternity entitlements for employees, but not as many that focus on paternity entitlements.
Paternity pay relates to the financial rights of employees when their partner is either having a baby (naturally or by surrogacy) or adopting a child.
In this article, we’ll explore the rules surrounding paternity leave pay. We'll also highlight your obligations as an employer when a member of staff wants to claim for this.
When employees take time off work for this reason, they could be entitled to one of two types of paternity pay:
- Statutory paternity pay (SPP).
- Contractual paternity pay (CPP).
What is statutory paternity pay?
It’s the minimum amount you can pay your employees by law if they’ve been at your company continuously for more than 26 weeks, ending with the 15th week before the expected week of childbirth.
Employees must take their paternity leave in the period beginning the date the child is born and ending 56 days later.
For adoptions within the UK, employees must take their paternity leave within 56 days, beginning with the date of placement.
Eligibility depends on if the employee’s average weekly earnings are at least equal to the lower earnings limit for their National Insurance contributions (£118 per week).
What is contractual paternity pay?
Instead of offering your employees the bare minimum, you may choose to offer a rate of pay that is higher than the statutory requirement.
This is ‘contractual’ because the length and amount offered should be set out in your employee’s contract of employment. While it’s up to you to decide how much to pay, it’s worth remembering that it can’t be lower than the statutory rate.
How much is paternity pay
If eligible, an employee’s SPP is either a flat rate of £148.68 (from April 2019) per week, or 90% of their average weekly earnings—whichever’s lower.
For example, if the employee’s average weekly earnings amount to £178.16, their SPP will be £148.68, as it’s the lower amount.
As for how to calculate paternity pay, you can either calculate this manually or use the government website.
If you’d like to calculate it by yourself, for any weekly paid employees you calculate their average earnings based on the eight weeks ending with the 15th week before the baby’s due.
For employees paid monthly, you base their SPP on the last two pay dates before the 15th week before the baby is born.
It’s important to remember, however, that if the employee’s average weekly earnings during this period are less than the lower-earnings limit, they won't qualify for SPP.
Payment starts the day after the last day the staff member worked before starting their paternity leave. You should make the SPP payment weekly and it should last for one or two complete weeks, with the two weeks being consecutive.
Who pays paternity leave?
It’s not uncommon for you to wonder, ‘do employers have to pay paternity leave?’. The answer is always yes. Even if you don't offer contractual paternity pay, employees are still entitled to statutory paternity pay, providing they meet the eligibility requirements.
It’s your responsibility to make these payments, although you can reclaim up to 92% of the of it from the government. It’s worth noting, if your business qualifies for a Small Employers’ Relief, you can reclaim up to 103% of the original payment.
For the self-employed, paternity pay is out of the question. This is because only staff members with an employment contract can receive SPP. With that in mind, it’s important to have a plan in mind for managing family affairs and upcoming expenses before the baby arrives.
While workers aren’t eligible for paternity leave (unless they’re employed by an agency), they may qualify for paternity pay if they meet the criteria for qualification.
If they do, they should write to their employer at least 28 days before they want payment to begin, stating:
- The worker’s name.
- When the baby is due.
- When they would like payment to begin.
- Whether they want one or two weeks’ pay.
Speak to a Croner expert today and get advice on statutory and contractual paternity pay. Call today on 0808 145 3380
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