Maternity Pay is an employee right. When an employee takes leave because of pregnancy, she can qualify for Maternity Pay. She can qualify for up to 39 weeks, as long as she meets certain criteria.
As an employer, you may ask yourself questions such as “how much is maternity pay” or “do you pay tax on maternity pay.” With changes made to legislation and minimum payments, you might need a refresher on what maternity pay is, and how it all works.
The history of UK maternity pay and leave
In 1933, the government permitted women to take maternity leave in the UK. However, until the introduction of the Sex Discrimination Act in 1975, women had no protection from dismissal. This was because of reasons to do with maternity leave.
The Equality Act 2010 introduced legislation directly preventing discrimination and unfair dismissal because of pregnancy. This is because this is one of the protected characteristics. Therefore, protected against all discrimination.
What is statutory maternity pay?
This is the basic maternity pay that all employees are entitled to. It's the legal minimum you must pay to any qualifying employee. Statutory maternity pay lasts up to 39 weeks, to complement the maternity leave entitlement.
A company may have contractual maternity leave and pay. This will be where you can implement your own leave policy but it cannot have less leave entitlement or a lower pay entitlement than the statutory one.
How does maternity pay work?
When an employee is having a baby, they’re entitled to a year of statutory maternity leave. This is true no matter how long they’ve been in the job. To be eligible for this, an employee must:
- Have an employment contract (it does not matter for how long.)
- Given you the correct notice.
While an employee is on maternity leave, employment law still entitles them to the employee rights they normally have, such as:
- Paid holiday
- Protection from unfair dismissal
- Pension payments and rights during the period of Statutory Maternity Pay payment
- Any other employee benefits (e.g. gym membership, medical insurance) for your whole maternity leave period
How many weeks is statutory maternity pay?
Statutory maternity leave is 52 weeks, which comprises:
- Ordinary Maternity Leave—first 26 weeks (six months.)
- Additional Maternity Leave—last 26 weeks (six months.)
Employees don't have to take the full 52 weeks but must take at least 2 weeks' leave after the baby is born.
Of this leave, you are entitled to 39 weeks, made up of:
- 6 weeks getting 90% of your average weekly pay (before tax)
- 33 weeks getting either £151.20 a week or 90% of your average weekly pay (before tax) - whichever is less
How much is statutory maternity pay?
UK Statutory Maternity Pay (SMP) is paid for up to 39 weeks. On 1 April 2018, Statutory Maternity Pay in the UK increased to £145.18 or 90% of the employee’s average weekly earnings. Maternity pay eligibility requires the staff member to be legally classed as an employee.
Maternity pay entitlement is for 39 weeks. This is on the condition that the employee has been continuously in your employ for 26 weeks by the time they must inform you of the pregnancy.
They must also have average earnings of at least £116 per week (from April 2018) in the eight weeks (the ‘qualifying week’) before the 15th week, before the 'expected week of childbirth' (EWC).
Employees who haven't worked for 26 weeks will have to claim maternity allowance.
Who pays statutory maternity pay?
You must pay Statutory Maternity Pay (SMP) just like you would pay a salary. You can usually reclaim 92% of maternity payments from HMRC.
If your business qualifies for Small Employer’s Relief, you might be able to reclaim 103%.
If you pay less than £45,000 in class 1 National Insurance, you will qualify for Small Employer’s Relief.
Is maternity pay taxable?
Yes, maternity pay is taxable. An employee receives deductions for tax and National Insurance on their Statutory Maternity Pay (SMP). This is no different to when they receive a normal wage slip. The employee still receives deductions for tax and National Insurance from maternity payments.
How to work out maternity pay
For the first six weeks, 90% of an employee’s average weekly earnings. For the remaining 33 weeks, £140.98 per week or 90% of the employee’s average weekly earnings, whichever is lower.
Having difficulty with how you calculate maternity pay? We have a great maternity pay calculator to help you work out what you should pay your employees.
Giving maternity leave notice
An employee must tell you about their pregnancy at least 28 days notice to qualify for 52 weeks’ statutory maternity leave. If you want it in writing, they must submit it this way.
In this, they must state that they wish to stop work to have a baby and state the day they want their SMP to start. Alongside the notice, they must provide proof of pregnancy. This is usually a doctor’s letter or a maternity certificate (known as an MATB1 certificate).
You must confirm within 28 days how much SMP the employee will get and when it will start and stop. If you decide they’re not eligible, you must give them the SMP1 form within 7 days of making your decision and explain why.
Shared parental leave
If the employee has a spouse or civil partner, they may wish to use Shared Parental Leave (SPL). The eligible staff members share up to 50 weeks of leave within the first year after their child is born (or adopted).
Parents can choose to take the leave separately or together or they can split the time, or stagger leave and pay. Eligible parents who are sharing responsibility for a child can get SPL in the first year after:
- The birth of their child.
- Adopting a child.
- Getting a parental order if they had the child through surrogacy.
Workers, including agency, contract and zero-hours workers, are not entitled to SPL. However, they might be able to get Shared Parental Pay.
What is occupational maternity pay?
Occupational maternity pay is an optional payment that you can make as an employer. You pay it on top of the standard maternity pay that your staff receives while they're on maternity leave. You might know it instead as contractual maternity pay or enhanced maternity pay.
This is an optional extra you can offer your employees, a company maternity pay scheme to supplement the Governments. It can help boost employee morale and engagement, so you see the return on this in retention and productivity.
However, as mentioned, it is optional so you don’t have to if it’s a bad financial decision for you.
Do agency workers get maternity pay?
Agency workers can get maternity pay if they meet the same qualifying conditions.
The agency worker must prove they were in continuous employment or in engagement with the agency. They must prove this for the 26 weeks by the 15th week before the EWC to meet the conditions of ‘continuous employment.’
Taking annual leave or sickness absence does not break continuous employment.
Maternity pay for the self-employed
To get the full amount of self-employed maternity pay allowance, they must have paid enough Class 2 National Insurance for at least 13 of the 66 weeks before their baby's due date. The Department for Work and Pensions (DWP) will check if they’ve paid enough when they make their claim.
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