14 Jun 2018
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 Statutory Maternity Pay that you can pay your staff while they're on maternity leave. When one of your staff goes on maternity leave, you must pay them Statutory Maternity Pay (SMP). You probably knew that. There is a minimum amount of SMP you must pay your staff each month. And you pay it just like you would their salary—so yes, tax and National Insurance deductions still apply. But did you know that you could enhance the amount you're paying to your new parent employees? Well, with occupational maternity pay (OMP), you can do just that. You might know it instead as contractual maternity pay or enhanced maternity pay.
Occupational Maternity Pay Entitlement
If you're going to offer occupational maternity pay, make sure you include the terms of your scheme in staff contracts. You could also include the terms in your employee handbook. That way, your staff can read up on the scheme whenever they like. The terms will also serve you as a reference document if you ever need to respond to a query or dispute. Conditions you could put in your occupational maternity pay entitlement scheme include:
- Staff must return to work for you once their maternity leave ends
- A length of service—e.g. one year of service before they're eligible for occupational maternity pay
- If the employee on maternity doesn't return to work, they must repay all or part of (be clear on the figure) the occupational maternity pay
This list isn't exhaustive.
How Much Occupational Maternity Pay Should You Pay?
Remember, you're enhancing an employee's SMP. So, logically, paying OMP requires you to add money on top of their SMP, creating a larger payment. SMP over 39 weeks looks like this:
- The first six weeks: 90% of your employee's average weekly earnings before tax
- The next 33 weeks: £145.18 per week, or 90% of your employee's average weekly earnings (whichever is lower)
- The first 12 weeks: full pay (but remember, that's in addition to SMP)
- The next eight weeks: half pay (and again, in addition to SMP).
- The remaining 19 weeks: just Statutory Maternity Pay.
If you're feeling even more generous, you could include a return-to-work bonus for your staff as an added incentive to make sure they come back.
Should you give your staff occupational maternity pay?
There's not a clear-cut 'yes' or 'no' for this. It comes down to what you think is best for your business. If the added cost would hurt the business, then don't do it. OMP is optional. One benefit is that your staff are likely to show gratitude towards your generosity when they return to work by being loyal and productive. Your staff retention numbers could increase. Your new parent employees will speak highly of you and your business, too. A good reputation can go a long way when you're looking to hire new talent.
Speak to an Expert
Croner offers expert advice about all things employment law, HR, health & safety, reward, and more. If you have a question about SMP, or OMP, or anything else related to maternity pay, contact us on 0808 145 3375.
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