If you own a business, you may need to manage employees taking leave for a new baby or adoption. This can be a challenging situation. It is important to consider the needs of your employees and their families. You should also consider the impact on your business operations.
This article discusses occupational maternity pay. We will explain what it is and how much employers should pay their employees.
For immediate advice on this topic speak to one of Croner’s experts here, or call us on 0800 145 3375.
What is Occupational Maternity Pay?
Occupational maternity pay, also known as contractual 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).
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.
You could enhance the amount you're paying to your 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 OMP, make sure you include the terms of your scheme in staff contracts. The terms of the OMP should be included in the employee handbook. This will make it easier for your employees to refer back to at a later date.
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, but are not limited to:
- A length of service—e.g. one year of service before they're eligible for occupational maternity pay.
- If an employee on maternity leave doesn't return to work, they must repay all or part of their occupational maternity pay. This needs to be made clear to the employee.
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: £172.48 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.
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 is no right or wrong answer to this.
It comes down to what you think is best for your business. As OMP is optional, you aren’t legally required to offer it to your employees. Especially if the added cost would hurt your business.
Your business will benefit, for example, your staff are more likely to show gratitude towards you when they return to work. 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 has a team of award-winning, HR professionals and consultants who are specialists in their field.
We have been providing assistance to businesses for 80 years. Our advice line is available 365 days a year, 24 hours a day. Why not speak to a Croner expert on 0808 145 3375.
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