All qualifying employees have a right to Statutory Maternity Pay (usually abbreviated to SMP) during pregnancy, whether this is specified in their contract or not and an employee enjoys the same benefits as any other employee. As with many other benefits, there are detailed and complicated rules governing the criteria for qualification and payment. However, PFN Payroll deals with all aspects of SMP on behalf of its clients and will ensure that if a client’s employee becomes pregnant the payment process operates smoothly. The basic principles which apply to the majority of cases of SMP are set out below.
Am employee qualifies for SMP if she becomes pregnant after the start of her employment and earns at least (for tax year 2016-17) £112 per week. If she was pregnant before she started her employment, even if she did not know this at the time, she will not qualify for SMP.
An employee who qualifies for SMP is entitled to take up to 39 weeks paid Maternity Leave, usually commencing around the 29th week of pregnancy. The first 6 weeks of Maternity Leave are paid at 90% of the employee’s GROSS salary, less tax and National Insurance. A further 33 weeks are paid at a flat rate of £139.58 gross (or 90% of the employee’s gross salary if this is less than £139.58), less tax and NI. The employee is also entitled to take a further 13 weeks of unpaid leave at the end of the paid leave, making the maximum length of Maternity Leave 52 weeks. The employee remains employed throughout this period and the employer is required to allow the employee to return to their job at the end of their Maternity Leave.
The employer may be able to reclaim the whole of the SMP they have paid to the employee from HMRC plus a small percentage in addition to this to compensate them for the additional employer’s NI which has been paid.
Employers should note that the employee will continue to accrue paid holiday whilst on Maternity Leave. The employer will therefore need to allow the employee to take accrued leave (paid at the employee’s normal pay rate) when they return to work at the end of their Maternity Leave or, if they do not choose to return, pay them for the accrued holiday entitlement.
If an employee does not qualify for SMP, they will normally be able to claim Maternity Allowance from the local Jobcentre Plus. Maternity Allowance is usually paid at a flat rate of £139.58 per week for up to 39 weeks (or 90% of the employee’s gross salary if this is less than £139.58). In these circumstances, the employer may treat the maternity absence as unpaid and will not need to reclaim anything from the Revenue.