Family_Tax Agility Accountants LondonDealing with and understanding Statutory Maternity Leave and Statutory Maternity Pay (SMP) as a new employer or SME can be difficult, especially if you’ve never had to deal with this issue yourself as an employee at a previous company.

Though we’ll be focusing on SMP in this post, it should be noted that all new mothers have a legal entitlement to take up to twenty-six weeks off around the time of the birth of their baby, regardless of whether or not they are entitled to SMP.

What are the SMP Requirements?

SMP is a compulsory payment you must make to female employees that have had (or are about to have) a baby, so long as they fulfil several requirements, namely:

  • They’ve worked continually for your company for upwards of twenty-six weeks before their SMP qualifying week; the fifteenth week before the expected due date.
  • They give you twenty-eight days notice (to receive Statutory Maternity Leave, your employee must inform you fifteen weeks before their baby is due).
  • They provide proof of pregnancy via a doctor’s letter or MATB1 certificate; typically issued twenty weeks before the due date.
  • They earn at least £111 a week (pre-tax) in an eight-week ‘relevant period’ prior to SMP being rewarded.

How Much is Rewarded?

Although your employees can take Statutory Maternity Leave for up to fifty-two weeks (twenty-six weeks of ‘Ordinary Maternity Leave’ and another twenty-six weeks of ‘Additional Maternity Leave’), you’ll only have to pay SMP for up to thirty-nine weeks, under the following rates:

  • Ninety percent (90%) of their pre-tax average weekly earnings (AWE) for the first six weeks.
  • £138.18 (tax year 2014/15), or ninety percent of their AWE, whichever is the lowest amount, for the remaining thirty-three weeks.

Due to employee SMP being treated as normal pay, you’ll need to deduct tax and National Insurance Contributions (NICs) as standard. You can use the government-provided SMP calculator to calculate your employee’s pay during this period.

Paternity Pay

Statutory Paternity Pay (SPP) is available to the biological father of a newborn baby, the partner, husband, or civil partner who is not a newborn baby’s biological father, and a mother’s wife or female partner in a same sex couple, under the same rates as SMP, though under vastly different timescales.

For one of your employees to qualify for a maximum of two consecutive weeks of SPP (at ninety percent of their pre-tax AWE, or £138.18; whichever is the lowest amount) they must:

  • Have provided you with a clear declaration of family commitment using form SC3.
  • Give you twenty-eight days notice of their paternity leave and have earned at least £111 a week (pre-tax) in an eight-week ‘relevant period’ prior to SPP being rewarded.
  • Have worked continually for your company for upwards of twenty-six weeks prior to their baby’s qualifying week.

Financial Help Available For Your Business

As the owner of a SME you’ll be relieved to know that financial help is available to you should you need it. In most circumstances you’ll be able to reclaim 92% of your employee’s SMP or SPP, with this increasing to 103% if you qualify for Small Employers’ Relief (SER); 100% of the SMP you’re required to pay out, plus 3% to cover NICs.

Professional Advice on SMP for Employers

To speak with a professional to discuss your requirements when it comes to providing your employees with accurate maternity and paternity pay, contact us today on 020 8780 2349 or get in touch with us via our contact page to arrange a complimentary, no obligation meeting.

 

This blog is a general summary. It should not replace professional advice tailored to your specific circumstance.