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Statutory Maternity Pay (SMP) Explained

Family_Tax Agility Accountants LondonIf you’re a small to medium-sized (SME) business owner, at one point, if it hasn’t happened already, one of your employees is going to tell you they’re soon to be expecting the pitter-patter of tiny feet.

Once you’ve finished congratulating them there’s a good chance you’ll find yourself wondering what on Earth you’re supposed to do next. You’re not alone. If you don’t know where to start when it comes to this area, here’s a brief overview of Statutory Maternity Pay (SMP) from the point of view of you, the employer.

Your Employee’s Maternity Pay Period

SMP lasts for a maximum of 39 weeks, known as your employee’s Maternity Pay Period (MPP). You must pay this weekly payment to your employee or former employee if they were employed by you before becoming pregnant, and during the pregnancy itself.

Unbeknown to many, you must determine your employee’s MPP by the date their baby’s due, not the date it’s born. Your employee must provide you with a MAT B1 form from her doctor giving the baby’s due date. She must then work out her qualifying week; the fifteenth week before the Expected Week of Childbirth (EWC).

Your employee can start receiving her SMP from you up to eleven weeks before the baby’s due date, so long as they stop working for you before then. If she decides to continue working past this point, she may choose when she wishes her SMP to begin.

Your Employee’s Eligibility

To legally qualify for Statutory Maternity Pay your employee must provide medically-certified evidence of her due date (the aforementioned MAT B1 form), and tell you when she would like SMP to begin — giving you twenty-eight days notice of this date.

She must also:

  • Have Been Continuously in Your Employ: Your employee must have been in your employ for an ongoing period of at least 26 weeks into her qualifying week; including at least one day of work in the qualifying week itself.
  • Have Earnings Equal to the Lower Earnings Limit: Your employee’s gross weekly (not monthly) earnings must be equal or above the current lower earnings limit in place for National Insurance purposes, these being £111.00 per week for 2014-15.

How Much to Pay

Provided all conditions are met, you must pay your employee a weekly rate of 90% of her average weekly earnings for the first six weeks of her SMP period. There is no upper limit to this amount. The following 33 weeks, however, are paid at a standard rate currently (2014-15) set at £138.18.

If the standard rate figure is higher than the earnings-related rate paid out for the first six weeks (ninety percent of your employee’s average weekly earnings) this weekly rate will continue for the remaining 33 weeks in place of the standard rate.

When and How You Pay

Despite all our talk of you paying your employee a ‘weekly’ rate, you should pay her in the same way and at the same frequency you would normally pay her. If she’s normally paid monthly, by all means continue the same pattern with her SMP.

For more detailed information and a full guide to Statutory Maternity Pay, visit the Gov.uk comprehensive SMP guide.

Need Help With Statutory Maternity Pay?

To speak with a professional regarding handling Statutory Maternity Pay (SMP) in your business, or for any other reason, 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.

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