Statutory Maternity Pay Guide for Employers (2012-2013)

Statutory Maternity Pay Guide for Employers (2012-2013)

Has your employee given you sufficient notice?

Pay

Where possible your employee must give you 28 days notice before they want to start to be paid. You should accept any delay in giving notice if the employee has good reason.

Notice can be given:

  • personally
  • by someone else
  • by phone
  • by post, fax or email.

In practice your employee will probably tell you about her leave and pay dates at the same time.

Leave

To qualify for maternity leave your employee should tell you when she expects to stop work and start her leave by the Saturday of the QW (use the tables).

You must confirm the date in writing including when you expect her back. If the employee is returning earlier than previously planned or later than the previously agreed date she must give you eight weeks notice of when she intends to start work again.

For more information go to www.hmrc.gov.uk/paye/employees/statutory-pay

Choosing dates

Your employee has the right to choose when she wants to start SMP and leave. SMP and maternity leave cannot start before the 11th week before the week the baby is due unless your employee gives birth before then. For early births – SMP and maternity leave begin the day after the birth. (Use the tables here)

Change of mind

Your employee can change her mind about the start date but should give you 28 days notice of her intended new start date.

Acknowledging your employee’s notice for SMP and leave

You must write to the employee within 28 days of the date she told you when she wants to take her maternity leave, to confirm the date:

  • she intends to stop work
  • you expect her to return to work.

Employee does not give acceptable notice

If your employee did not give you acceptable notice and she does not have a good reason for being late, give her form SMP1 within 7 days of the decision being made. This must all be done within 28 days from the date the employee gave notice of absence (or the date she gave birth if this had occurred earlier). Take a copy of the form MATB1 Maternity Certificate and give the original back to her.

Paying SMP

Start of payment

If your employee meets all the qualifying conditions then for the first six weeks SMP will be 90 per cent of the employee’s Average Weekly Earnings. After that SMP will be either the weekly standard rate or 90 per cent of the employee’s Average Weekly Earnings, whichever is less.

The standard weekly rate is £135.45 for pay weeks commencing on or after Sunday 1 April 2012.

SMP is a weekly payment. It should be paid on the employee’s next usual payday on or after the last day of their pay week.

SMP pay weeks start with the first day of the SMP pay period, so that, for example, an SMP pay period which starts on a Wednesday will have pay weeks within the pay period which run from Wednesday to the following Tuesday.

The SMP pay period starts on the day the woman wants it to start and it is usual that this date will be the same day as her maternity leave starts. Both pay and leave might start earlier if your employee has:

  • a premature or early birth
  • a pregnancy-related absence

SMP should be paid in the same way as you would pay earnings and for the same period. All the usual deductions apply, including PAYE tax and National Insurance contributions (NICs), except Attachment of Earnings Orders or Deductions of Earnings Orders for the Child Maintenance and Enforcement Commission (Arrestment of Earnings Orders in Scotland).

SMP paid part-weekly

SMP can be paid as part weeks to help employers align the payments to their employees’ normal pay period. The weekly rate may be split into two and if it is, the calculation is done on the basis of dividing the weekly rate by seven. For example, if the pay period covers the end of one month and the beginning of the next (two days in April and five days in May) then pay two-sevenths in one month and five-sevenths the next month.

Paying through an agent

You can arrange for the SMP to be paid through an insurance company, friendly society, payroll service or other third party. However, bear in mind that you, as the employer, are responsible for making sure that it is paid according to the rules.

Employee has more than one employer

If your employee has more than one employer they can get SMP from each employer if they satisfy all the qualifying conditions. They can choose to take different times off from each employer.

Employee goes abroad during the Maternity Pay Period (MPP)

If an employee leaves the UK while they are in their MPP, for example, to go on holiday or visit relatives living abroad, you are still liable to pay SMP during the MPP. As the employee will have already met the qualifying conditions, then payment should continue, even if the employee is out of the country.

Non-cash payments

You may normally pay some of your employee’s earnings as a non-cash payment, for example, providing board and lodging or giving them goods or services. However, you must pay any SMP in full. SMP cannot be sacrificed or offset against other benefits, it must be paid in cash.

All non-pay contractual benefits must continue during statutory maternity leave. These may include any childcare vouchers, company car or mobile phone provided to the employee as part of their contract of employment.

Lump sums

If you do decide to pay the SMP as a lump sum, you and your employee could pay more NICs than if you paid it on their normal payday. See Employer Helpbook E13 (2012) Day-to-day payroll and the CWG2 (2012) Employer Further Guide to PAYE and NICs, for more information on working out NICs.

Offsetting SMP against employee’s pay

If you pay maternity pay under an employee’s contract of employment you must pay your employee at least the amount of SMP they are entitled to for each week in the pay period but you can offset the contractual payment against your liability to pay SMP for the same week for which it is payable.

If your employee is entitled to more SMP than the contractual maternity pay you may offset the occupational pay but you must pay the balance of SMP due. Even if you are paying your employee occupational maternity pay you may still recover an amount based on your full SMP liability from the NI Fund in the normal way.

However, if you have set up a scheme whereby your employee pays a contribution towards their occupational maternity pay, they are entitled to the full amount of SMP on top of their maternity pay from the scheme. If you share the cost of the maternity pay scheme, then you must calculate what proportion of the maternity pay is from your contributions and ensure that you pay your employee any balance of SMP needed to bring your share up to the SMP due. You cannot offset any of the maternity pay they have paid for against their SMP entitlement.

Employee is not returning to work

If your employee is not returning to work you must still pay them SMP to which they are entitled, for further information see When does SMP stop?.

You cannot ask them to repay it.

Compromise agreements

If your employee stops working for you, they may have potential claims against you, for example to salary or wages which have not been paid in full. This type of thing is often dealt with by a single agreement, sometimes described as a compromise agreement.

If your employee has entitlement to SMP, you may want to include this as part of the compromise agreement. However, SMP is a legal entitlement and if she has met the qualifying conditions, she must receive that legal entitlement.

Any compromise agreement that pays her something other than her actual SMP will not satisfy her legal entitlement.

A compromise agreement may use terms such as:

  • in lieu of SMP entitlement
  • in recognition of SMP entitlement
  • compensation for SMP entitlement

or not mention SMP entitlement at all. It may simply refer to an overall settlement figure which aims to cover all your employee’s outstanding entitlements.

When terms like these are used, or there is simply an overall settlement figure, you may not have met your obligation to pay SMP.

To remove any doubt about whether you have met your requirement to pay SMP, you must make sure that if you include payment of SMP in any compromise agreement:

  • it is properly calculated in accordance with your employee’s entitlement and
  • clearly identified as SMP in the agreement.

SMP is subject to tax and NICs and you should make sure that you make these deductions when you pay your employee.

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