Statutory Maternity Pay Guide for Employers (2012-2013)

Statutory Maternity Pay Guide for Employers (2012-2013)

Directors

Companies incorporated after 1 October 2009

There are new regulations for companies incorporated after 1 October 2009.

They provide new Articles of Association for these companies and will:

  • apply by default if other Articles are not adopted.
  • allow its directors to determine a director’s remuneration
    • Directors can decide what and when to pay remuneration. There is no need for a resolution of the company’s shareholders at its Annual General Meeting (AGM).
    • In such cases payment of a director’s fees will be regarded as earnings for the purpose of entitlement to SSP/SMP/SAP/OSPP/ASPP on the date payment was made.

Companies incorporated before 1 October 2009

The previous standard Articles, which apply in default, continue to apply. An ordinary resolution is required to determine a director’s remuneration. The method of calculating directors’ earnings on an annual figure (after an ordinary resolution has been passed by the shareholders) will still apply to these companies. Any payments made in anticipation of the annual vote cannot be taken into account for calculating AWE.

Paid contractually

If the director is contractually paid a regular salary, calculate their AWE like any other employee, by using the checksheets.

Paid by a determination of the directors (not a formal vote)

Calculate their AWE by using the checksheet for directors paid by a formal vote, but use the date monies were paid instead of the date of the shareholders’ resolution at the Annual General Meeting (AGM).

Paid both contractually and by formal vote

A director who is paid contractually may also be paid a bonus or fees by a formal vote. You must still calculate their AWE using the checksheets. You should only include the monies voted by formal vote if the date of the vote falls in the relevant period.

Paid only by a formal vote

If the director is paid only by a formal vote calculate their AWE using SMP Checksheets – Not an Employer before Qualifying Week. A formal vote usually takes place at the company’s AGM and is agreed in the company minutes.

Monies drawn in anticipation of a formal vote

Some directors may regularly draw money from the business in anticipation of a formal vote. Do not include this money when working out the director’s AWE, even if NICs were deducted at the time they were paid.

Checksheet for directors paid only by a formal vote

To work out AWE if you do not pay your employees in a regular pay pattern

1. Find the date baby is due.
    /    /    
2. Find the date of the Saturday in the Qualifying Week.
    /    /    
3. Find the date of the last payday on or before that Saturday. This is the last day of the relevant period.
    /    /    
4. Count back to the payday at least eight weeks from the date in 3 and come forward one day, for example if the payday is 22 June, enter 23 June. This is the first day of the relevant period.
    /    /    
5. Add together the earnings paid in between the dates at 4 and 3 (inclusive). (Do not include any money drawn in anticipation of the vote.)
6. Work out how many whole months there are between the dates in 4 and 3 (inclusive). If there is not a whole number of months see ‘Rounding to the nearest whole month when there is not a whole number of months in the relevant period’ on page 23.
7. Divide the figure in 5 by the number of whole months in 6.
8. Multiply the figure in 7 by 12.
9. Divide the figure in 8 by 52

(Do not round up or down to whole pence; use the unrounded amount to decide if your employee’s earnings are high enough.)

Does your director earn enough?

If the amount at 9:

  • is at least £102.00 gross a week for babies due between 17 July 2011 and 14 July 2012, or
  • is at least £107.00 gross a week for babies due between 15 July 2012 and 13 July 2013

then your director earns enough to meet this qualifying condition.

If they don’t earn at least the amounts shown above, they don’t qualify for SMP. You must give them 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.

If your director earns enough, go to Has your employee given you sufficient notice?

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