Statutory Maternity Pay Guide for Employers (2012-2013)

Statutory Maternity Pay Guide for Employers (2012-2013)

How to Recalculate your employee’s AWE

Step 1

Recalculate their AWE using the earnings paid in the relevant period as increased by the pay rise. Do not include any PAYE Settlement Agreement expense payments and benefits in kind at this stage.

If the new AWE amount is at least:

  • £102.00 for babies due between 17 July 2011 and 14 July 2012, or
  • £107.00 for babies due between 15 July 2012 and 13 July 2013 your employee’s earnings are high enough to get SMP.

So:

  • work out the total amount of SMP she is now entitled to
  • take away any SMP you have already paid her
  • pay any extra SMP due.

Your employee may not be entitled to any extra SMP because their AWE with the pay rise, excluding the PAYE Settlement Agreement earnings, are less than their original earnings. If this is the case, do nothing, your employee may continue to receive the SMP as originally calculated.

If the new AWE are less than the LEL go to Step 2.

Step 2

Recalculate their AWE using the earnings paid in the relevant period as increased by the pay rise and include the expense payments and benefits in kind.

If the new AWE amount is at least:

  • £102.00 for babies due between 17 July 2011 and 14 July 2012, or
  • £107.00 for babies due between 15 July 2012 and 13 July 2013

your employee’s earnings are high enough to get SMP.

So:

  • work out the total amount she is now entitled to
  • take away any SMP you have already paid her
  • pay any extra SMP due.

If the new AWE are less than the LEL shown above she still cannot get SMP. If you have not already done so give the employee 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.

Earnings in the relevant period where pay rise awarded before or during maternity leave

A pay rise must not be withheld because a woman is on maternity leave. You must recalculate SMP AWE to take account of pay rises awarded, or which would have been awarded to a woman had she not been on maternity leave, if:

  • you awarded a pay rise on or after 6 April 2005, or before that date had granted a pay rise which had not been put into payment by then, and
  • the pay rise was effective from anytime between the start of the eight-week set period for calculating SMP and the end of the woman’s statutory maternity leave. (This is Ordinary Maternity Leave and Additional Maternity Leave.)

If the effective date of the pay rise falls before the start of the set period but the earnings in the set period at the time SMP was originally calculated had not been adjusted to reflect that pay rise before the end of the set period:

  • you must recalculate her AWE to include the pay rise as though it was effective from the beginning of the set period
  • pay any extra Statutory Maternity Pay (SMP) due. If a pay rise is awarded which on recalculation means that her earnings are now high enough for her to get SMP when she could not before you should:
    • work out 90 per cent of her AWE
    • take away the standard rate of SMP
    • pay her the difference for six weeks.

If 90 per cent of her AWE is less than the standard rate you may not have to pay her anything.

This is because she may have received the balance of the SMP now due as Maternity Allowance from the Jobcentre Plus or in Northern Ireland the Jobs and Benefits office.

However, not all women are entitled to Maternity Allowance, or the Maternity Allowance she got may have been less than the SMP she is now entitled to. You should therefore ask her to get a letter from the Jobcentre Plus or in Northern Ireland the Jobs and Benefits office to confirm how much Maternity Allowance she received.

If your employee gives you a letter from the Jobcentre Plus office or in Northern Ireland the Jobs and Benefits office showing how much Maternity Allowance she got:

  • work out the total amount of SMP she is entitled to
  • take away the Maternity Allowance she was paid
  • take away any SMP you have already paid her
  • pay her the difference.

She should still benefit from a pay rise even if she does not intend to return to work with you after her maternity leave has ended.

If a pay award is made after she has terminated her employment and the pay rise is backdated into a time when she was working for you or was on maternity leave with you, she may be entitled to benefit from the pay rise. You should check the terms of her old contract of employment with you.

If more than one pay rise has been awarded during the above period you will need to perform separate calculations for each.

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