Statutory Maternity Pay (SMP) re-visited

One of the areas we find that generates more enquiries than any other is the murky world of Maternity Pay and all associated areas such as paternity, adoption and shared parental leave.

Paternity Leave is the easiest area to get to grips with:

• Statutory Paternity Pay (SPP) lasts for 2 weeks.
• The employee can take one week or two weeks, up to April 2024 paternity leave had to be taken in one go.
• From April 2024 SPP, whilst still staying at two weeks, can be taken in two wholly separate periods, so long as two periods fall into a 52-week window from the birth.

The rules covering maternity, adoption and shared leave differ, but derive from the same basis:

• SMP covers a period of 52 weeks.
• The first 26 weeks are deemed as ordinary maternity leave.
• The following 26 weeks is additional maternity leave, with the first 13 weeks paid. The remaining 13 weeks are unpaid.
• The first 6 weeks of maternity pay is paid at 90% of your average weekly earnings (AWE) The remaining 33 weeks will be paid at £184.03 (2024-25 rates) or 90% of your average weekly earnings (whichever is lower).

Average Weekly Earnings (AWE)

The AWE are calculated by taking the 8 weeks / 2 months income before the date of the 15th week before the baby is due. Please note that if employees are using salary sacrifice their average weekly earnings are calculated on the amount actually paid to them. It is also worth noting that, if any bonus or commission payments are made in the qualifying period, these payments are included in the calculations.

Statutory Maternity Pay

SMP starts when you take your maternity leave unless you are off ill with pregnancy-related illness in the 4 weeks before the baby is due. In which case SMP can start at the on-set of the sickness period.

To get SMP you need to have worked for your employer continuously for at least the last 26 weeks continuing into the qualifying week (15th week before the baby is due) and you earn an average of at least £123 per week. If the company ceases to trade, or the employee decides not to return to work after the SMP period, the employee is still entitled to the full amount of SMP. This includes foreign nationals whose work visas may expire during maternity leave.

Holiday Pay

Holiday pay accrues all the while an employee is on statutory leave. If, after 39 weeks the employee decides not to return to work, then holiday accrual ceases at 39 weeks.

Pension Contributions

Pension contributions continue throughout the statutory pay period. Employee contributions are based at the normal percentage rate. Employer contributions are paid at the rate they would normally be paid at if the employee was working as normal. Employer contributions cease after the paid maternity leave period ends.

SMP is normally paid through the standard payroll where tax and NIC is deducted, employers can decide to pay the SMP as a lump sum, if both parties agree, but this could mean paying more NIC than if paid in the normal pay periods.

Get In Touch

Contact your local Whitings office today for more information or advice on Payroll and/or Statutory Maternity Pay, paternity, adoption or shared parental leave.