If your employee is expecting a baby, she may be entitled to Statutory Maternity Pay (SMP). This replaces her normal earnings to help her take time off around the time of the birth. She also has a statutory right to a minimum amount of maternity leave.
Whether you have to pay SMP to an expectant employee depends on how long they’ve worked for you and how much they earn. They’ll have to provide you with evidence of when the baby’s due and give you notice of when they want you to start paying their SMP.
Payments of SMP count as earnings. You must deduct tax and National Insurance contributions (NICs) from them in the usual way.
You’ll normally be able to recover some or all of the SMP you pay.
An employee who is expecting a baby has the right to 26 weeks of ‘Ordinary Maternity Leave’ and 26 weeks ‘Additional Maternity Leave’ – making one year in total. As long as they give you proper notice they can take this no matter how long they’ve worked for you, how many hours they work or how much they’re paid. But you only have to pay them SMP if they meet certain conditions.
They must have:
- worked for you continuously – full or part-time – for at least 26 weeks up to and into the 15th week before the week the baby’s due
- average earnings at least equal to the Lower Earnings Limit for NICs – £102 a week or £442 a month for 2011-12
- given you the right paperwork confirming the pregnancy and sufficient notice of when they would like the SMP payments to start
For the first six weeks you must pay your employee SMP at the rate of 90 per cent of their average weekly earnings. For the next 33 weeks you must pay them the lower of the following:
- £128.73 – from 3 April 2011
- 90 per cent of their average weekly earnings
If your total National Insurance payments are £45,000 a year or less, you’ll be able to recover 103 per cent of the SMP you have to pay. This is to compensate you for the employer’s NICs you have to pay on the SMP.
If your total National Insurance payments are more than £45,000 a year you can recover 92 per cent of the SMP you have to pay.
You can recover SMP by deducting it from your monthly PAYE (Pay As You Earn) payments. Or you can ask HM Revenue & Customs (HMRC) for funding in advance.
For further information, please go to: www.hmrc.gov.uk/employers/ssp-faq.htm