Statutory Maternity Pay (SMP) started in April 1986. It is a statutory obligation by Employers to pay their employee while they are not at work after having a baby.
SMP is paid in the same way as wages, for up to 39 weeks and should be paid in the same way you would pay earnings and for the same period. All usual deductions apply including PAYE Tax and National Insurance, but NOT attachment of earnings orders or deductions of earnings orders for child maintenance and enforcement commission.
In the case of twins or multiple births, the entitlement to SMP is exactly the same as it would be for only one baby.
Statutory Maternity Leave (SML) is the entitlement to time off before and following the birth of a child. All Employees are entitled to Maternity Leave, and it is no longer dependant on their length of service and there is no age restriction for paying SMP to an Employee. It is up to the Employer to calculate the amount of SMP available to the Employee based on determining factors set by HMRC.
The period of maternity leave is split into two parts:
Ordinary Maternity Leave (OML) is the first 26 weeks of Statutory Maternity Leave. Legislation specifies that the Employee must be off work for a minimum of 2 weeks after the baby is born. This is known as Compulsory Maternity Leave (CML). For factory workers the Compulsory Maternity Leave period is four weeks. During this period it is an offence for the Employer to allow the Employee to perform any work, even from home. KIT days are not permitted during this period.
Additional Maternity Leave (AML) is the period of 26 weeks leave, available in addition to ordinary maternity leave and must immediately follow the OML. It cannot be taken at another time.
An Employee can choose when she wants to start her Maternity Leave but it cannot be before the 11th week before the baby is due. This date is referred to as the WBD (week baby due). If the baby is born before this date then SML will start on the day after the baby was born. In the case of sickness, and if the illness is pregnancy related, SML would start the day after the first full day of absence at any time after the beginning of the fourth week before the WBD (week baby due). If an Employee is already off work due to sickness when they reach the fourth week before the Week Baby Due, the Statutory Maternity Leave should automatically take over.
Although Statutory Maternity Leave may still be given, you are unable to pay Statutory Maternity Pay without having sufficient proof of the pregnancy.
The form MATB1, or any document signed by a doctor or midwife that includes the date the baby is due is sufficient medical evidence to be able to pay SMP. This proof cannot be issued any earlier than 20 weeks before the week the baby is due.
When a maternity certificate has been given another one cannot replace it unless the original is lost and then it must clearly state ‘duplicate’ on the document.
If the employee has 2 jobs her 2nd job may accept a letter signed by a doctor/midwife including details of the woman’s name and her date of confinement. This document also needs to be stamped and if it has been issued by the mid-wife, it should have a pin number and expiry date of registration. The original MATB1 may be given to a 2nd employer to photocopy then add a note onto it saying that the original has been seen and this is a true copy.
Medical evidence must be provided within 21 days from the date that the employees SMP pay period starts. Failure to provide this evidence means you are unable to pay the SMP. With good reason it must be accepted providing it is received by what would be the 13th week of SMP pay period.
As the Employer, you should be notified of your Employees pregnancy, the expected week of childbirth (WBD) and when your Employee expects to stop work and start leave, by the end (the Saturday) of the 15th week before the baby is due (the WBD)
It is possible, for various reasons, that notice may not always be given on time. When ‘late notice’ occurs, it is common for the Employer to ask for the reason why it is late. If you accept that there is a good enough reason for late notice then the delay may be allowed. If you feel the reason is not acceptable then a start date suitable to the business should be discussed with the Employee and mutually agreed although this date cannot be later than the actual birth.
If the baby is born early and your Employee has been unable to notify you in time, you must be notified of the date of birth as soon as possible and the reason should be accepted.
At this time there is no obligation on the Employee to tell you if she wishes to take OML. It is stated in the legislation that the Employer must assume she is going to be taking the full entitlement to leave unless specifically notified otherwise.
You must respond in writing within 28 days confirming the date on which her additional maternity leave will end. It is good practice to also include the start date of the maternity leave and also the date the Emloyee is expected to return to work, the amounts of pay, if any which will be paid and how this is calculated. For more guidance, the Employer Help Book E15 published by HMRC contains a sample letter.
The Emloyee can chose when they want to start pay and leave. SMP can not start before the 11th week unless she gives birth before then (for early births the SMP and maternity leave begin the day after the birth). She has the right to change her mind about the start date but must give 28 days notice of this change. She also does not have to take the full 52 weeks leave if she does not want to but she must give you at least 56 days notice of her intention to resume work early. If the 56 days notice is not given then you as an Emloyer have the right to postpone her return date to one which secures 56 days notice but this date cannot be beyond the end of her additional maternity leave.
Returning to work – if the mother is returning earlier or later than planned she must give 8 weeks notice of when she intends to start work again.
Acknowledging notice – you must write to her within 28 days of the date she told you she wants to take her leave to confirm the date she intends to stop working and the date you expect her to return to work.
Terms and Conditions during Statutory Maternity Leave
During the time an Employee is on statutory maternity leave she will remain entitled to the benefit of all the terms and conditions of employment which would have applied if she had not been absent. The right does not extend to remuneration.
All benefits in kind must be provided throughout the period. Most of these will be straightforward, for example, she will be entitled to retain the use of the company car or mobile phone, if one was provided prior to her leave.
Pension rights must be preserved throughout the period of paid maternity leave, and this applies to both contractual and statutory pay. The Employee will continue to accrue pension rights at the rate that would have been applicable if she was actually working. Employer contributions will remain to be paid as they would have been if she was still in work but the Employee contributions are based on the amount of contractual or statutory maternity pay being paid to her during her maternity leave.
Annual leave entitlement will continue to accrue at the normal contractual/statutory rate as is she had been working.
The Employee has the right to return to the same job with the same terms and conditions that she had before starting her leave, with any natural enhancement applied as if she had been at work. If she uses any of her additional maternity leave the right to return to the same job is lost, she only has a right to return to a ‘suitable and appropriate role’
Normal notice of termination of the contract of employment applies (Employers can dismiss a woman who is on maternity leave, they just have to be careful to ensure they do it in the same manner as they would is she was not on leave)
Compensation in the event of redundancy (for example if the Employer has an occupational redundancy scheme in addition to the statutory scheme)
Disciplinary and grievance procedures
Continuity of the contract of employment
Operating the SMP scheme
The Employee should ideally advise you that she wishes to start getting SMP 28 days before they want to be paid.
They need to provide evidence (MatB1) within 21 days from the date her pay period starts (without this evidence you must not pay)
They must be employed continuously for at least 26 weeks up to and into the 15th week before the week the baby is due (if not employed long enough give an SMP1 form)
Average earnings need to be at or above the lower earnings limit (LEL) (if earnings are not high enough issue an SMP1)
Check they have given you sufficient notice (28 days before they want to be paid unless they have good reason to notify you late)
If the conditions detailed above are satisfied, then entitlement to SMP should be calculated.
To calculate the SMP payments you firstly need to work out:
whether your Employee has worked for you long enough
whether they earn enough
how much to pay them
For the first six weeks you must pay your employee SMP at the rate of 90 per cent of their average weekly earnings.
Length of Employment
Ordinary maternity leave and additional maternity leave will be given no matter how long the Employee has been employed.
For payment of SMP, the mother must be employed by you continuously for at least 26 weeks continuing into the 15th week before the week the baby is due (count part weeks as full weeks)
Find the date the baby is due ( you can use the charts in the HMRC books or their website and read across to the latest start date for employment with you. (A start date after this means she will not qualify, and you should issue an SMP1 form).
How to work out the set period
The ‘Set Period’ is needed to establish the earnings to be used and the number of days, weeks or months to divide those earnings by. All earnings paid in the set period will be divided by the number of days, weeks or months in that set period.
Date 1 – the last normal pay day on, or before the Saturday of the qualifying week (QW) this is the 15th week before the week the baby is due. This pay day will be ‘date 1’ and is the end of the ‘set period’
Date 2 – the last normal pay day falling not less than 8 weeks before the pay day at date 1. Date 2 will be the day after this pay day and is the start of the ‘set period’
Average Weekly Earning
To work out the average weekly earnings, the following steps are taken:
1 – find the date the baby is due
2 – find the date of the Saturday in the 15th week before the baby is due
3 – find the date of the last normal pay day on or before that Saturday (this is the last day of the set period)
4 – count back to the pay day at least 8 weeks from the date in ‘3’ and come forward one day e.g. pay day 22 June, enter 23rd June. This is the first day of the set period.
5 – add together the earnings paid in between the dates ‘4’ and ‘3’
6 - divide the figure at ‘5’ by the number of whole weeks in the set period (do not round up or down to whole pence here, use the rounded amount to decide earnings.
If the amount at ‘6’ is at least that of the Qualifying Earnings Limit, which for 2013-2014 tax year is £109.00, then they earn enough to meet the qualifying criteria for payment of SMP.
When working out AWE for monthly paid employees, you must convert monthly pay into an average weekly amount:
Follow all steps 1 through to 5
6 – work out how many whole months there are between the dates in ‘4’ and ‘3’ (if there is not a whole number of months, count the number of odd days then round the odd days up or down in line with these rounding rules. In February round 14 days or less down and 15 days or more up. Any other month round 15 days or less down and 16 days or more up.
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 here, use the unrounded amount)
In the event of an overpayment or underpayment of wages being made to the employee and it was made within the ‘set period’ the calculation of average wages for SMP must be made on the the overpaid or underpaid amount and not what the payments should have been.
Where an employee has entered into a salary sacrifice scheme their average weekly earnings are calculated using the amount of earnings actually paid to them during the ‘set period’
For the purpose of calculating AWE for SMP the calculation is based on earnings which are subject to NICs.
If an Employee qualifies for Statutory Maternity Pay, the payment rates for the 2013/2014 tax year are:
First 6 weeks : 90% of the Average Weekly Earnings
Further 33 weeks at the lesser of 90% of the Average Weekly Earnings or £136.78
Rights on return
The Employee has the right to return to work, to the same job in which she was employed before she went on maternity leave and have all the accrued rights as if she had not been absent. Any pay rises which may have occurred whilst she was away should be incorporated into her pay and her employment service for the purpose of pensions, benefits and pay will deemed to be continuous.
The Employee has no right to postpone her return beyond the end of the statutory maternity leave. If she fails to return she will therefore be absent without leave. If your Employee is unable to return to work due to illness (and has notified you of this in accordance with the normal terms of her contract of employment) she must be treated as if she has returned to work and commenced sick leave. Sick pay (and SSP if the qualifying conditions are met) will be payable as normal.
After Additional Maternity Leave has been taken, if it is not ‘reasonably practical’ to offer the woman her old job back you only have to provide a role that is suitable, such as a similar role in a different department, however the terms and conditions must still be no less favourable than her old job.
Returning to work – if the mother is returning earlier or later than planned she must give 8 weeks notice of when she intends to start work again.
If the employee is not returning to work you must still pay SMP.
If your employee does not qualify for SMP
The form SMP1 ‘Why I cannot pay you SMP’ needs to be issued to tell an Employee if they are not entitled to SMP and the reason why.
If the Employee becomes sick during SMP, continue with SMP do not pay SSP. If it is a pregnancy related absence, i.e. if she is absent through illness relating to her pregnancy and it continues into or starts within the four-week period starting on the Sunday of the 4th week before the baby is due, the Statutory Maternity Pay period and leave start on the day after the first complete day of absence.
If the Employee dies, SMP is paid for the whole week in which she died and then stops.
If the baby dies during the SMP pay period, payments continue as normal.
If pregnancy ends other than by a live birth before the 25th week of pregnancy then SMP is not payable. In these cases the Employer should consider if SSP is payable.
If a still birth occurs after the start of the 16th week before the EWC the Employer must treat the Employee as having had a baby and any SMP should be paid in the same way as it would have been for a live birth. Even if a baby survives for only an instant, no matter how many weeks into the pregnancy, it is treated as a live birth.
KIT days (Keeping in Touch days)
These are days that an Employee on maternity leave is allowed to perform work for their Employer or attend training or meetings without losing her SMP. This does not mean that the Employer has a right to oblige the Employee to work and also does not mean that the Employee has the right to work. The KIT days are to be mutually agreed and used for ‘keeping in touch’. A total of 10 days is allowed and these days may be used consecutively, singly or in blocks.
If the Employee works more than 10 days you cannot pay SMP for any week in which she works, even if she only works one day in that week you must not pay the whole week of SMP.