Employee earnings affected by a backdated pay rise
A pay rise mustn’t be withheld because of maternity leave. You must recalculate the Average Weekly Earnings (AWE) to take account of pay rises awarded, or which would have been awarded had your employee not been on maternity leave. This applies if the pay rise was effective from anytime between the start of the 8 week relevant period for Statutory Maternity Pay (SMP) and the end of the statutory maternity leave.
If the effective date of the pay rise falls before the start of the relevant period but the earnings in the relevant period at the time SMP was originally calculated hadn’t been adjusted to reflect that pay rise before the end of the relevant period you must:
recalculate her AWE to include the pay rise as though it was effective from the beginning of the relevant period
pay any extra 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 couldn’t before, you must:
Work out 90% of her AWE.
Take away the standard rate of SMP.
Pay her the difference for six weeks.
If 90% 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 (MA) from the Jobcentre Plus or in Northern Ireland the Jobs and Benefits office.
Not all women are entitled to MA, or the MA 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 MA 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 MA she got:
Work out the total amount of SMP she is entitled to.
Take away the MA 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 doesn’t 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 must 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’ll need to perform separate calculations for each.
Employee becomes sick
If the employee:
becomes sick during the SMP pay period don’t pay her Statutory Sick Pay (SSP) but continue to pay her SMP as normal
returns to work within the Maternity Pay Period (MPP) and then goes sick during that period, SMP is payable and not SSP
Keeping in touch days
To keep in touch during her maternity leave and ease her eventual return to work, a woman can work for you during her SMP pay period for up to 10 days without ending her maternity leave or losing her SMP for the week in which that work is done. These 10 days are called ‘Keeping in Touch’ (KIT) days and enable your employee to undertake the odd day’s training or do some work for you on occasions.
The employer has no right to demand that such KIT work is undertaken and your employee has no obligation to undertake such work. Before any work is done, you must agree with your employee:
what work she will be doing
whether the KIT days are used consecutively, singly or in blocks, but any work on any day (even as little as an hour) will count as a whole KIT day
how much they will be paid for work done - you may count the amount of SMP towards the contractual pay agreed with your employee but you must pay the weekly SMP rate the employee is entitled to and comply with your statutory obligations, eg paying at least the National Minimum Wage
If your employee does more than 10 days work for you in her SMP pay period you can’t pay SMP to her for any week in which she does such work and her maternity leave will come to an end.
Once your employee has used her 10 KIT days, she will lose one week’s SMP for each week or part week she works for you.
The SMP pay period is not extended to take account of any such weeks. Any SMP lost in this way is always at the standard rate first, or 90% of the AWE if this is lower than the standard rate.
An employee must take 2 weeks (or 4 weeks if working in a factory) compulsory maternity leave immediately after the date the child is born and can’t work or use a KIT day during that time.
Employee returns to work then goes off sick
The legislation for entitlement to SMP has not changed in that, where your employee has returned to work within her MPP, and goes off sick, she can’t get SSP from you. You should consider paying SMP to her. Her husband’s or partner’s employer will continue to pay them ASPP during both her sickness and the remaining MPP period.
Employee isn’t returning to work
If your employee isn’t returning to work you must still pay her SMP that she is entitled to.
You cannot ask them to repay it.
Employee works for another employer
It is up to your employee to tell you that she is working for another employer.
If your employee works for another employer during the MPP before the baby is born, carry on paying SMP.
If your employee works for another employer after the baby is born, check whether she was employed by that employer during the Qualifying Week (QW) and if:
your employee is working for someone who employed them in the QW, you should continue to pay them SMP as normal
your employee is working for someone who didn’t employ them in the QW, you must stop paying SMP from the start of the last pay week they work for that employer. You must give the employee form SMP1 within 7 days of the decision being made
Employee taken into legal custody
You can’t pay SMP for any SMP pay week your employee is in legal custody or for any week in the pay period after that. You must 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).
It is your employee’s responsibility to tell you if she is in detained in legal custody usually this means if she is arrested or in prison.
She isn’t in legal custody if she is:
voluntarily helping police with their enquiries
out on bail
serving a suspended sentence
Employee dies
If your employee dies during the MPP, you should pay SMP for the week in which they die, but not for any week in the MPP after that.
Baby dies
If the baby dies during the SMP pay period, payment should continue as normal.
Stillbirth
Your employee is entitled to SMP and maternity leave if the baby is stillborn.
A stillbirth occurs if the baby is stillborn after the 24th week of pregnancy. You’ll need evidence before making payment, eg a stillbirth certificate issued by the registrar or certificate/notification for the registration of a stillbirth issued by the attending midwife/doctor.
If a baby is born alive but survives only for an instant, it is a live birth whenever it is born and you must apply the rules for a live birth.
Break in employment
Some breaks between periods of employment won’t interrupt a period of continuous employment for SMP purposes. Employees with an ongoing contract of service during the following breaks remain continuously employed:
temporary cessation of work - including short-term contract or agency workers
public holidays - the employee can still get SMP
sickness or injury - the employee can get SMP if the total period of incapacity is 26 weeks or less
paternity, parental and adoption leave - if the employee took paternity leave when she was adopting a child or when a baby was born and she worked for you before and after the break she will satisfy the employment rule
pregnancy - if your employee was not working for you because of a birth, and she worked for you before and after the break, and the break is not more than 26 weeks
Non-cash payments and contractual benefits
You may normally pay some of your employee’s earnings as a non-cash payment, for example, providing board and lodging or giving them goods or services. However, you must pay any SMP in full. SMP cannot be sacrificed or offset against other benefits, it must be paid in cash.
All non-pay contractual benefits must continue during statutory maternity leave. These may include any childcare vouchers, company car or mobile phone provided to the employee as part of their contract of employment.
Lump sums
If you decide to pay the SMP as a lump sum, you and your employee could pay more National Insurance contributions (NICs) than if you paid it on their normal payday.
Reinstatement after dismissal
If your employee didn’t work for you during the relevant period because you dismissed her, she is entitled to SMP as if she hadn’t been dismissed, if:
she is reinstated because an employment tribunal decides that you dismissed her unfairly
you reinstate her as a result of a statutory grievance procedure
Reinstatement after Armed Forces service
If the employee didn’t work for you during the relevant period, because she was serving in the Armed Forces and she returned to work for you within 6 months of the end of her service in the Forces, she may still be able to get SMP.
For SMP the employee must have been continuously employed by you for at least 26 weeks by the end of the QW. The period she served in the Armed Forces won’t count as part of the 26 weeks but the period she was employed with you before and after her service in the Armed Forces will count.
Trade Disputes or industrial action
Your employee must have been continuously employed by you for at least 26 weeks by the end of the QW. Don’t count the period they were on strike, even for 1 day, as this week will not count as part of the 26 weeks as your employee must have been employed for 26 weeks from the start of their employment into the QW.
Employee leaves job
Your employee can’t get maternity leave if they have left their job but may still qualify for SMP.
It doesn’t matter why she left or that she is not coming back – she is entitled to SMP if she satisfies the qualifying conditions.
If your employee starts work for a new employer before her baby is born, you are still liable to pay SMP. There are special rules for when you start to pay. Work out the date of the Sunday of the 11th week before the week baby due.
If she leaves before that date, the SMP pay period will start on the earlier of the following dates:
the Sunday of the 11th week before the baby is due
the day after the baby is born
If she leaves her employment after the start of the 11th week, and before any other event which may trigger her pay, then the pay period starts the day following the day on which she left her employment.
Premature or early birth after QW
If the baby is born early, there are special rules for when your employee needs to give you evidence and when you start to pay. All the other terms and conditions apply.
Your employee won’t have been able to give you advance notice, but they must tell you the date of birth as soon as possible.
Your employee should give you medical evidence (usually form MATB1 Maternity Certificate) of the date the baby was due and the date of birth. You can accept a birth certificate as evidence of the date of birth.
Your employee should give you the evidence within 21 days after the date of birth, or as soon as she can if this is not possible and not later than 13 weeks after the start of the SMP pay period.
The maternity leave and SMP pay period starts on the day after the date of birth.
Baby born in or before the QW
If the baby is born in or before the QW, there are special rules for all 4 of the terms and conditions.
The employee must:
give you medical evidence of the date the baby is due
have been continuously employed by you for the required period
have AWE high enough in the relevant period
give you acceptable notice for start of SMP
Your employee should give you medical evidence (usually form MATB1 Maternity Certificate) of the date the baby was expected to be born as well as the actual date of birth, but you can accept any document signed by a doctor or midwife as long as a date or expected date is provided. You can accept a birth certificate as evidence of the date of birth.
Your employee should give you the evidence within 21 days of the start of her SMP pay period or as soon as she can but no later than 13 weeks after the start of the SMP pay period.
If the baby is born before or during the QW, the continuous employment rule is satisfied if she would have completed 26 weeks continuous employment with you had it not been for the baby’s early birth.
If your employee has earnings, which vary from week to week, you must work out her AWE using the baby’s date of birth instead of the baby’s due date and the Saturday before the date of birth instead of the Saturday in the QW. This is because you must pay her 90% of the AWE for the first 6 weeks. The total AWE should be compared to the Lower Earnings Limit (LEL) on the Saturday before the actual date of birth.
Pregnancy-related absence
If the employee is absent from work because of her pregnancy and the absence continues into or starts within the 4 week period starting on the Sunday of the 4th week before the week baby due, there are special rules for when her leave starts and when you start to pay.
The SMP pay period and her maternity leave start on the day after the first complete day of absence from work because of her pregnancy within the 4 week period. This may mean that you have to pay a mixture of wages and SMP at the beginning or end of the period.
If you aren’t sure whether the employee’s absence is caused by her pregnancy contact the Employer Helpline on 0300 200 3200 for advice.
Employee doesn’t qualify for SMP: PAYE Settlement Agreements
If your employee has AWE of less than:
£109.00 for babies due between 14 July 2013 and 19 July 2014
£111.00 for babies due after 19 July 2014
and they received any expense payments or benefits in kind in the relevant period, which were included in a PAYE Settlement Agreement, you must recalculate their AWE.
If you had to recalculate your employee’s earnings because they didn’t qualify and both the following apply:
some of their earnings were included in a PAYE Settlement Agreement
they then get a backdated pay rise that is effective during or before the start of the relevant period which you hadn’t included in the original calculation
you must recalculate their AWE (see paragraph - Earnings in the relevant period where pay rise awarded before or during maternity leave).
If they don’t intend to return to work after the birth they may still be entitled to benefit from the pay rise. You must check the terms of her old contract of employment with you.
Salary sacrifice
If an employee has entered into a salary sacrifice with you their AWE is calculated using the amount of earnings actually paid to them during the relevant period. SMP cannot be sacrificed, it must be paid in full. For more information on the rules for Salary Sacrifice Contractual benefits.
For the purposes of calculating AWE for SMP the calculation is based on earnings which are subject to NICs. More information is available on the treatment of childcare vouchers and other contractual Expenses and benefits.
Some schemes for childcare support provided by you and made available to your employees may be exempt from PAYE tax and Class 1 NICs.
The value of the childcare vouchers provided during the MPP may not be deducted from the SMP.
Where an employee agrees to accept childcare vouchers as part of a salary sacrifice their SMP entitlement will be assessed on their gross earnings on which NICs are payable.
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 can’t get SMP. If you haven’t 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.
Salary sacrifice: an overview for employers
Find out about the impact of salary sacrifice arrangements on SMP (PDF 89K)