Statutory Maternity Pay

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 have worked for you and how much they earn. They will 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 will normally be able to recover some or all of the SMP you pay.

ENTITLEMENTS

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. 

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 (known as the Quallifying Week) before the week the baby's due
• average earnings at least equal to the lower earnings limit for NICs, £111.00 a week for 2014/15, in the relevant period period up to the Qualifying Week
• given you the right paperwork confirming the pregnancy and sufficient notice of when they would like the SMP payments to start

SMP will be paid for 39 weeks.

Average Weekly Earnings

The calculation of the average weekly earnings is very important because it not only determines if the woman qualifies for SMP but also how much she qualifies for. To qualify for SMP an employee must have average weekly earnings of at least the NIC LEL amount, £111.00, at the end of the Qualifying Week.

How Much Do You Need To Pay

From Sunday 6th April 2014, SMP is paid for:

First 6 weeks - 90% of average weekly earnings with no upper limit.

Remaining 33 weeks - The lower of either the Standard rate (currently £138.18) or 90% of average weekly earnings.

Recovery of SMP

All employers are entitled to recover 92% of SMP they pay, however if the employer qualifies for Small Employers Relief, where the total NIC in the qualifying tax year was under £45,000, they can recover 100% of SMP paid plus an additional 3% in compensation for the employer’s share of NIC due on these payments.

CALCULATING SMP ON BRIGHTPAY

To access this utility, simply click  'Payroll' and select the employee’s name on the left:

1.  Under Statutory Pay, click Calendar
2.  On the Calendar, click on the date that the baby is due
3.  Select Maternity Leave from the Parenting Leave section at the top right of the screen
4.  Enter all relevant dates and select the employee's Length of Leave from the drop down menu
5.  In the event the employee has a Pregnancy Related Illness, enter the Illness Start Date
6. Average Weekly Earnings (AWE) - the program will automatically calculate the employee’s average weekly earnings for the purpose of calculating SMP due.
   The user can at their own discretion override the automatic calculation and manually enter an employee’s average weekly earnings. However it is recommended to seek advice from an accountant before doing so. To override the automatic calculation, simply untick the box and enter the amount.
7.  Click Save when completed. The program will automatically update the calendar accordingly and apply the SMP due.

Overriding the 'Average Weekly Earnings' Calculation

If existing payment records have not been recorded in BrightPay, the automatic calculation performed by the program after completing the above may be inaccurate. In the event of this occurring, the user may override the AWE by doing the following:

1.  On the main Payroll screen, click the Edit icon in the employee’s Statutory Payments section
2.  In Maternity Leave, select the option ‘Override average weekly earnings’
3.  Enter the average weekly earnings amount for the employee, then click out of this box
4.  The program will calculate SMP based on the AWE manually entered by the user

Editing the Length of Maternity Leave

Should an employee wish to extend or reduce the length of their maternity leave, the length of leave already entered for the employee can be edited as follows:
 

1. In Payroll, select the employee’s name on the left
2. Under Statutory Pay, click on Calendar
3. On the Calendar, select any date in advance of the current payroll date and which is currently marked as Maternity Leave
4. Within the Maternity Leave section that will appear to the right of the calendar, click the Edit icon
5. Amend the employee’s Length of Leave by selecting the number of weeks now applicable from the drop down menu
6. Click Save
7. Close the Calendar to return to the main Payroll screen

Further information regarding the operation and calculation of Statutory Maternity Pay can be found on the HMRC website or by consulting the HMRC Guide E15 Employer Helpbook for Statutory Maternity Pay.