An employee who is expecting a baby may be entitled to receive Statutory Maternity Pay from her employer. This is paid in place of normal earnings when time is taken off work around the period when a baby is due to be born. The Statutory Maternity Pay is paid to help a woman take time off work when a baby is born. Maternity leave may also be taken, and a minimum period is allowed.
Payment of Statutory Maternity Pay is dependent on the length of time the person has been employed by a company, and the amount they earn. Evidence has to be provided of the baby’s due date and an employee has to give reasonable notice of when they want the payments to start. Statutory Maternity Pay is paid in the same way as usual earnings, and is liable to income tax and National Insurance Contributions. However, part or all of the SMP may be recoverable.
An employee who is expecting a baby will be entitled to receive a year off work which is made up of 26 weeks Ordinary Maternity Leave and 26 weeks Additional Maternity Leave. This time off can be taken without any conditions having to be met. The amount of time they have been employed or the level of earnings has no effect on the one year’s maternity leave. Statutory Maternity Pay however, is subject to specified criteria.
The person must have worked for an employer on a full or part time basis for a minimum of 26 continuous weeks up to the 15th week before the baby’s due date. Average earnings must have been at least equivalent to the Lower Earnings Level, which is £102 a week in 2011-12. Confirmation of the pregnancy must also be provided and sufficient notice of when SMP will start.
The first six weeks of SMP will be paid at a rate of 90 percent of an employee’s average weekly pay. SMP for the next 33 weeks will consist of either £128.73 a week, if paid after 3rd April 2011 or 90 percent of the average weekly wage, whichever is the lower.
An employer whose National Insurance Contributions are below £45,000 a year may be able to claim back 103 percent of any SMP that has been paid. The extra amount is to cover the National Insurance Contributions paid on the SMP by the employer. An employer who pays NICs over £45,000 may claim back 92 percent of the SMP. HMRC has a free SMP calculator which will help employers to calculate SMP due and decide whether an employee is entitled to the payment.
Still unsure about Statutory Maternity Pay? See our guide on this subject here.
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