Statutory maternity pay (SMP)
This section explains who is entitled to SMP, what the entitlement is, when it should be paid, when the entitlement ceases and how a business can reclaim the SMP it has paid out.
Contractual or statutory?
The right to Statutory Maternity Pay (SMP) applies to a person whose earnings attract liability for Employer’s Class 1 National Insurance contribution or would have if their earnings were high enough. Thus employers as well as employment businesses engaging temporary workers under a contract for services are potentially liable to pay SMP because they are responsible for the payment of Employer’s Class 1 National Insurance contributions, subject to the employee/worker satisfying the qualifying conditions.
You are not obliged to pay any more than SMP. However if you choose to pay more than SMP, for example, through your own company’s maternity scheme these payments can be offset against SMP. If such a payment is included in the contract of employment then you will be obliged to make a payment so you should make sure that the details of the scheme are clear.
Who qualifies for SMP?
An employee/worker must satisfy the following conditions before she can qualify for SMP:
- She must have been continuously employed for at least 26 weeks as at the 15th week before the week the baby is due (“WBD”). This is irrespective of the number of hours worked. The 15th week is known as the Notification Week (NW). Therefore her employment must have commenced before the Sunday that begins the 40th week before the WBD. Also her employment must extend into the NW, although she does not need to be employed for the whole of that week;
NB: A “week” means a period of seven days beginning with Sunday and ending on Saturday. It is irrelevant that the employee’s pay week may cover a different period. - Her average weekly earnings for the eight weeks up to and including the NW must not be less than the lower earnings limit for the payment of National Insurance contributions, which applied in the NW;
- She must still be pregnant at the 11th week before the WBD or have had the baby by that time;
- Medical evidence must be provided of the due date of the baby (i.e. the WBD), this will normally be on form Mat B1 (maternity certificate);
- At least 28 days’ notice (or, if that is not reasonably practicable, as soon as is reasonably practicable) must be given to you of the date from which she expects your liability to pay her SMP to begin;
- She must have stopped working
There is a provision safeguarding a woman’s entitlement to SMP from the 15th week before the expected week of childbirth. This means that a woman will keep her entitlement to SMP where, for whatever reason, her employment is terminated after this date.
How do I determine whether a temporary worker is entitled to SMP if she has not been working continuously?
It is extremely important for employment businesses to keep records of a temporary worker’s work pattern. If it appears that there is a break in continuous employment, you should first consider the reasons for the break, as a temporary cessation due to illness, injury, or a client’s company shutdown may not amount to a break. The Inland Revenue’s Employers Guidance sets out in detail whether temporary workers will be entitled to SMP. If you offer work to the temporary worker during each of the 26 weeks before the start of the Notification Week before the baby is due and she is not available or is no longer looking for work, continuity of employment will be broken unless she is unavailable due to sickness, injury or pregnancy or on paid leave under the Working Time Regulations.
If there was no employment in the NW, a temporary worker can still be treated as employed in that week if all the following conditions are satisfied:
- The employment business had no work for the temporary worker in that week; and
- The temporary worker was not intending to start her maternity absence at that time and was available for work after the NW; and
- The temporary worker did have further employment with the employment business before starting her maternity absence.
If the temporary worker had intended to go on working but stopped before the NW due to sickness, she can be regarded as working into the NW but she must in fact resume work with the employment business within 26 weeks of stopping before this can apply (this may mean that no decision on SMP can be made until after the baby is born and when the temporary worker has re-registered with the employment business).
In circumstances where the temporary worker has stopped looking for work through a particular employment business before the start of the NW, she cannot be entitled to SMP from the employment business.
There is a provision safeguarding a woman’s entitlement to SMP from the 15th week before the expected week of childbirth. This means that a woman will keep her entitlement to SMP where, for whatever reason, her employment is terminated after this date.
In order to determine continuity of employment each case will be decided on its merits. Either the temporary worker or an officer of the DWP, can request a determination by an adjudication officer.
What do I do if I decide that my worker is not entitled to SMP?
If you are satisfied that there has been a break in the temporary worker’s continuity of employment, or the employee/worker is not entitled to SMP because she has not met the qualifying conditions, you should complete and issue a Form SMP1 explaining the reason why they are not eligible, together with the maternity certificate to them. This should be done within seven days of deciding that you are not required to pay SMP because she will need both documents to claim maternity allowance from the DWP.
How long is SMP paid for?
SMP is payable for a period of 39 weeks. The period during which it can be paid is called the ‘maternity pay period’ (MPP). SMP cannot start earlier than the 11th week before the due date of the baby nor later than the week immediately following childbirth.
SMP may be payable for a shorter period if the employee/worker:
- Dies;
- Goes into legal custody;
- Goes outside the European Community;
- Works for you during the MPP either before or after the birth or works for a different employer during the MPP after the birth.
There are two rates of SMP:
- The “earnings related rate” is 90% of the employee/worker’s average weekly earnings, payable for the first 6 weeks of the period for which SMP is due. This is calculated by taking her average weekly earnings for the eight weeks ending with the Notification Week (NW) i.e. her actual earnings for the eight weeks up to the 15th week before the week the baby is due. With temporary workers paid weekly you should add together her gross earnings including any overtime, bonus payments, retrospective pay awards, holiday pay and Statutory Sick Pay (although payment of SSP may exclude her as it is below the lower earnings limit NI) paid for the last eight normal pay days falling on or before the end of the NW and divide by eight.
- For the remaining 33 weeks of the maternity pay period, the woman will receive the standard weekly rate of SMP or 90% of average earnings if they are less than the standard rate.
How much is SMP?
There are two rates of SMP:
The “earnings related rate” is 90% of the employee/worker’s average weekly earnings, payable for the first 6 weeks of the period for which SMP is due. This is calculated by taking her average weekly earnings for the eight weeks ending with the Notification Week (NW) i.e. her actual earnings for the eight weeks up to the 15 th week before the week the baby is due. With temporary workers paid weekly you should add together her gross earnings including any overtime, bonus payments, retrospective pay awards, holiday pay and Statutory Sick Pay (although payment of SSP may exclude her as it is below the lower earnings limit NI (see ‘Who Qualifies for SMP?’)) paid for the last eight normal pay days falling on or before the end of the NW and divide by eight.
For the remaining 33 weeks of the maternity pay period, the woman will receive the standard weekly rate of SMP or 90% of average earnings if they are less than the standard rate.
What is the effect of any pay rise awarded during maternity leave when calculating the
As a result of the decision in the case of Alabaster v Barclays Bank plc and another, Statutory Maternity (General) (Amendment) Regulations 2005 were introduced to amend the Statutory Maternity Pay (General) Regulations 1986 in relation to the calculation of maternity pay.
Under these Regulations, when averaging the employee’s normal weekly earnings in order to calculate the “earnings related rate”, you also have to take into account any pay rise that is made to the employee between the beginning of the 8 week period ending with the Notification Week and the end of the period of statutory maternity leave when calculating an employee’s normal weekly earnings as if that pay rise applied in each week of the relevant period. This includes pay rises that would have been awarded had the employee not been absent on statutory maternity leave.
For the purposes of these Regulations, ‘statutory maternity leave’ includes both ordinary and additional maternity leave.
Note that it is only employees that are entitled to the right of statutory maternity leave, however if a worker would have been entitled to a pay rise during the relevant period or before the date you start paying her Statutory Maternity Pay, it could be argued that she would be entitled to this pay rise to be included in the calculations also.
Can I reclaim SMP?
Yes, the amount of SMP reclaimable from the Government is 92%. Employers qualifying for Small Employers Relief can reclaim the full amount of SMP paid plus compensation for the NICs paid on SMP. In order to qualify for Small Employers Relief the employer must have paid £45,000 or less each year in gross National Insurance contributions.
Under the Employment Act, you can recover SMP in two ways:
- By offsetting your SMP payments against any payments due to be made to the Inland Revenue;
- By applying for advance funding if the amount you are due to pay in SMP exceeds the tax, national insurance and other allowable payments due to be made to the HM Revenue & Customs.
What are the penalties for non-payment?
If you fail to pay SMP to an employee or temporary worker who meets the qualifying conditions, you will be liable for the following:
- Failure to pay SMP within the time allowed, a fine not exceeding £1,000 for any one offence;
- Failure to provide information required in connection with SMP; a fine not exceeding £1,000 for any one offence and a fine of up to £40 for each continued day of failure following conviction;
- Failure in keeping required records; a fine not exceeding £1,000 for any offence and a fine of up £40 for each continued day of failure following conviction.
Employers who provide false information relating to SMP will be liable on conviction to a fine of up £5,000 or a term of imprisonment of up to three months.
Who is entitled to paid antenatal visits?
All employees are entitled to paid time off in order to keep appointments for antenatal care, made on the advice of a registered medical practitioner, registered midwife or registered health visitor. She is entitled to reasonable time off with pay at the appropriate hourly rate. This is her right regardless of length of service or hours worked.
Except for the first appointment, if you request it, your employee must be prepared to show you:
- A certificate from a registered practitioner, registered midwife or registered health visitor confirming that she is pregnant; or
- An appointment card, or some other document, showing that an appointment has been made.
It is important to note that if an employer unreasonably refuses to allow a woman time off for antenatal care or fails to pay the whole or part of the amount due a woman may make a complaint to the Employment Tribunal. The complaint must be presented within three months of the date of the appointment unless it was not reasonably practicable to do so.
Temporary workers engaged under a contract for services who are agency workers for the purpose of the Agency Workers Regulations 2010 can also become eligible to take paid time off to attend antenatal appointments. See the Rec legal guide on AWR.
Workers who do not qualify for paid time off should not be prevented from attending antenatal appoints in any case.
Does a ‘worker’ have to be paid when attending ante-natal classes or scans?
The Employment Rights Act 1996, section 55 (1) refers to an “employee” and “employer” and also refers to other issues being taken into account in accordance with the “contract of employment”.
Section 230 of the Act refers to an “employee” being an individual who has entered into or works under a “contract of employment”.
Under this Act workers (under a Contract for Services) are therefore excluded (although members should familiarise themselves with the section concerning employee/worker status).
Does European law provide the worker this right?
European Directives are not directly enforceable in UK courts – they need to be passed through Parliament as a UK statute. They do not become automatically part of domestic law. If a member state fails to implement a directive properly within the time scale set out in the directive, an individual can rely on the directive in making a claim if that claim lies against an "emanation of the state". An "emanation of the state" is a body (whatever its legal form) which carries out a public service under the control of the state or which has for that purpose special powers. An organisation that is a "private sector" employer i.e. not an emanation of the state - has no ability to affect the implementation of a directive. Someone unable to bring a claim against an employing "emanation of the state" has an alternative potential right of redress known as a "Francovich" claim. If an EC directive, which the state has failed to implement, is intended to confer rights on individuals and an individual can show damage caused by the failure to implement, that person has a right to sue the state for compensation for its failure to implement the directive.
The Directive states: “Member states shall take measures to ensure that pregnant workers within the meaning of Article 2 (a) are entitled to, in accordance with national legislation and / or practice, time off, without loss of pay, in order to attend ante-natal examinations…..”
Article 2(a) states “pregnant worker shall mean a pregnant worker who informs her employer of her condition, in accordance with national legislation and / or national practice.”
It is for the individual member states to determine the definition of worker / employee. The phrase “employee” is not mentioned once in the Directive, yet “employers” and “employment contracts” are. The phrase “employee” in the directive would have been too restrictive, but “worker” allows national legislation to be flexible. The UK government has exercised the option to refer only to “employees” as defined by national legislation.”
The Agency Workers Regulations 2010
Temporary workers engaged under a contract for services who are agency workers for the purpose of the Agency Workers Regulations 2010 can also become eligible to take paid time off to attend antenatal appointments. See the Rec legal guide on AWR.
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