Small business responsibilities: maternity leave and pay
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For many companies, particularly smaller businesses, maternity leave can be challenging to manage – how do you cope when a key team member isn’t there?
It’s true that you will need to recruit or reorganise to cover an employee’s maternity leave, but there’s less to fear from maternity pay than many realise. The government will repay 92% of statutory maternity pay and 103% if your business qualifies for Small Employers Relief.
If you want to know about paternity leave, take a look at our guide to paternity pay and leave. Read on for more on maternity leave and how to reclaim maternity pay.
What are employees entitled to?
Leave:
Employees can take up to 52 weeks of maternity leave. The earliest that leave can start is 11 weeks before the due date – unless the baby is born early.
The first 26 weeks is known as ordinary maternity leave, the next 26 weeks is additional maternity leave.
All employees with a contract of employment are entitled to take maternity leave, it doesn’t matter how long they have worked for you. But they must let you know the date when the baby is due and when they want to start their maternity leave at least 15 weeks before the baby is expected to arrive.
If the baby is born early, then leave starts the day after the birth. Your employee must give you the child’s birth certificate or a document signed by a doctor or midwife that confirms the date of birth. Then you need to write to them confirming the new end date for their leave.
Pay:
- You can pay more than the statutory amount if you have a company maternity scheme, but Statutory Maternity Pay (SMP) is paid to eligible employees for up to 39 weeks.
- For the first six weeks, this is 90% of their average weekly earnings before tax.
- For the following 33 weeks, it is either £172.48 or 90% of your average weekly earnings (whichever is lower) .
- Tax and national insurance need to be deducted from these figures.
- Your employee’s employment rights (such as the right to pay, holidays and returning to a job) are protected during maternity leave. For more on employee rights, read the Which? guide to maternity pay and leave for employees.
How do you reclaim statutory maternity pay?
You can reclaim most, if not all the statutory maternity pay that you give to your employee from HMRC. Larger businesses can reclaim 92% of the payments.
If you are a small business, and have paid less than £45,000 in Class 1 National Insurance contributions for your employee(s) in the last complete tax year, then you qualify for small employer’s relief, and can reclaim 103% of the costs.
Your payroll each month will show you what you have paid in statutory pay. Some payroll software can calculate how much you can claim back, and produce an ‘employer payment summary’ (EPS) for you to send to HMRC.
You need to send the EPS to HMRC each month for which you’re reclaiming statutory pay, before the 19th of the following month.
You can write to the PAYE Employer Office to ask for a repayment if you cannot set off the payments against the current year’s liabilities. You cannot do this until the start of the next tax year.
Who is eligible for statutory maternity leave and pay?
Some employees won’t qualify for both maternity leave and maternity pay.
To qualify for Statutory Maternity Leave, employees must:
- Have an employment contract
- Give you the correct notice (ie let you know the expected birth date and when they want to start their maternity leave at least 15 weeks in advance)
You cannot refuse maternity leave or change the amount of leave employees want to take. You can delay the start date for leave or pay if the employee has given you the wrong amount of notice, and doesn’t have a reasonable excuse for this. In this case, you should write to them with details of the delayed start date within 28 days of their leave request.
To qualify for Statutory Maternity Pay (SMP), employees must:
- Be classed as an employee and on your payroll in the 15th week before the expected week of childbirth (the qualifying week)
- Have worked for you continuously for at least 26 weeks up to any day in the qualifying week
- Earn at least £123 a week
- Give you proof that they are pregnant (usually a MATB1 certificate or doctor’s letter)
- Give you the correct notice (ie let you know the expected birth date and when they want to start their maternity leave at least 15 weeks in advance of the due date)
If your employee is not entitled to SMP, you must give them a SMP1 form as they may be entitled to claim maternity allowance instead. Maternity allowance is not claimed via your business. It needs to be claimed using an MA1 claim form online or via a Jobcentre.
Some employees, such as agency workers, casual workers and company directors are subject to different entitlement rules – the government website has more details.
Record keeping
You must keep records for HMRC for three years from the end of the tax year they relate to, including:
- Proof of pregnancy
- The date SMP began
- Your SMP payments and dates of payments
- The SMP you have reclaimed
- Any weeks you didn’t pay and why
Keeping-in-touch days and returning to work
Your employee is entitled to work for you for up to 10 days during the period of her maternity leave without losing her SMP or her maternity leave. These days are called keeping-in-touch days and are designed to help your employee maintain contact with the workplace, undertake training or work for you on the odd occasion.
You cannot demand that your employee attends keeping-in-touch days.
Before working for you during any keeping-in-touch days you and your employee must agree:
- What work she will be doing
- Whether the keeping-in-touch days are used singly or in blocks – note any work undertaken (even as little as an hour) will count as a whole keeping-in-touch day
- How much she will be paid for working during the keeping-in-touch day. You can count the SMP towards her contractual payment but you must ensure she receives the full amount of SMP and that this is equal to the minimum wage for the amount of hours she has worked – if not you must pay her up to the minimum wage to comply with your statutory obligations.
If your employee works more than 10 days, her maternity leave will come to an end and you cannot continue to pay her SMP.
All employees must take two weeks (or four weeks if they work in a factory) compulsory maternity leave immediately after the birth. They cannot work or use a keeping-in-touch day during that time.
If your employee decides not to return to work following her maternity leave you must still pay her the SMP she is entitled to. You cannot ask her to repay it.
Check the government website for more details on payment of SMP in special circumstances, such as if your employee receives a pay rise during the period of maternity leave, premature or early birth and pregnancy related absence.
