Rights to statutory payments

As there are a number of occasions where an employee has the right to time off work, the law provides that employers must make certain statutory payments, effectively giving employees the right to statutory payments.

Maternity pay

Although women can take up to 52 weeks’ maternity leave, Statutory Maternity Pay (SMP) is only paid for up to 39 weeks. For the first six weeks, SMP is paid at 90% of average weekly earnings. For the following 33 weeks employers must pay the employee SMP at the lower of either 90% of their average weekly earnings or £139.58.

Any pay rise taking effect during the 52-week SMP period must be applied to the whole leave period and SMP recalculated accordingly. Payment should be made on the usual payday, and like any other earnings, is subject to PAYE income tax and NICs, which should be deducted at the same time.

Employers must pay SMP to a female employee who has:

• worked for the employer continuously (full or part-time) for at least 26 weeks up to and into the 15th week before the week the baby is due average earnings at least equal to the Lower Earnings Limit for NICs – £112 a week or £486 a month or £5,824 a year for 2015/16

given the employer the right paperwork confirming the pregnancy and sufficient notice of when they would like the SMP payments to start.

If the employee does not meet all these conditions, the employer is not liable to pay SMP and must give her form SMP1 so she can claim State Maternity Allowance.

Employers can recover 103% of SMP paid if their total National Insurance payments are £45,000 a year or less to compensate them for employer’s NICs paid on SMP. Employers whose National Insurance contributions are more than £45,000 a year can recover 92% of the SMP they have to pay.

If an employee leaves, is dismissed or made redundant any time after starting her maternity leave, she is still entitled to the full 39 weeks’ SMP.

Paternity pay

Statutory Paternity Pay (SPP) is a legal entitlement to help a father who earns the equivalent of the Lower Earnings Limit (£112 per week or £486 a month) or more to care for a baby or support the mother in the first few weeks after the birth. This entitlement applies to a partner/husband who is not the biological father, including a female partner in a same-sex couple.

SPP will be the lesser of 90% of the individual’s earnings or £139.58 per week and is paid for a maximum of two weeks. Employees who have average weekly earnings below the Lower Earnings Limit do not qualify for SPP, but may be able to claim Income Support while on paternity leave. As with SMP, employers can recover between 92% and 103% of SPP paid, depending on their level of NI payments.

Please note there are other restrictions that apply to SPP such as length of service. More information can be found in HMRC’s Employer Helpbook for Ordinary and Additional Statutory Paternity Pay (see www.hmrc.gov.uk/helpsheets/e19.pdf).

Shared parental pay

Employees who choose to share parental leave and meet the requirements (see article 61) are eligible for Shared Parental Pay (ShPP). ShPP is calculated as the lower of either 90% of their average weekly earnings or £139.58.

Adoption pay

Statutory Adoption Pay (SAP) is available to any employee (male or female) who is either adopting a child on their own, or one member of a couple adopting a child together, but is not normally available to foster parents or step-parents who go on to adopt a child.

Both SPP and SAP are subject to PAYE income tax and NICs, which should be deducted at the same time. Civil partners in same-sex relationships are entitled to a package of rights and responsibilities reflecting those already available to married couples.

Employers can claim back between 92% and 103% of SPP or SAP paid and deduct it from their monthly or quarterly PAYE and NIC payments. Further information is available in booklets E15 and E16 from www.hmrc.gov.uk.

‘Keeping in touch’ and SPLIT days

Keeping in touch days enable employees to do some work for their employer without losing SMP or SAP for that week. Previously, employers could not pay these entitlements for any week when employees worked for them when on leave (even working half a day resulted in a loss of entitlement to a full week’s SMP or SAP).

They can work up to ten days during maternity or adoption leave – the occasional day’s training, for example – without losing entitlement to SMP or SAP. But they must be paid their contractual pay for days actually worked.

Up to 20 Shared Parental Leave in touch (SPLIT) days are allowed for people taking Shared Parental Leave. Both parties must be clear about whether contractual pay will top up ShPP to full pay or whether contractual pay will be in addition to ShPP for that week. SPLIT payments must meet minimum wage obligations and not be discriminatory, which is why it is usually necessary to pay the employee at their normal rate.

Sick pay

Employers must pay an employee Statutory Sick Pay (SSP) if the employee is off sick for four or more consecutive days. The statutory standard weekly rate for 2014/15 is £88.45 a week for employees with average earnings above the Lower Earnings Limit (£112 per week, £486 per month, £5,824 per annum). Employees who earn less than £112 per week during the eight weeks before being off sick are not eligible for SSP. He or she should instead be given a completed SSP1 form – available from the Department for Work and Pensions (www.gov.uk/statutory-sick-pay).

SSP is payable for up to 28 weeks. If the employee is still off sick after this period, the employer must fill in form SSP1 and send it to the employee who should then use it to claim Incapacity Benefit. SSP must be included in gross pay. Any deductions from gross pay will also be made from SSP.

An employer can automatically opt out of operating the full SSP scheme if it pays wages or sick pay equal to (or higher than) the current rate of SSP due per day to employees when off ill. But whether or not an employer pays SSP, it must keep records of all staff absences of four days or more. Records should also be kept of the amounts of wages or sick pay paid out.

From 6 April 2014 employers have not been able to recover SSP. They have until 5 April 2016 to recover any SSP paid before 5 April 2014.