All pregnant employees qualify for 52 weeks Maternity Leave. Most employees qualify for Statutory Maternity Pay while they are off, which the employer must pay. HMRC do meet the full cost of the SMP payments which can run for up to 39 weeks. Should the employee decide to stay off for the full 52 weeks of maternity leave, the last 13 of these will be unpaid.
To qualify for SMP your employee must be working for you 26 weeks up to and including the ’Notification Week’, which is 15 weeks before the baby is due. This means that if she is employed by you when she first becomes pregnant and is still employed 15 weeks before the due date, she will qualify for SMP. Average earnings in the 8 weeks up to and including the Notification Week must also reach £120 gross per week.
If your employee does not qualify for SMP, she may be entitled to Maternity Allowance instead. We provide an SMP1 form for her to take to the local Benefits Office.
Maternity leave dates and annual leave
Your employee can stop working up to 14 weeks before the baby is due. In practice, most employees work on much later than that. The earliest we can start paying SMP is 11 weeks before the baby is due.
Annual leave continues to accrue during maternity leave. In practice, this means extra paid holiday is often taken either at the beginning or at the end of the leave. Any holidays not taken at the end of the holiday year are normally carried forward or paid. If the nanny is not returning after her leave, and she has outstanding holidays, she will be entitled to holiday pay on her last payslip. This can amount to up to 5.6 weeks of pay, depending on when the holiday year falls and how much holiday was taken before the maternity leave started. HMRC do not meet this cost.
If your employee is already in a pension scheme, membership continues throughout the maternity leave but the contributions are affected. The employee’s contributions fall, because they are based on the SMP amounts. The employer’s contributions continue at the same level, because they are based on the contracted salary. During the 13-week unpaid leave all contributions cease, then resume when the employee returns to paid employment. Again, HMRC will not meet this cost.
The amounts of SMP payable depend on earnings during the 8 weeks up to and including the 15th week before the baby is due. Provided average earnings exceed £120, the following amounts will be due:
• 90% of the average earnings for the first 6 weeks
• £151.20 per week for the next 33 weeks (or 90% of average again if that’s lower than £151.20)
Claiming funding from HMRC
Shortly before the maternity leave begins, we submit a claim to HMRC on your behalf, for 100% of the estimated SMP payable and a further 3% compensation. HMRC will pay the money directly into your bank account, normally but not always within 4 weeks of the claim going in. You can then draw on these funds each pay day to pay out the SMP.
We don’t charge anything for calculating and paying the SMP. Also, your subscription covers you for up to 2 employees at any one time, so we can normally pay a temporary cover nanny at no extra cost. Just ask if you need advice putting together an offer.
Contact the NannyMatters Payroll Team if you would like our full advice sheet regarding SMP.