An employee tells you they’re pregnant, but you’re unsure whether they qualify for Statutory Maternity Pay or Maternity Allowance.
What is the difference between Statutory Maternity Pay (SMP) and Maternity Allowance?
The difference between Statutory Maternity Pay and Maternity Allowance is primarily down to employee eligibility and what benefits they get whilst on maternity leave (and whether as an employer you have to pay!)
If you do have to pay Statutory Maternity Pay – you can normally reclaim just over 90% of that back.
Is your employee eligible for Statutory Maternity Pay or Maternity Allowance?
In a nutshell:
1) If your pregnant employee has 26 weeks continuous employment 15 weeks before their expected due date (around 26 weeks into pregnancy) they’re eligible for Statutory Maternity Pay.
2) If they earn more than £113 per week before tax they are eligible to Statutory Maternity Pay.
3) If they gave you sufficient notice they’re pregnant and request maternity leave (and meet points 1&2) they are eligible for Statutory Maternity Pay.
4) If they don’t earn over £113 per week before tax and not been employed with you long, they could be entitled to Maternity Allowance.
What is Statutory Maternity Pay?
Similar to paying your staff in the normal way, you pay Statutory Maternity Pay the same way you pay their salary, including any deductions for TAX and National Insurance contributions. Which you can claim back later.
How much is SMP?
SMP is paid for 39 weeks and at two rates. The first six weeks, you will need to pay 90% of your employee’s average pay. The average is calculated from the pay they actually received in the eight weeks or two months up to the last pay day before the end of the qualifying week. After six weeks, a flat rate of £140.98 per week (April 2017 – April 2018) is paid for 33 weeks or 90% of their average earnings if less.
Employees on maternity leave accrue annual leave and are entitled to paid leave in addition to SMP (including bank holidays).
At the end of maternity leave, your employee doesn’t have to return to work and doesn’t have to repay their SMP. Unless you have given your employee additional benefits above SMP.
What is Maternity Allowance?
Maternity Allowance is a financial benefit for pregnant women who are either self-employed or working but don’t qualify for Statutory Maternity Pay.
Is your employee eligible for Maternity Allowance?
If your employee doesn’t qualify for Statutory Maternity Pay, they could be entitled to Maternity Allowance paid directly from the Department for Work and Pensions.
Your employee may be able to get it if in the 66 weeks before their baby’s due:
- Employed for at least 26 weeks
- Earning £30 or more a week for at least 13 of those weeks – they don’t have to be together
- Working and their average pay is less than £113 a week
How much is maternity allowance?
The amount your pregnant employee will receive again depends on their eligibility, which they will need to apply for themselves via the Department for Work and Pensions.
However, they won’t get Maternity Allowance if they haven’t worked enough qualifying weeks (this can be across two employers) or earn less than £30 a week.
For more details on both Statutory Maternity Pay and Maternity Allowance visit the Department for Work and Pensions guide by clicking here