How to claim statutory maternity pay as an employer

The requirement in recent years for employers to comply with Real Time Information (RTI) reporting and Pension Auto Enrolment, mean the cost of employing people has risen significantly. Given such financial commitments and the complexities of running a payroll, time off for maternity can be another headache for employers to deal with.

Written by: Debbie Austin

However, the reality is that it’s not the financial drain it might at first appear. Far from it in fact. Depending on the size of your business you may be able to claim most, if not all, of the money back from HM Revenue & Customs (HMRC).

What employers are required to offer Mothers

Employees are entitled to up to 52 weeks maternity leave. Of that entitlement, employers are required to pay 39 weeks of statutory maternity pay (SMP) to new mothers. Whilst that’s the minimal requirement, you can offer more as you see fit. Maternity leave is split into two categories with the first 26 weeks known as ‘Ordinary Maternity Leave’ and the last 26 weeks is known as ‘Additional Maternity Leave’.

Your employees qualify for SMP (the required minimum you must pay them) if they:

• Earn at least £113 a week on average
• Have worked for you for 26 weeks prior to the 15th week before their due date

If this is the case then SMP has to be paid at 90% of average weekly earnings (before tax) for the first 6 weeks. The employee has to provide you with an MATB1 form from the midwife as soon as they receive it.

This contains details of the qualifying weeks and the amount to be settled to the employee for the 6 weeks at the required 90% pay. After that period, you then either continue offering that sum or £140.98 a week (depending on which is lower) for the remaining 33 weeks.

Of note, a Mother has the option of taking a further 13 weeks of maternity leave on top of the remaining 33 but this would ordinarily be in the form of unpaid leave.

The rules around maternity

To follow the rules correctly you’ll need to have clear procedures and policies in place. Make sure from the start that your employees are aware of your maternity scheme and in it you must state that they tell you they’ll be going on maternity leave 15 weeks prior to the due date.
The absolute earliest maternity leave can be taken is the 11th week before the birth. In cases of premature or early delivery, leave commences the day after the birth took place. It’s up to the employee to provide you with the child’s birth certificate or alternatively, documents that have been signed by a doctor or midwife to confirm the date of the birth.

Employers are then responsible for writing to the employee to inform them of the end date of their leave

What you need to do to reclaim SMP

You can claim the full sum of SMP as well as an extra 3% on top if your business has paid less than £45,000 in class one national insurance contributions over the last tax year. Larger employers can claim back 92% of the SMP they’ve paid out!

If you use, or you’re in the process of selecting payroll software, check if it has the ability to calculate a maternity claim as well as put the paperwork together to submit to HMRC and process your refund.

Does your payroll contain directors or employees where PAYE payments are minimal each month? If so then there will be little to no PAYE liability to offset the maternity reclaim against. What this means is you’ll be able to claim the funding in full prior to the maternity actually starting. It’ll be deposited into your business bank account within 10 days of making the claim.

Wellers

Wellers has over 70 years experience advising organisations in the hospitality sector.

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