Statutory Maternity Pay (smp)
Calculation of Average Weekly Earnings (AWE) The ‘relevant period’ for the calculation of Average Weekly Earnings (AWE) is that between: • the last normal payday before the end of the Notification Week, i.e. before the Saturday of the 15th week, and • the last normal payday falling at least eight weeks before the pay-day at (a) above. COPYRIGHT © 2021 THE CHARTERED INSTITUTE OF PAYROLL PROFESSIONALS The normal payday is that specified in the contract, or the day usually paid where there is no contract or the contract does not specify a payday. Weekly paid employees : add together all earnings in the relevant period and divide the total by the number of weeks covered by the payments. Earnings are any gross payments treated as earnings for NICs purposes. Monthly paid employees: add together the gross earnings in the relevant period and divide by the number of months covered by the payments (where not a whole number of months, to the nearest whole number) multiply the result by 12 and divide by 52. In both cases do not round down to ensure the employee can qualify if possible. Where the baby is born before, or during, the Notification Week, the period over which the average earnings are calculated is the eight weeks ending with the last payday in the week in which the baby was born. In August 2017 HMRC revised the guidance on this matter. In addition, to the usual rules, employers are required to assume the 26 weeks continuous employment criterion has been achieved if she would have achieved it if it were not for the early birth. The relevant period is worked out using the birth date and not the QW. In September 2017 further clarification was published regarding some forms of employment and how they affected earnings calculations, primarily to cater for the position directors often find themselves in. This guidance can be found at https://www.gov.uk/guidance/statutory-maternity-pay-how- different-employment-types-affect-what-you-pay#directors but essentially it splits calculations between incorporations prior to 1 October 2009 and those incorporated afterwards. Any payments voted by the board, which are classified as earnings, are assessed at the time the vote occurs, however any drawings taken in anticipation of a board vote on payment will not be included in the AWE assessment unless the vote occurs during the averaging period. Under the special Covid-19 rules an employee taking any form of parental or adoption leave is entitled to have their average earnings calculated on normal earnings and not those applicable during “furlough”. No printing, copying or reproduction permitted. The new guidance confirms that if a director receives regular fees by way of salary then this salary is the earnings for the purposes of the AWE assessment. Backdated Pay Rises - the effect of a pay rise on SMP Two employment law cases affect the calculation of SMP where a pay rise has, or will occur. The Gillespie case requires SMP to be recalculated as a result of a pay rise backdated into the
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