COMPLIANCE
Statutory maternity pay
First introduced in 1987, statutory maternity pay (SMP) is the payment made to eligible women, who take a period of maternity leave either prior to, or from, the date their baby is born. Here, the CIPP’s policy and research team provides an overview of how the payments work
Eligibility To qualify for payment of SMP, a woman needs to meet certain eligibility criteria. They are as follows: ● the woman must provide their employer with sufficient notice (a minimum of 28 days before they want to stop work) ● they must provide proof they are pregnant – this can be a letter from their doctor or midwife, or a form MATB1 ● they must earn at least the lower earnings limit ● they must have been working for their employer continuously for a minimum of 26 weeks continuing into the qualifying week *
Payment This article focuses on payment of SMP only, but employers can pay more than the rate of SMP if they wish. Details of any enhanced
maternity pay should be included in company documents provided to staff. ● payment for weeks 1-6 equates to 90% of the average weekly earnings (AWE)
● payment for weeks 7-39 equates to the current amount of SMP (£156.66 for 2022/23), or 90% of AWE, whichever is lower. The payment should be made to employees through payroll, and subject to standard deductions. It will also be included in the year-to-date figure reported on the full payment submission. Larger employers can reclaim 92% of SMP through the employer payment summary (EPS), while those that qualify for small employers’ relief ** can reclaim 103% through the same mechanism.
Record keeping Records relating to SMP must be kept for Her Majesty’s Revenue and Customs (HMRC), and they include: ● proof of the pregnancy – a form MatB1 or a doctor’s note ● the date SMP began ● details of SMP payments made, along with dates ● SMP amounts reclaimed ● any weeks SMP wasn’t paid and the reason why. Records must be retained for a minimum period of three years from the end of the tax year they relate to. An SMP2 form can be used for this, or employers may choose to keep their own records. The SMP2 form can be located here: http://ow.ly/3uuh30sjE4s. Jargon-buster * The ‘ qualifying week ’ is the 15th week prior to the expected week of childbirth. ** To qualify for small employers’ relief , employers must have only been liable to pay class 1 National Insurance contributions equating to £45,000 or less in the qualifying tax year. Use your voice… Which topic would you like to see covered in the next instalment of the ‘ Did you know ’ series? Please contact the team, at Policy@cipp.org.uk.
Alabaster A European Court of Justice case, which impacts how an employee’s AWE is calculated for the purposes of SMP when an employee is given a pay rise, is referred to as ‘alabaster’. If an employee receives a pay rise that takes effect from any time between the start of the eight-week set period for calculating SMP and the end of the woman’s statutory maternity leave, then a relevant pay adjustment must be made. Guidance on how to make an alabaster calculation is available within HMRC’s Statutory Payments Manual, which can be accessed here: http://ow.ly/EjGX30sjE66. Training course This article provides a very high overview of SMP and doesn’t cover all the intricacies of the different scenarios which can arise. Never fear, though, the CIPP does offer a comprehensive training course on statutory payments. Details can be found here: http://ow.ly/ItWO30sjE5S.
| Professional in Payroll, Pensions and Reward | June 2022 | Issue 81 12
Made with FlippingBook - Online magazine maker