Get your payroll right for maternity pay

As an employer, you will face many challenges, but maternity pay for your employees is a unique obstacle you must overcome.

It is essential you understand maternity pay and how to successfully incorporate it into your payroll to benefit both you and your employees.

You might feel uncertain about maternity pay and what your obligations are, but we are here to help you navigate the process and ensure you payroll successfully.

Statutory maternity pay

Statutory maternity pay (SMP) is paid to an employee by an employer and is payable for up to 39 weeks.

Your employee, however, is entitled to a maximum of 52 weeks leave.

By using the Payroll Manager software (recognised by HMRC), your employee will quickly know if they are entitled to SMP based on automatic calculations.

If you do not have this software, you should seek expert advice using our friendly team by getting in touch today.

The amount of SMP your employee will get is based on how long they have worked for you and how much they are paid.

Roughly, their average weekly pay should be above £123 (for 2023/24) and they should have worked for you 26 weeks prior to the qualifying week (the qualifying week is 15 weeks prior to the expected birth date).

SMP is payable at 90 per cent of the employee’s average weekly pay for six weeks and then at a rate of £172.48 (for 2023/24) or 90 per cent of the average weekly wage (whichever figure is lower).

It is important your employee informs you of the date they wish their leave to begin and how many weeks maternity leave they wish to take.

They should also provide you with a MAT B1 form; this is medical evidence of their pregnancy and helps you to payroll their maternity pay properly.

Enhanced maternity pay

As well as offering SMP, you might also offer your employees ‘enhanced’ or ‘contractual’ maternity pay.

For example, your employee might get 26 weeks of full pay followed by 13 weeks of SMP.

As their employer, you need to ensure your employees’ contract reflects the conditions of enhanced maternity pay.

These include:

• If your employee is entitled to enhanced maternity pay
• The amount of pay they will get
• How long they get it for

If you choose, you can pay more to your employees but you need to make sure your payroll reflects this.

Offering your employee enhanced maternity pay might mean they have to repay some or all of the enhanced amount (which is anything more than SMP).

Reasons might include:

• If they do not return to work
• If they leave shortly after maternity leave

It is important you set out these regulations to your employee as this could have a significant impact on your payroll if you don’t.

Employer pension contributions whilst on maternity leave

Your employee could be a member of a workplace pension scheme, which can add challenges to your payroll.

As their employer, you should still pay pension contributions based on their pensionable earnings before they go on their maternity leave.

Make sure you seek advice to pay your obligations successfully as this could impact both your payroll and your employee.

You must gain a clear understanding of how to correctly payroll maternity pay to ensure a period of rest and development is available for your employees.

Every situation is unique and so you must seek tailored financial advice to ensure there is specialised financial support for your employees.

If you would like to discuss maternity pay with an expert, contact us now.