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Drafting a Maternity Policy - Maternity Pay

In part one of our three part series on drafting a maternity policy, we talked about Employers' statutory rights when it came to maternity leave.

In part two we talk about maternity pay and Employers' obligations when it comes to paying it.

Employers must pay Statutory Maternity Pay (SMP) to eligible employees.

To qualify for SMP an employee must have been and still be employed by the organisation for 26 weeks at the 15th week before the EWC and must have earned on average more than the lower earnings limit (available from HRMC – see links at the end of this document) in the last eight of those 26 weeks.  An employee who does not qualify may be eligible for Maternity Allowance through Jobcentre Plus.

SMP is payable for up to 39 weeks and comprises:

  1. 6 weeks at 90% of average, weekly earnings
  2. 33 weeks at a flat rate set by the Government.

Reclaiming Statutory Maternity Pay (SMP)

The majority of employers can recover 92% of the SMP through the PAYE system.  Small employers, those whose annual NI contributions are £45,000 or less are reimbursed 100% of the SMP plus an extra 4.5% compensation.

Contractual Maternity Pay

The sample policy on this site is based on statutory entitlements. While employers are legally obliged to give Statutory Maternity Pay to eligible employees, they may also choose to supplement this.

Encouraging experienced employees to return to work is in every employer’s interest.  Employees who feel valued by the organisation will be loyal, committed workers and one way of achieving this is by offering enhanced maternity benefits.  For example:

  1. for the first 6 weeks of maternity leave the employee will receive full pay; ie: the amount of Statutory Maternity Pay set for that period plus the percentage required to increase the payment to the total, current gross weekly salary
  2. for the following 20 weeks, the employee will receive the amount of Statutory Maternity Pay set for that period plus an amount equal to half of the total, current gross salary;
  3. for the remaining 13 weeks the employee will receive SMP only

The above is an example. You may choose to be more or less generous. For example you may wish to make the 20 weeks half pay inclusive of SMP rather than additional to it. Or you may wish to give full or half pay for a longer period.

NB: It is important to bear in mind that while SMP can be reclaimed through HMRC, any additional contractual maternity pay cannot be reclaimed. While it is good practice to offer contractual maternity pay, you should ensure that you will have the resources to commit to doing so. Remember that if you will be recruiting to fill the maternity vacancy there will be a significant cost to paying a salary to the temporary worker as well as contractual maternity pay to the person on maternity leave.

You may wish to make any enhanced maternity pay dependent on an undertaking that the woman will return to work for a specific time after her maternity leave (e.g. at least 3 months)

If an employee changes her mind and decides not to return to work with the organisation the organisation can, at its discretion, request a refund of the contractual element of maternity pay, but this should be stated clearly in the policy and preferably in the contract of employment.

Other incentives might be to provide information and/or financial help with childcare, a phased return to work or flexible working.  See a SAMPLE Enhanced Maternity Pay Arrangement at the bottom of this page.

Keeping in Touch (KIT) Days

KIT days allow a woman to do some limited work under the terms of her contract of service for the employer paying her SMP without losing her SMP for the week in which such work is done. The maximum KIT days is 10.  These can be used to keep the employee up to date with her work and to attend training. Any length of work done on any one day will count as a full KIT day for purposes of calculating the 10 days. In other words it is NOT possible to do 20 half days.

The SMP rules place no restrictions on when KIT days can be used. However, maternity leave regulations prohibit a woman working for the two weeks immediately following the birth.

KIT days can only be taken where both the woman and her employer agree that it would be beneficial. Neither side is able to insist that KIT days are worked. You will need to decide on, and specify in your policy, what arrangements will be in place for payment for KIT days that are worked.

The amount to be paid to an employee for working during her maternity leave is a matter for agreement between the parties and should reflect the nature of the work and the amount done. The employer will need to consider how any contractual payment for work done on a particular day will work alongside any statutory maternity pay due.

You can choose to give payment or you may wish to give the option of allowing the woman time off in lieu when she returns to work.

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