What to do when paying maternity pay if an employee leaves, becomes sick, dies, or is awarded a pay rise.
Employees furloughed under the Coronavirus Job Retention Scheme (CJRS)
These rules apply where the employee’s period of family-related statutory pay begins on or after 25 April 2020.
If your employee was on furlough and you paid them with help from the CJRS during any part of the relevant 8 week period, there are different rules about how you work out their AWE.
This is to make sure your employee’s eligibility for SMP and earnings-related rate of SMP is not affected if their wages are lower than normal because of being furloughed.
The earnings used to work out their AWE for the part of the 8 week period that they were furloughed will be the higher of either what they:
- actually received from their employer
- would have received from their employer had they not been on furlough
Where it’s not clear what the employee would have received, a helpful starting point is the reference salary used to determine how much you can claim through the CJRS. You can find guidance on working out 80% of your employees wages through the CJRS scheme.
You should also consider payments the employee was due to receive in the relevant period that would have been classed as earnings. This could include:
- bonus payments
- commission payments
No changes to how you work out their AWE will be needed where:
- you’re claiming the employee’s wages through the CJRS but you’re topping them up to full pay at your own cost - the employee’s earnings will not be lower than they would have been
- as a result of the coronavirus crisis, during the relevant period you agreed a reduction in pay with your employee outside of the CJRS
Employee earnings affected by a pay rise
A pay rise must not be withheld because of maternity leave.
You must recalculate the average weekly earnings (AWE) to take account of pay rises awarded, or that would have been awarded had your employee not been on maternity leave.
This applies if the pay rise was effective from anytime between the start of the 8 week relevant period for Statutory Maternity Pay (SMP) and the end of the statutory maternity leave.
If a pay rise is awarded after you’ve calculated your employee’s earnings, and that pay rise is effective from the start date of the relevant period but before the Maternity Pay Period (MPP) ends, you must:
- recalculate the AWE to include the pay rise as though it was effective from the beginning of the relevant period
- pay any extra SMP due
If a pay rise is awarded which, when recalculated, means that earnings are now high enough for your employee to get SMP when they could not before, you must:
- Work out 90% of the AWE.
- Take away the standard rate of SMP.
- Pay the difference for 6 weeks.
If 90% of the AWE is less than the standard rate you might not have to pay your employee anything.
This is because they may have received the balance of SMP due from Jobcentre Plus (or the Jobs and Benefits office in Northern Ireland) as Maternity Allowance (MA).
Not all women are entitled to MA, or the MA may be less than the SMP your employee is now entitled to. You should ask them to get a letter from the Jobcentre Plus (or the Jobs and Benefits office in Northern Ireland) to confirm how much MA was received.
If your employee gives you a letter from the Jobcentre Plus office (or the Jobs and Benefits office in Northern Ireland) showing how much MA was received:
- Work out the total amount of SMP they’re entitled to.
- Take away the MA that was paid.
- Take away any SMP you’ve already paid.
- Pay your employee the difference.
Your employee should still benefit from a pay rise, even if they do not intend to return to work with you after their maternity leave has ended.
If a pay award is made after they have terminated their employment and the pay rise is backdated to when they were working for you, or were on maternity leave with you, they may be entitled to benefit from the pay rise. You must check the terms of their old contract of employment.
If more than one pay rise has been awarded during the period they were on maternity leave you’ll need to make separate calculations for each one.
Underpayments and overpayments
If there are over or underpaid earnings affecting the AWE which disadvantages either you or the employee, check if there’s documentary evidence agreeing to the amount that should have been paid.
If there is use the agreed earnings to calculate the AWE.
If there is not use the actual earnings.
Employee becomes sick
If the employee:
- becomes sick during the SMP pay period do not pay Statutory Sick Pay (SSP), continue to pay SMP as normal
- returns to work within the MPP and then goes sick during that period, pay SMP, not SSP
‘Keeping in touch’ days
To keep in touch during maternity leave and ease your employee’s return to work, they can work for you during their maternity leave for up to 10 days. This will not end their maternity leave or mean they lose their SMP for any weeks that they do some work.
These 10 days are called ‘keeping in touch’ (KIT) days and allow your employee to undertake training or do occasional work for you.
The employer has no right to demand that KIT work is undertaken and an employee does not have to do it. Before any work is done, you must agree with your employee:
- what work they’ll be doing
- whether the KIT days are used in a row, one at a time or in blocks - any work on any day (even an hour) will count as a whole KIT day
- how much they’ll be paid for the work they do
You may count the amount of SMP towards the contractual pay agreed with your employee, but you must pay the weekly SMP rate the employee is entitled to and comply with your statutory obligations (for example, paying at least the National Minimum Wage).
If your employee works more than 10 days for you in their SMP pay period:
- you cannot pay SMP to them for any weeks where they work
- their maternity leave will come to an end
Once your employee has used their 10 KIT days, they’ll lose one week’s SMP for each week or part week they work for you.
The SMP pay period is not extended to take account of these weeks. Any SMP lost in this way is always at the standard rate first, or 90% of the AWE if this is lower than the standard rate.
An employee must take 2 weeks - or 4 weeks if working in a factory - compulsory maternity leave immediately after the date the child is born, and cannot work or use a KIT day during that time.
Employee returns to work then goes off sick
Where your employee has returned to work within their MPP and goes off sick they cannot get SSP from you. You should consider paying SMP.
Employee leaves job
Your employee cannot get maternity leave if they have left their job, but they may still qualify for SMP.
It does not matter why they left or that they’re not coming back - they’re entitled to SMP if they satisfy the qualifying conditions, you cannot ask them to repay it.
There are special rules for when you start to pay. Work out the date of the Sunday of the 11th week before the week the baby is due.
If they leave your employment before that date, the SMP pay period will start on the earlier of the following dates:
- the Sunday of the 11th week before the baby is due
- the day after the baby is born
If they leave their employment after the start of the 11th week, and before any other event which may trigger their pay, then the pay period starts the day following the day on which they left their employment.
Employee works for another employer
It’s up to your employee to tell you that they’re working for another employer and when they stop working for that employer.
Employee starts work with another employer before or during the qualifying week (QW)
If your employee started work for another employer before the end of the QW you must continue to pay SMP throughout the MPP, even if they’re still working for that employer after the baby is born, unless one of the following apply:
Employee starts work with another employer after the QW and before the baby is born
If your employee starts work for another employer after the QW, but before the birth of the child you do not have to pay SMP for any weeks they work for that employer after the baby is born.
You must reinstate SMP for any full maternity weeks your employee does not work for that employer after the baby is born.
If your employee’s contract with that employer ends during the MPP, their entitlement to SMP will restart until the end of the MPP.
Employee starts work for another employer after the baby is born
If your employee starts work for another employer after the baby is born, you do not have to pay SMP for any weeks they work for that employer.
You must pay SMP for any full maternity weeks your employee does not work for that employer.
If your employee’s contract with that employer ends during the MPP, entitlement to SMP also ends and cannot be restarted.
You must issue your employee with form SMP1.
Employee taken into legal custody
You cannot pay SMP for any SMP pay week your employee is in legal custody (this usually means they’re in prison) or for any week in the pay period after that.
You must give the employee form SMP1 within 7 days of the decision being made. This must be done within 28 days from the date the employee gave notice of absence (or the date they gave birth if this had occurred earlier).
It’s your employee’s responsibility to tell you if they’re detained in legal custody.
They are not in legal custody if they’re:
- voluntarily helping police with their enquiries
- out on bail
- serving a suspended sentence
If your employee dies during the MPP, you should pay SMP for the week in which they die, but not for any week in the MPP after that.
If the baby dies during the SMP pay period, payment should continue as normal.
Your employee is entitled to SMP and maternity leave if the baby is stillborn.
A stillbirth occurs if the baby is stillborn after the 24th week of pregnancy.
You’ll need evidence before making payment (for example, a stillbirth certificate issued by the registrar, or a certificate or notification for the registration of a stillbirth issued by the attending midwife or doctor).
If a baby is born alive but survives only for an instant, this is a live birth and you must apply the rules for a live birth.
Break in employment
Some breaks between periods of employment will not interrupt a period of continuous employment for SMP purposes. Employees with an ongoing contract of service during the following breaks remain continuously employed:
- temporary cessation of work - including short-term contract or agency workers
- public holidays
- sickness or injury - the employee can get SMP if the total period of incapacity is 26 weeks or less
- paternity, parental and adoption leave - if the employee took paternity leave when they were adopting a child, or when a baby was born and they worked for you before and after the break
- pregnancy - if your employee was not working for you because of a birth, and they worked for you before and after the break, and the break is not more than 26 weeks
Non-cash payments and contractual benefits
You may normally pay some of your employee’s earnings as a non-cash payment (for example, providing board and lodging or giving them goods or services).
However, you must pay any SMP in full. SMP cannot be sacrificed or offset against other benefits, it must be paid in cash.
All non-pay contractual benefits must continue during statutory maternity leave. These may include any childcare vouchers, company car or mobile phone provided to the employee as part of their contract of employment.
If you decide to pay the SMP as a lump sum, you and your employee could pay more National Insurance contributions (NICs) than if you paid it on their normal payday.
Reinstatement after dismissal
If your employee did not work for you during the relevant period because you dismissed them, they’re entitled to SMP as if they had not been dismissed, if:
- they’re reinstated because an employment tribunal decides that you dismissed them unfairly
- you reinstate them as a result of a statutory grievance procedure
Reinstatement after armed forces service
If the employee did not work for you during the relevant period because they were serving in the armed forces, but they returned to work for you within 6 months of the end of their service in the forces they may still be able to get SMP.
The employee must have been continuously employed by you for at least 26 weeks by the end of the QW to get SMP.
The period they served in the armed forces does not count as part of the 26 weeks.
The period they were employed with you before and after their service in the armed forces will count.
Trade disputes or industrial action
Your employee must have been continuously employed by you for at least 26 weeks by the end of the QW. Do not count the period they were on strike (even if this was one day) as this week will not count as part of the 26 weeks.
Your employee must have been employed for 26 weeks from the start of their employment into the QW.
Premature or early birth after QW
If the baby is born early, there are special rules for when your employee needs to give you evidence and when you start to pay. All the other terms and conditions apply.
Your employee will not have been able to give you advance notice, but they must tell you the date of birth as soon as possible.
Your employee should give you medical evidence (usually a form MATB1 maternity certificate) of the date the baby was due and the date of birth. You can accept a birth certificate as evidence of the date of birth.
Your employee should give you the evidence within 21 days after the date of birth, or as soon as they can if that’s not possible, and no later than 13 weeks after the start of the SMP pay period.
The maternity leave and SMP pay period starts on the day after the date of birth.
Baby born in or before the QW
If the baby is born in or before the QW, there are special rules. The employee must:
- give you medical evidence of the date the baby is due
- have been continuously employed by you for 26 weeks
- have AWE high enough in the relevant period
- give you acceptable notice for start of SMP
Your employee should give you medical evidence (usually a form MATB1 maternity certificate) of the date the baby was expected to be born as well as the actual date of birth.
You can accept any document signed by a doctor or midwife as long as an expected date of birth is provided.
You can accept a birth certificate as evidence of the date of birth, but this is not accepted as evidence of the date the baby is due.
Your employee should give you the evidence within 21 days of the start of their SMP pay period, or as soon as they can, but no later than 13 weeks after the start of the SMP pay period.
If the baby is born before or during the QW, the continuous employment rule is satisfied as if they would have completed 26 weeks continuous employment with you if the baby had not been born early.
You must work out the AWE in the relevant period by using the birth date instead of the QW.
If the employee is absent from work because of their pregnancy and the absence continues into or starts within the 4 week period starting on the Sunday of the 4th week before the week baby due, there are special rules for when leave starts and when you start to pay.
The SMP pay period and their maternity leave start on the day after the first complete day of absence from work because of their pregnancy within the 4 week period. This may mean that you have to pay a mixture of wages and SMP at the beginning or end of the period.
If you are not sure whether the employee’s absence is caused by their pregnancy contact the Employer Helpline for advice.
Employee does not qualify for SMP: PAYE Settlement Agreements
You must recalculate your employee’s AWE if all of the following apply:
- their AWE are less than the lower earnings limit in force at the end of the QW
- they received any expense payments or benefits in kind in the relevant period
- the expenses or benefits were included in a Pay As You Earn (PAYE) Settlement Agreement
You must recalculate their AWE if you had to recalculate your employee’s earnings because they did not qualify and both the following apply:
- some of their earnings were included in a PAYE Settlement Agreement
- they get a backdated pay rise that’s effective during or before the start of the relevant period which you had not included in the original calculation
If they do not intend to return to work after the birth they may still be entitled to benefit from the pay rise. You must check the terms of their old contract of employment.
If an employee has entered into a salary sacrifice their AWE is calculated using the amount of earnings actually paid to them during the relevant period. SMP cannot be sacrificed, it must be paid in full.
To calculate AWE for SMP, base the calculation on earnings subject to NICs. See expenses and benefits for more information.
Some schemes for childcare support provided by you and made available to your employees may be exempt from PAYE tax and Class 1 NICs.
The value of the childcare vouchers provided during the MPP cannot be deducted from the SMP.
Where an employee agrees to accept childcare vouchers as part of a salary sacrifice their SMP entitlement will be assessed on their gross earnings on which NICs are payable.
- Work out the total amount they’re now entitled to.
- Take away any SMP you’ve already paid.
- Pay any extra SMP due.
If the new AWE are less than the lower earnings limit they cannot get SMP.
If you have not already done so, give the employee form SMP1 within 7 days of the decision being made.
This must be done within 28 days from the date the employee gave notice of absence (or the date they gave birth if this had occurred earlier).
Take a copy of the form MATB1 maternity certificate, and give the original back to your employee.