Statutory Maternity Pay: how different employment types affect what you pay
Some employment types like agency workers, directors and educational workers have different rules for entitlement.
For some employees you need to consider which earnings should be used in the average weekly earnings calculation before you can use the calculator.
Agency workers and casual (or short contract) employees
There are different rules for casual (or short contract) employees and agency workers.
You can treat agency workers as employees for PAYE tax and Class 1 National Insurance contributions (NICs). If you deduct PAYE tax and Class 1 NICs from the agency worker’s earnings, or would do if they were high enough, then you must pay them Statutory Maternity Pay (SMP) if they satisfy the qualifying conditions.
The Agricultural Wages Board in England was abolished on 1 October 2013.
From this date agricultural workers in England who aren’t covered by the terms and conditions of the Agricultural Wages Board will be eligible for Statutory Payments if they meet the appropriate qualifying conditions.
Casual and short contract employees
A casual employee is usually someone who works for an employer, as and when they are required on a series of short contracts of employment with that person. Such casual workers may also be called short contract employees. If you have to deduct PAYE tax and Class 1 NICs from the worker’s earnings, then you will have to pay them SMP if they satisfy all the qualifying conditions.
Mariners can get SMP if you have a place of business in the UK and they are on a home-trade ship.
Some NHS employees whose contracts are split between Strategic Health Authorities and NHS trusts, as a result of NHS reorganisation, can choose to have all their earnings added together for working out Average Weekly Earnings (AWE) for SMP purposes.
However, if an employee changes from one trust to another during the 26 weeks qualifying rule, the employee may not satisfy the continuous employment rule for SMP purposes.
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Supply teachers, seasonal workers or other sporadic employment
Supply teachers, seasonal workers and other employees who work as and when you need them may not have worked for you in every week:
from the latest start date for employment with you
up to and including the Sunday of the Qualifying Week (QW)
For SMP in this instance, a week means Sunday to Saturday, as a week means different things in different contexts. Count part weeks as full weeks.
- did work for you in every week she will satisfy the employment condition
- didn’t work for you in every week you need to check why not
She can still get SMP if she didn’t work if any of the following apply:
- she was on paid leave, or you didn’t have work to offer her
- you offered her work and she turned it down but you must check the reason why she turned down the work
Companies incorporated before 1 October 2009
The previous standard articles, which apply in default, continue to apply. An ordinary resolution is required to determine director’s remuneration. The method of calculating director’s remuneration by an annual figure (after an ordinary resolution has been passed by shareholders) will apply to these companies. Any payments made in anticipation of the annual vote can’t be taken into account for calculating AWE.
Companies incorporated after 1 October 2009
There are new regulations for companies incorporated after 1 October 2009. They provide new Articles of Association for these companies and will:
- apply by default if other articles are not adopted
- allow its directors to determine a director’s remuneration
Directors can decide what remuneration to pay and when. There is no need for a resolution of the companies shareholders at its Annual General Meeting (AGM). In such cases payment of director’s fees will be regarded as earnings for the purpose of entitlement to SMP on the date payment was made and the SMP calculator used in the normal way.
If the director is contractually paid a regular salary - their AWE are calculated like any other employee.
Paid by a determination of the directors (not a formal vote)
Calculate the AWE by adding together the monies paid and any other payments of earnings, but use the date monies were paid instead of the date of the shareholders’ resolution at the AGM to determine the total earnings during the relevant period.
Paid both contractually and by formal vote
A director who is paid contractually may also be paid a bonus or fees by a formal vote. You must still calculate their AWE like any other employee, but you should only include the monies voted by formal vote if the date of the vote falls in the relevant period.
Paid only by a formal vote
If the director is paid only by a formal vote calculate their AWE in the usual way, substituting the dates of the formal votes in place of the normal paydays. A formal vote usually takes place at the company’s AGM and is agreed in the company minutes.
A formal vote usually takes place at the company’s AGM and is agreed in the company minutes.
Monies drawn in anticipation of a formal vote
Some directors may regularly draw money from the business in anticipation of a formal vote. Don’t include this money when working out the director’s AWE, even if NICs were deducted at the time they were paid.
Employee has more than one job with you
If you add together all the employee’s earnings to work out Class 1 NICs you must add them together to calculate the employee’s AWE, and the employee can only get one amount of SMP. In this case, they should take the same time off from each job otherwise they will lose some of their SMP because they are working for you.
If Class 1 NICs are worked out separately on the employee’s earnings, then you must calculate their AWE separately, as the employee can get more than one amount of SMP.
In this case, they can choose to take different times off from each job without losing any SMP. This is because SMP entitlement is treated completely separately under each contract when earnings aren’t added together to work out NICs.
Employee has more than one job
If a woman has more than one job, only one maternity certificate can be issued showing the expected date. She needs to agree with one employer what other evidence will be accepted to confirm the date the baby is due.
Your employee can either:
- show one employer the original MATB1 maternity certificate, which the employer can photocopy and then note the copy that the original has been seen and this is a true copy of the original which can then be given back to the employee for use by the other employer
- provide a letter which includes the pregnant woman’s name and the date of confinement which must be stamped and signed by a doctor or midwife and if signed by a midwife, must have the midwife’s PIN and expiry of registration date
Employee works abroad
If your employee works for you outside the UK from the latest start date for employment with you, and up to and including the Sunday of the QW she can get SMP.
If you weren’t liable to pay Class 1 NICs throughout that period and they worked for you in the European Economic Area (EEA), they may still get SMP where both the following apply:
- if you were liable to pay Class 1 NICs on her earnings throughout that period, or would have been if her earnings had been high enough
- if you weren’t liable to pay Class 1 NICs throughout that period and she worked for you in the EEA, but she worked for you in the UK in the QW, and you were liable to pay Class 1 NICs on her earnings for that week, or would have been if her earnings had been high enough