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HMRC internal manual

Statutory Payments Manual

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HM Revenue & Customs
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Average Weekly Earnings (AWE) - SMP/SAP/SPP: earnings used to calculate AWE

SMP

An employee’s gross AWE in the relevant period must be at least equivalent to the Lower Earnings Limit (LEL) which applies at the end of the Qualifying Week (QW).

SAP

An employee’s gross AWE in the relevant period must be at least equivalent to the LEL that applies at the end of the Matching Week (MW) or the Official Notification Week (ONW).

SPP

An employee’s gross AWE in the relevant period must be at least equivalent to the LEL that applies at the end of the QW, MW or ONW.

To be paid SPP for adoptions from abroad the MW is replaced by the later of the week in which:

  • the 26 weeks continuous employment condition is satisfied, see SPM250000, or
  • notification is sent to the adopter

SMP/SAP/SPP {.filledcircle}

Earnings are defined by regulation as:

“any remuneration or profit derived from employment”, except where specifically excluded by regulations.

Any payments which are liable for Class 1 NICs, or would be if they were high enough are included.

The relevant period is needed to establish the number of days, weeks, months, to divide earnings by. The earnings paid in the relevant period will be divided by the number of days, weeks or months in that relevant period.

For definitions of “relevant period” and “normal pay day”, see SPM171100.

When calculating an employee’s AWE, all earnings paid in the relevant period must be included even if they relate to periods outside the relevant period, for example, holiday pay which is paid on a pay day in the relevant period but is for a past or forward period. If, on any pay day, the employee was not due any pay, blank weeks are included as zero pay.

If incorrect earnings have been paid, which would produce a situation that worked to the disadvantage of either the employer or employee, and there is documentary evidence of an agreement between both parties as to the actual earnings that should have been paid, you should use the earnings agreed to calculate an employee’s AWE. Where there is no evidence of an agreement, you should calculate the AWE using the earnings actually paid.

For mistimed payments see SPM170900.

When calculating the AWE for directors’, see SPM171700