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HMRC internal manual

Statutory Payments Manual

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Average Weekly Earnings (AWE) - SMP/SAP/ShPP/SPP: employee not paid during set holidays

Employees in jobs with set holidays, typically teachers, may be employed on contracts of multiples of a year with payments of salary spread throughout the year but they may also be employed on:

  • yearly contracts but they are not paid during holidays, or
  • a series of contracts when they are only paid for the period of each contract.

Although the contractual arrangements are different, and this may effect the relevant period, if the relevant period is the same under either contract, there is no difference in the way the AWE are calculated. The earnings paid during the relevant period are added together and the total is divided by the number of weeks in the relevant period.

The following examples are for teachers but could be for any workers on similar contracts.

School holidays at the beginning of the relevant period - yearly contract SMP example

A nursery school employs teachers on a yearly contract but does not pay them any wages during school holidays. The contract of employment states that the teachers will be paid weekly on Fridays during term-time and will not receive any payments during school holidays. The teacher’s “normal pay day” is Friday even though she does not receive any wages for a particular week.

Her EWC is 23 November 2014 to 30 November 2014 so the QW starts on Sunday 10 August 2014. The last normal pay day on or before the Saturday of the QW was Friday 8 August 2014, even though she was not paid any wages as she was on unpaid leave. The last normal pay day at least 8 weeks before that was Friday, 13 June 2014.

The relevant period is therefore Saturday 14 June 2014 to Friday 8 August 2014, which is 8 weeks and the total earnings during the period are £630.

The AWE are £630 divided by 8 = £78.75.

The AWE are below the LEL for 2014-15 tax year therefore SMP is not payable.

The QW/MW/ONW falls during school holidays - term-time only contract

Teachers who are employed under term-time only contracts are not employed during the school holidays so, if the QW/MW/ONW falls during a holiday they may not be able to qualify for SMP because their average weekly earnings are reduced by the number of weeks of zero pay.

They may, however, be able to satisfy the continuous employment test using either

  • regulation 11(1) of the SMP (General) Regulations 1986 for SMP entitlement if they return to work before their maternity absence starts, or
  • regulation 11(1) plus 11(3A) of the SMP (General) Regulations 1986 which waives the requirement to return to work for workers such as teachers employed on term time contracts.
  • regulation 33(1) plus 11(3A) of the SMP (General) Regulations 1986

Example

As in the previous example a teacher’s EWC is 23 November 2014 to 30 November 2014 so her QW starts on Sunday 10 August 2014. She plans to start her maternity leave and SMP on 2 November 2014.

The school was closed for the holidays on 25 July 2014 and her contract of employment with the school finished on that day. It was renewed on 1 September 2014, the first day of the new term.

Although the QW fell during the period when she was not employed under a contract of employment she can still qualify for SMP because she returned to work on 1 September 2014, as long as her AWE in the relevant period are above the LEL.

School holidays are during the relevant period, not at the beginning or end, teachers on either annual or term- time contracts.

A teacher employed on a series of 13-week contracts is paid weekly on a Friday during term-time. The nursery was closed for the summer holidays from 1 August 2011 to 2 September 2011 so the last payday of the term was Friday 29 July 2011.

Her EWC is 22 January 2012 to 28 January 2012 so the QW starts on Sunday 9 October 2011

The last normal pay day on or before the Saturday of the QW was Friday 7 October 2011

The last normal pay at least eight weeks before that was Friday, 29 July 2011

The relevant period is Saturday 30 July 2011 to Friday 7 October 2011, which is 10 weeks.

The nursery school was closed for 4 weeks between 30 July 2011 and 26 August 2011 so she wasn’t paid for this period.

Her total earnings in the relevant period are£980 divided by 10 = AWE of £98.00

The AWE are below the LEL for 2011-12 tax year therefore SMP is not payable.