Statutory Maternity Pay - how it is worked out
Your employer will look at your gross earnings paid to you in a set period. They will work out your average weekly earnings over this set period to find out if you qualify for Statutory Maternity Pay and how much to pay you.
How much do you get
If you qualify for Statutory Maternity Pay (SMP) it is paid for a maximum period of 39 weeks. It is paid:
- for the first six weeks at 90 per cent of your average gross weekly earnings with no upper limit
- for the remaining 33 weeks at the lower of either the standard rate of £138.18, or 90 per cent of your average gross weekly earnings
Your employer will work out the rate of SMP you will get.
How your average weeking earnings are calculated
To qualify for SMP your average weekly earnings must be at least equal to the lower earnings limit (LEL). The LEL that applies to you is the one which is current on the Saturday at the end of your qualifying week. The LEL changes every year. The LEL is £111 in the 2014-2015 tax year.
To calculate your average weekly earnings your employer will average your gross earnings over a period of at least eight weeks up to and including the last payday before the end of your qualifying week. The qualifying week is the 15th week before the week your baby is due. This period may vary depending on how often you are paid – weekly, monthly or other intervals.
For working out SMP purposes, ‘pay’ means gross pay that is due to you before any deductions. Your employer will take into account your gross pay that you received in the set period, as long as it counts for National Insurance (NI) contributions (or would count if you earned enough or were old enough to pay NI contributions).
If you get sick pay, overtime payments, bonus payments, arrears of pay or holiday pay this is all included to work out your SMP, if you actually get them in your set period. It is when you get paid the money that counts, not when it was actually earned.
If you get a pay rise
If your employer awards a pay rise which is effective at any time from the start of the set period used to work out your SMP and the end of your maternity leave, your employer must work out your SMP again and pay you any balance due to you.
If you have a salary sacrifice arrangement
If you have a salary sacrifice arrangement in place during the period used to work out your SMP, the SMP average weekly earnings calculation will be based on your contractual earnings which count for NI contrbutions. This could mean that your average weekly earnings may not reach the lower earnings limit (LEL) for payment.
If you are a student
If you are a student in receipt of a bursary, your bursary is not treated as earnings for SMP purposes.
How SMP is paid
Your employer will usually pay you SMP in the same way and at the same time as your normal wages.
SMP is treated as earnings so your employer will deduct income tax and NI contributions. Your employer may also make other deductions that would be made from your pay such as trade union subscriptions and pension contributions.
If you are expecting more than one baby, the SMP you will get will be exactly the same as if you were expecting only one baby.
Even if you don't intend to return to work, you can still get SMP. You don't have to repay it if you decide not to return to work. Once you have qualified for SMP your employer must pay it to you even if you leave employment with them.
Entitlement to SMP does not affect your right to any other maternity payments provided by your employer. But SMP will count towards any maternity payments your employer pays you.