Statutory maternity pay – employee rights and employer obligations

The birth of a child is a wonderful time in your employee’s life. But, like any leave period, it presents various legal, HR and payroll challenges for the employer to navigate.

Depending on their contract type, new mothers are entitled to either Statutory Maternity Pay (SMP), maternity allowance, or enhanced maternity pay. Each comes with different costs and repayment terms that must be understood by all parties.

There is a great deal of sensitivity surrounding maternity leave and pay. It is important for bosses to be 100% certain of their legal obligations, to ensure staff members do not feel they have received unfavourable treatment – or worse, discrimination. With a good maternity leave policy, you can also attract and keep great talent and set out an inclusive company culture.

Below, we’ve provided a simple, accessible explainer of maternity pay including how it works, who is eligible, and what the rules are for small businesses.

What is Statutory Maternity Pay?

Statutory Maternity Pay is the minimum amount of money that a business must pay when a woman takes time off work to have a baby. It is a key part of the staff benefits package for employers. SMP is organised into two stages:

• Stage 1: In the first six weeks, the worker gets 90% of their average weekly earnings (before tax)
• Stage 2: In the next 33 weeks, the worker gets £184.03 OR 90% of their average weekly earnings (whichever is lower).

If you’ve not already done the maths, that means statutory maternity pay is paid for up to 39 weeks. That said, women can return to work earlier than this, should they choose. They can also choose to remain on maternity leave beyond 39 weeks, but without statutory maternity pay after that point.

The shortest maternity leave an employee can take is two weeks (this increases to four weeks if they are based in a potentially unsafe workplace, like a factory). Of course, a good employer should support mothers going on the length of maternity leave of their choice, and not pressurise them to change plans around company needs. However, if a mum wants to change the agreed date for returning to work, they must give their employer at least 8 weeks’ notice.

Who is eligible for SMP?

Naturally, to first know if the employee can claim SMP, you will first need to be aware that they are pregnant.

Some employers ask for a MATB1 Maternity Certificate as proof of pregnancy. The employee receives this after the 20th week of pregnancy, and it includes the date the baby is due. However, the staff member may inform you of their pregnancy before the 20th week.

Once an employee has informed you they are expecting, they will be eligible for SMP if they:

• Earn a minimum of £123 per week under their employment contract
• Have told the employer of their pregnancy at least 15 weeks before their due date (also known as the “qualifying week”)
• Have worked for the employer for at least 26 weeks up to the qualifying week (they cannot be an agency work, freelancer, or on a zero-hour contract)

If an employee is not eligible for SMP, the business owner has seven days to explain why and provide proper reasoning. You should use the SMP1 form, available to download on the GOV.UK website, to do this. The pregnant employee may still be eligible for maternity allowance instead.

What if I’m self-employed?

If the employee does not qualify for statutory maternity pay, for example if they are self-employed, they should apply for maternity allowance from HMRC.

Maternity allowance is a form of government benefit. Through it, the individual is entitled to between £27 and £184.03 a week for up to 39 weeks. If they take the full 52 weeks Statutory Maternity Leave, the final 13 weeks will be unpaid.

The amount a self-employed mother receives depends on how much Class 2 National Insurance (NI) contributions you have made in the 66 weeks before your baby is due.

To get £184.03 per week you must have been registered with HMRC for at least 26 weeks in the 66 weeks before your baby is due and paid Class 2 NI for at least 13 of the 66 weeks before your baby is due.

How maternity leave works in the UK

There are three types of maternity leave available to UK employees. Here’s a quick runthrough of what they are, and what distinguishes them from the other:

1. Ordinary Maternity Leave (OML)

This stage refers to the first 26 weeks of maternity leave. If the woman returns to work during this period, they have the legal right to return to exactly the same job role and contract they had before leaving.

2. Additional Maternity Leave (AML)

This stage refers to the latter 26 weeks of maternity leave. The business has a legal right to hire a full-time replacement during this period. However, they must offer a position with similar pay and conditions to the employee who went on leave.

3. Shared Parental Leave (SPL)

Shared parental leave gives new parents the option to split any time taken off work between them. Workers may be eligible for shared parental leave (SPL) of up to 50 weeks and Statutory Shared Parental Pay (ShPP) of up to 37 weeks.

This needs to be taken in the first year after the birth or adoption of a child. It can be taken in blocks or in one go. Birth parents are eligible if they:

• Share responsibility for the child at birth
• Have been employed by their respective companies continuously for 26 weeks by the time the application is submitted
• Do not leave their respective companies while they are on SPL or accepting ShPP
• Earn at least £123 a week

How much maternity leave can an employee take?

Because of how the above leave types are organised, the total maximum amount of time that an eligible employee can take for maternity leave is up to 52 weeks (if they use both OML + AML).

As we’ve explained, maternity pay does not have to be distributed after 39 weeks. Legally, this means an employer does not have to offer maternity pay for the whole length of time a person is on leave – although it might be advisable for the business to do so.

It is important to note that your employee is still entitled to all maternity rights, including Statutory Maternity Pay, if the baby is born early, is stillborn (after the 24th week of pregnancy), or dies after birth.

When does maternity leave start?

Eligible women can start their maternity leave any day from 11 weeks before the due date. The leave will start automatically if:

• The baby arrives early, or
• The employee goes off work with an illness related to their pregnancy in the four weeks before the week of the due date

So, because the employee must notify the employer of their pregnancy at least 15 weeks before their baby is due to be born, the business will have at least four weeks to prepare.

Keeping in touch (KIT) days

Your employee may want to carry on working for you whilst they are on maternity leave. They can work a maximum of 10 paid keeping in touch (KIT) days without their maternity leave or pay being cut. They are also allowed to work up to 20 shared-parental-in-touch (SPLIT) days without affecting shared parental leave eligibility. These are in addition to the 10 KIT days already available to employees on maternity leave.

It is for the employer to determine their policy with regards to payment for KIT days, however as a minimum this must be at least national minimum wage for the relevant age of the employee. They cannot demand KIT days and you cannot force them to take them.

Mums can use these days to come in and talk about their return to work, and receive any updates on how the organisation is developing. They don’t have to work a whole day, even a one hour meeting would count. KIT days can also be used for training.

If the employee does work more than ten days, they will not receive maternity pay for the weeks that they work.

Promotion opportunities and restructures

Whatever type of leave your employee is on, and regardless of when they choose to return to full-time work, you must inform them about the following circumstances:

• If there is an opportunity for them to be promoted, you must give them sufficient notice to apply
• Organisational restructuring that could affect them once they have returned from leave

Statutory maternity pay for small businesses

Because it is a legal requirement, SMEs face a civil penalty from HMRC if they fail to pay the correct amount. That’s why it is important to be clear in your employment contracts how much maternity pay employees will receive, how long for, and under what conditions.

How do small businesses calculate SMP?

Calculating Statutory Maternity Pay is a complicated process with a lot of jargon involved. To help, we’ve broken it down into three, easy-to-follow steps.

Step 1. Gather your information

To work out how much SMP a staff member will be due, the employer needs four pieces of information:

• Due date (from the MATB1 form or as told to you by the employee)
• Your employee’s intended start date for SMP, if they have given you one
• Your employee’s gross pay and the dates they were paid
• Confirmation that the employee pays Class 1 NIC on their salary and bonus

Step 2. Calculate average earnings

The next step is to calculate the employee’s average weekly earnings. These should be based on pay received during the ‘relevant period’ (eight weeks before the qualifying week).

The end of the relevant period is the last normal payday on, or before, the Saturday of the qualifying week.

The average weekly earnings in the relevant period must not be less than the Lower Earnings Limit for National Insurance contributions, otherwise the employee will not be eligible for SMP. For the 2024/25 tax year, pending any future changes, the limit is £123 per week.

GOV.UK example: An employee is paid weekly and the baby is due on 23 March 2024:

Business owners should add up all the earnings paid during the relevant period and divide by eight (the number of weeks in the relevant period).

If the employee is paid monthly, the calculation will look a bit different:

Business owners should add up all the earnings paid during the relevant period and divide them by 2 (number of months in the relevant period).

Then, multiply the figure by 12 (number of months in the year), and finally divide it by 52 (number of weeks in the year).

Step 3. Start issuing maternity pay

Once you know the employee’s average weekly earnings, you’ll be able to work out SMP and pay this to the individual as you would their wage slip.

SMP is a weekly payment. Payments start on the first day of maternity leave. If the employee leaves work on a Wednesday, they will be paid on a recurring basis every Wednesday until they return from mat leave.

Example: An employee’s average weekly earnings are £230. For their first six weeks on mat leave, they will receive 90% of this amount, or £207, every Wednesday. For the remaining weeks they will receive the statutory amount of £184.03 every Wednesday.

How do small businesses pay SMP?

Maternity pay should be paid out at the same time the employee would have received a wage packet – whether that’s monthly or weekly. As SMP is based on average earnings, not salary, any bonuses or commission form part of that calculation.

They should start from the day the employee chooses to begin their maternity leave. Tax and National Insurance should also be deducted as normal.

Claiming back statutory maternity leave

For small businesses with few employees and limited resources, a staff member going on maternity leave can feel like a bundle of not-so-joy. But don’t worry, you can reclaim most or all SMP back from HMRC.

Businesses of any size are entitled to reclaim 92% of an employees’ SMP from HMRC. You can use payroll software to calculate how much you’ve paid in statutory pay and how much you are able to claim back.

This amount goes up to 103% if your business is eligible for Small Employers’ Relief. You are entitled to this support package if you have paid less than £45,000 in Class 1 National Insurance contributions in the complete tax year before the qualifying week.

To claim the money back, HMRC will require you to produce an Employer Payment Summary (EPS). This must be submitted each month by the 19th of the proceeding month that you’re reclaiming pay for (eg a claim for SMP issued in the month of July would need to be submitted before August 19).

HMRC’s basic PAYE tools can help you do this if you have fewer than ten employers. You can also use HR software to track and manage the files.

What if I can’t afford to make payments?

HMRC has a support channel in place in case your business cannot afford to make SMPs. The business owner must submit an application online or via post, up to four weeks before the first payment is due.

Be aware that if you make a mistake on your application form, HMRC could charge you a maximum civil penalty of £3,000 per employee.

If the company has become insolvent, HMRC will cover all leave payments (including for Statutory Maternity Pay) if the employee was on maternity leave when the company became insolvent.

Enhanced maternity pay

We’ve been discussing statutory requirements on maternity pay. But there are no rules barring you from offering over this amount to women on mat leave – in fact, it’s something more companies are choosing to do as part of Enhanced Maternity Pay (EMP).

Statutory vs enhanced maternity pay

Enhanced Maternity Pay is awarded to workers on top of statutory maternity pay. The most popular form of enhanced maternity leave, offered by 42% of UK firms, was found to be full pay for six weeks. This is then followed by the standard statutory rate for the remaining weeks of leave.

However, the business could choose to pay its employees full pay for three months, six months, or even the entire period of maternity leave. The policy should be introduced to your benefits and perks package, based on what you feel comfortable the company can afford.

Because of how expensive EMP can be, most organisations choose to have a qualifying period of service ranging from 6 months to 12 months before employees are eligible to apply for EMP.

Some also introduce a clawback clause stipulating certain terms and conditions to qualify for the payment.

For example, an employee might be given a minimum length of time they must return to the business to receive the full EMP. Clawbacks should be handled delicately, however. Any policies that pressurise the person to return to work before they are ready could backfire.

Do employers have to offer Enhanced Maternity Pay?

Employers are under no obligation to offer EMP. Particularly for cash-strapped SMEs, it might make more sense to stick to statutory payments if you are worried about the impact EMP could have on balance sheets.

However, having an EMP policy adds an attractive feather to your company’s cap. It tells job seekers that you are a generous employer with a supportive company culture.

Not to offer these kinds of policies could prove detrimental in the long-term. The average age that people become parents in the UK is increasing, meaning parents are increasingly likely to be in senior or mid-level roles.

Most businesses choose to offer EMP so they can more easily attract these experienced staff members and hold onto their talent. In fact, research by XpertHR in 2022 found that 65% of UK organisations now pay some form of EMP.

Flexible working

Having a child can be a stressful period for new parents. There are hospital appointments to go to, sleepless nights, and often childcare difficulties.

One of the easiest ways for businesses to help smooth the transition back to the office is to offer flexible working. Flexible work arrangements give the employee more control over how long, where, when and at what time they work.

Parents can make use of these practices to better juggle care responsibilities and work commitments. Examples include remote working, hybrid working, flexitime, or part-time work.

In December 2023, the government unveiled its Flexible Working Bill, which came into effect in April 2024. Under the new regulation, all employees now have the right to request flexible working from day one.

You must deal with every flexible working request in a reasonable manner. This means you must assess the advantages and disadvantages of the application, and meet with the employer to discuss the application. If you say no, you must offer an appeal process.

A return to work mother has a legal entitlement to request a flexible working arrangement but not to be granted one. Employers can reject an application for any of the following reasons:

• Burden of additional costs
• Detrimental effect on the business’ ability to meet customer demand
• Detrimental impact on quality and performance
• Unable to reorganise work among existing staff
• Unable to recruit more staff
• Insufficient work during the periods the employee wishes to work
• Planned structural changes

Unpaid parental leave

An employee is entitled to 18 weeks of unpaid parental leave (per child or adopted child) up to the child’s 18th birthday. Unless you agree otherwise, this is limited to four weeks in a year for each parent.

There is no specific reason why a parent should take parental leave, but it might be used to spend more time with their children in school holidays. As a rule, 21 days notice must be given in advance of the start date, or 21 days before the adopted child is expected.

Unpaid parental leave must also be taken in whole weeks rather than individual days (unless you allow otherwise, or if the child is disabled). To be eligible, the parent must:

• Have worked at the company for more than one year
• Be named on the child’s birth or adoption certificate
• Not be self-employed, an agency worker or contractor
• Not be a foster parent (unless they’ve agreed parental responsibility in court)

An employee is entitled to 18 weeks unpaid parental leave if their child is entitled to receive a disability living allowance.

Parents do not have to be living with the child to qualify, but the leave must be taken within a set period and leave cannot be transferred between parents. However, both parents qualify if they are both working.

Conclusion

Statutory Maternity Pay is a valuable benefit for working parents.  Hundreds of thousands of working women have relied on SMP to help them balance a career alongside care commitments.

Small businesses also benefit from SMP. It can help to attract and retain talented employees, and ensure an inclusive workplace where staff feel valued and supported. Plus, the government’s reimbursement schemes means qualifying SMEs can end up claiming back more than they pay out.

But, as the above guide has shown, SMP is also a confusing area of employment law. The wellbeing risks for your employees of getting it wrong, not to mention the financial risks for a business, means it is essential for business owners to understand their obligations and the processes involved.