Statutory Maternity Pay

Statutory Maternity Pay

Statutory Maternity Pay

Are you processing Statutory Maternity Pay (SMP) payments correctly?

Congratulations! One of your employees has announced their pregnancy. Are you confident about the appropriate considerations to cover their role as they embark on maternity leave?

From an HR perspective, you’re likely aware that you must:

  • Have a maternity policy in place
  • Write to the employee confirming what their entitlements are whilst on maternity leave
  • Receive a MATB1
  • Carry out a risk assessment

However, have you thought about the wider employment considerations when it comes to statutory maternity pay (SMP)?

Our team handles SMP concerns for clients frequently, and we share here some of the more esoteric questions we dealt with recently regarding circumstances that could impact maternity pay.

What happens to the car allowance during maternity leave?

During Ordinary Maternity Leave (OML) and Additional Maternity Leave (AML), an employee is no longer entitled to remuneration (salary). However, there is no change to benefits, and these continue as if the employee has not taken maternity leave.

The concern is whether the car allowance is part of the remuneration package or the benefits package.

You could argue that a car allowance is a benefit. It often appears separately on a payslip. Therefore, the employee should continue to receive their car allowance whilst on maternity leave.

However, if the car allowance is a regular salary payment and attracts national insurance contributions (NIC), it is a part of the worker’s remuneration package. Thus, not payable during maternity leave.

The rules are not straightforward and depend on the specifics of the case, so we advise you to proceed with caution and contact a payroll professional for guidance.

Do I include those on maternity leave in annual salary reviews?

Yes, you must include all employees on maternity leave when you carry out your usual salary review process.

According to the CIPP, following the Alabaster judgement, the employee’s SMP calculation will need to consider any pay rise that takes effect anytime between the start of the eight-week set period for calculating average weekly earnings (AWE) for SMP and the end of SML.

You’ll likely encounter scenarios where recalculating SMP is necessary to include the payment uplift. If you need guidance with payroll calculations, speak with Kasia Field.

What do I do if an employee is made redundant before going on maternity leave?

The main question is whether employers must pay SMP even if the worker is unemployed during their maternity leave period.

First, you must ensure you have and follow correct redundancy processes.

Maternity Action states that if your employee is made redundant and their employment ends before their qualifying week, they are not eligible for SMP. However, they may be entitled to claim Maternity Allowance.

If your employee’s employment ends in or after their qualifying week, they are entitled to SMP for 39 weeks. If your employee is already on maternity leave and receiving SMP, their maternity leave will end when their employment ends though you must continue to pay their SMP for the rest of the 39 weeks.

What are my employer’s obligations if a contractor goes on maternity leave?

Remember, fixed-term workers, qualify for maternity leave and pay, the same as your permanent staff.

Whilst the fixed-term contract has a set end date, the right to SMP continues if the worker qualifies. You can pay SMP as a lump sum if you abide by the NIC rules. If you pay the employee’s statutory maternity pay as a lump payment, you may pay more in NICs than if you pay SMP monthly or weekly.

With the rules relating to maternity leave and pay being complex, we advise you seek professional guidance. Contact Bal (Head of HR) or Kasia (Payroll Manager) if you need support through these complicated processes.





Bal Dhesi
HR Manager at Wilder Coe
Bal recognises that effective people management is key to any successful organisation. With a number of years’ experience gained in the field of HR, Bal provides a bespoke and tailored service to her clients whilst delivering practical yet simple people orientated solutions.