Statutory maternity pay (SMP)
You can easily process statutory maternity pay (SMP) by using Sage One Payroll to automatically calculate it for you.
We’ve gathered together everything you need to help you understand the qualifying rules and entitlement, as well as how to record it in Sage One.
You can also find information from GOV.UK
The employee must provide you with medical evidence, which is usually a MATB1 maternity certificate provided by their doctor or midwife. However, you can accept any document, signed by a doctor or midwife, that includes the date the baby is due. The employee should give you proof within 21 days of the SMP start date.
To qualify, the employee must have worked for you continuously for at least 26 weeks up to the qualifying week, which is the 15th week before the expected week of childbirth. The employee must also still be pregnant at the start of the 11th week before the week the baby is due or had the baby by then.
The employee’s average weekly earnings (AWE) in the eight weeks before the qualifying week is at least or above the current national insurance (NI) lower earnings limit (LEL). For the 2016/2017 tax year, this is £112.00.
The employee should give you at least 28 days notice of when they want SMP to start. However, if this isn’t possible, for example if the baby arrives early, they should tell you as soon as possible.
If an employee doesn’t qualify for SMP, you must give them Form SMP1. This form allows the employee to apply for Maternity Allowance.
- All employed women are legally entitled to a total of 52 weeks maternity leave regardless of their length of service. They don’t need to qualify for SMP to be able to take maternity leave.
- If the employee meets all qualifying conditions, as an employer, you’re obliged to pay the statutory rate of SMP. Whether you pay any further wages on top of the statutory requirement depends on the employee’s contract of employment. You’re under no statutory obligation to pay anything further.
- For employees who qualify, SMP is payable for 39 weeks. This is made up of:
- 6 weeks at the higher rate, which is 90% of the employee’s average weekly earnings.
- 33 weeks at the standard rate, which is either 90% of the employee’s average weekly earnings or £139.58 per week, whichever is lower.
- The average weekly earnings calculates based on how much the employee earns in the eight weeks prior to the qualifying week. This includes all payments subject to NI, not just their basic salary. This automatically calculates for you based on the information you enter into Sage One. You can find further information from HMRC.
An employee can choose when to start her SMP, but it:
- Generally can’t start before the 11th week before the week the baby is due, however, it can start earlier if the baby is born earlier. It must start by the day after the baby is born.
- Can start on any day of the week.
- Can start earlier if the employee has a pregnancy-related absence four weeks before the week the baby is due.
- Must start the day after she leaves your employment if she leaves after the start of the 11th week. You can find more information about paying SMP to someone who leaves your employment from GOV.UK.
Sage One calculates SMP in whole weeks only.
- 1. Click the Pay Runs tab, then click Process Pay Run.
- 2. Check the pay date is correct, then click Next.
- 3. Select the relevant employee, then click Add Absence then Maternity.
- 4. Complete the following information:
|Child Due Date||Enter the date that the child is due to be born on.|
|Documentation Received||If the employee has notified you formally of her intention to take maternity leave using Form MATB1, choose Yes.|
|Qualifying Week||The 15th week before the baby is due to be born.|
|Start Date||Enter the date the employee wants to start her maternity leave.|
|End Date||Enter the date the employee wants to end her maternity leave.|
|Pension Earnings||If any payment made to the employee as SMP should be included in pensionable earnings, select this check box.|
|Qualifying Earnings||If any payment made to the employee as SMP should be included in qualifying earnings, select this check box.|
- 5. Click Save.
If there’s not enough information to calculate the average weekly earnings (AWE), this option appears:
|Issue Certificate SMP1||If the employee isn’t entitled to SMP because her earnings are less than £112, click the SMP1 link and provide her with the form.|
|Manually set the AWE value||If you started using Sage One Payroll part-way through the tax year and there’s not enough history to calculate the average pay, select Manually set the AWE value > enter the average weekly pay.|
- 6. Click Save, then complete the rest of the pay run as normal.
All employers can recover some, if not all, of the statutory maternity pay (SMP), that they pay to employees.
If you’re classed as a small employer, you can recover 100% plus 3% in small employers’ relief. Otherwise, you can recover 92%. This calculates automatically and reduces your liability and the amount you owe to HMRC. It’s recorded when you submit an employer payment summary (EPS).
Your company normally qualifies for small employers’ relief if your liability for national insurance (NI) contributions was £45,000 or less in the last complete tax year prior to the employee’s qualifying week.
- For babies due between 14 July 2015 and 19 July 2016 – Check your liability for 2015/2016.
- For babies due from 20 July 2016 – Check your liability for 2015/2016.
If you’re a new employer or unsure whether you qualify for small employer’s relief, you should check this with HMRC. You can find further information from GOV.UK.
If you reclaim SMP, you can see this amount on your P32 Employer Payment Record.