Employer advice and support for maternity, paternity, adoption and shared parental leave and pay

June 1, 2023 11:47 am Published by

Parental leave and pay advice from First Call FinancialsIt’s exciting news in the office when one of your employees makes the lovely announcement that there’s a baby on the way.  As an employer, you will be required to manage the practicalities around their leave and ensuring they are correctly paid which can include maternity, paternity or adoption leave and pay.

With a wide range of options available to prospective parents it can be confusing and overwhelming for employers and in larger companies you can face the prospect of multiple members of the team approaching this in different way.

It’s important to understand the law and have clear policies in place that allows clarity, consistency and compliance for every member of your team.  Furthermore, some employment types, such as agency workers, directors and educational workers, have different rules for entitlement.

For a start familiarise yourself with the legal requirements.  Maternity, paternity and adoption leave is a statutory requirement for employees and has legal implications for you as an employer if not handled correctly.  It is important for businesses to research and understand the specific laws and regulations including duration of leave, notice requirements, eligibility criteria and pay implications.

There is lots of guidance and advice available but let’s try to look at some key considerations and practicalities.

Maternity: When does an employee need to notify an employer of their pregnancy?

By law, an employee must notify their employer of their pregnancy at least 15 weeks before the expected due date and provide them with either a MATB1 form or other medical confirmation. The law requires an employer to acknowledge this within 28 days of receiving the notice, letting your pregnant member of staff know their entitlements to maternity leave and pay.

An employee can begin maternity leave up to 11 weeks prior to the birth (unless the baby is born early) and all employees must take at least 2 weeks after the birth.

Women are entitled to a total of 52 weeks maternity leave which they will be eligible for once they have given their employer the correct notice.  During their maternity leave, women are entitled to maternity pay. Employers may provide their own maternity pay at an enhanced rate, in which their employees may have to meet set criteria, to be eligible. If they fall outside the scope of eligibility or an employer doesn’t offer enhanced maternity pay, the pregnant employee will be entitled to statutory maternity pay.

It is highly recommended that as an employer you communicate with the employee and have an open and supportive conversation, at the earliest suitable opportunity, with the expectant mother to discuss her plans, preferences and any specific needs during the maternity leave period.  This will also help you plan for the absence, enabling redistribution of workload and responsibilities of the employee on maternity leave.  Options include the redistribution of duties amongst existing employees, hiring temporary replacements or considering flexible working arrangements all of which will have different financial implications for the business.

Maternity Pay

Statutory maternity pay is currently paid for up to 39 weeks. It is calculated as:

  • 90% of average weekly earnings (before tax) for the first 6 weeks
  • £172.48 or 90% of average weekly earnings (whichever is lower) for the next 33 weeks

To be eligible for statutory maternity pay, employees must:

  • Have worked for their employer for 26 weeks by the 15th week before their due date
  • Earn at least £123 a week on average

If an employee does not meet these criterion or is classed as self-employed, then employees may be entitled to maternity allowance and will need to complete a Maternity Allowance Claim Form via HMRC to apply.

Paternity Leave & Pay

Male employees are entitled to paternity leave and pay.

Usually this consists of 1-2 weeks of paid leave. Unlike maternity leave, paternity leave must start after the birth of the baby and end within 56 days of the birth. Statutory paternity pay is currently at £156.66, although an employer has discretion to allow for further leave or an enhance paternity pay scheme for their employees. Eligibility for paternity pay and leave is the same as maternity pay and leave.

Adoption & Surrogacy

When an employee is looking to adopt a child or proceed with a surrogacy, the employee is entitled to statutory adoption leave and statutory adoption pay. The employee is also entitled to shared parental leave and pay.

Statutory adoption leave is 52 weeks. However, only one parent would be eligible for this. This means that the other parent could opt to take paternity leave.

Statutory adoption pay is the same as statutory maternity pay. Similar to maternity and paternity pay, the employer has discretion to allow for an enhanced company adoption pay scheme.

To be eligible for adoption pay and leave, employees must provide proof of adoption or surrogacy to their employer, whether that be an overseas or UK adoption. They must also have been working for the employer for at least 26 weeks and provide the correct notice.

Shared Parental Pay

It is also possible for prospective parents to elect to share the leave and pay entitlement between them.  Shared Parental Leave and Statutory Shared Parental Pay are applicable when a couple are:

  • having a baby
  • using a surrogate to have a baby
  • adopting a child
  • fostering a child who they are planning to adopt

Electing to take this option means that parents can share up to 50 weeks of leave and up to 37 weeks of pay between them.  There are specific eligibility criteria as well as rules around how this works which can be located on the HMRC website.

Reclaiming Statutory Pay

As an employer you can usually reclaim 92% of statutory Maternity, Paternity, Adoption and share Parental Pay.  If you are a small business and qualify for Small Employers Relief this increases to 103%.

You need to calculate how much you need to reclaim and include them within your Employer Payment Summary to HMRC.  These are usually offset against current years liabilities but if you are unable to do this then you need to apply directly to HMRC for a repayment (although this cannot be done until the start of the next tax year).

How can an employer support their employees?

It should also be noted that whether it’s maternity, paternity or adoption leave, employees are protected in the way that they are entitled to pay rises, accrue holiday as usual and have the right to return to work.  Businesses that operate a company maternity scheme may be able to offer more than the statutory amounts of leave and pay.  However, these policies must be clearly documented.

Whilst some employees may not be entitled to leave and pay their employment rights are, however, protected whilst absent.  This means they are still entitled to pay rises and accrued holiday, and their job remains safe.

As an employer you must understand the legal requirements around maternity, paternity and adoption leave and pay.  ACAS and HMRC both provide employees and employers free, impartial advice on workplace rights, rules and best practice.

We would also recommend getting specific payroll advice if you don’t have an inhouse payroll team with suitable expertise in this area.

Need a hand?

For help and advice about any aspect of payroll and how to manage maternity, paternity or adoption leave payments give our team a call on 0117 379 0810 to arrange a free no obligation conversation.

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This post was written by Tarah

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