If you are in employment, or have recently had a job, the chances are you will be entitled to some type of maternity pay. It is important to be aware of your potential maternity payments so that you can plan ahead and claim that to which you are entitled.
We will now take a look at the various types of maternity pay in more detail – perhaps more importantly, the conditions of eligibility.
- Different types of maternity pay
- Entitlement to statutory maternity pay
- Changes to your employment
- Maternity pay for the self-employed
- Maternity pay for agency workers
- More than one employer
- Falling pregnant while on maternity leave
- Contractual maternity pay
- When can you claim maternity allowance?
- Additional benefits
- Employer refusing to cover maternity pay
- Protecting your rights
Many people will be familiar with the two main types of maternity pay but there is also a third option. The different types of maternity pay are as follows:-
- Statutory maternity pay
This is the more common type of maternity pay and defines the minimum your employer can pay you.
- Contractual maternity pay
Some employers will pay above and beyond their statutory obligations when it comes to maternity pay. It is important to remember that maternity payments cannot fall below the statutory minimum.
- Maternity allowance
This is the type of maternity pay which many people might be unfamiliar with. It is a catch-all allowance for those not entitled to statutory maternity pay from their employer.
Statutory maternity pay is the most commonly known form of maternity payment and places a legal obligation on your employer. There are two simple conditions:-
- You are in employment in the 15th week before your due date and have worked for your employer for at least 26 weeks prior
- Your average pay, before taxation, is at least £120 a week
In order to introduce a degree of clarity, especially for those with varied pay, your rate is calculated by:-
- Taking your average payment over an eight week period, finishing approximately 15 weeks before your due date
- If you have been furloughed, your average pay is based upon your regular rate of pay, not furlough payments
- Where your employer has been taken over, your average payment calculation may include work for both parties
It is important to be aware of the calculation regarding average pay because, if less than £120, you won’t be entitled to statutory maternity pay.
As maternity leave is available over a prolonged period of time, often organised months in advance, there may be occasions where you experience changes to your employment contract. In these situations it is important to be aware of your statutory rights and the legal obligations of your employer. Some of the more common issues include:-
If we look at statutory maternity pay (we will cover contractual maternity pay later), assuming you qualify, you will still receive this even if you leave your employment. The reason for a parting of the ways is irrelevant, whether you resign, were sacked, or made redundant. Once you qualify for statutory maternity leave this entitlement cannot be taken away from you.
On occasion, there may be a parting of the ways prior to your entitlement period for maternity pay being fulfilled. In this scenario, it may be that you are entitled to maternity allowance payments. Make sure you are aware of your rights!
Over the years we have seen a significant increase in the protections afforded to those who fall pregnant while in employment. While there are numerous levels of protection, and conditions which your employer needs to abide by, the two main ones are:-
- You cannot be sacked for any reason to do with your pregnancy
- You cannot be sacked for any reason to do with your maternity leave
These protections are set in stone and any employer failing to abide by them will face serious legal consequences. In the event that your employer sacked you as a means of avoiding maternity payments, you will still receive maternity pay as long as you have been in their employ for at least eight weeks.
In this instance we will consider two different types of self-employment:-
- Sole Trader
If you are a sole trader then you will not be entitled to statutory maternity pay. However, you may be entitled to claim the maternity allowance.
The situation may be a little different if you are employed by your own company. There is every chance that you will be entitled to statutory maternity pay. In this situation, your company would pay you the statutory obligation and reclaim this back from HMRC.
As with any type of employment, it is dangerous to make assumptions without actually taking professional advice. Fail to prepare, prepare to fail!
Over the years there has been a lot of concern and confusion regarding agency workers and possible entitlement to statutory maternity pay. Unfortunately, many employment agencies have found it beneficial not to correct assumptions that those on their books are self-employed. This is not necessarily the case – especially if you are deemed to be an employee of the employment agency.
You may learn that your eligibility for statutory maternity pay is exactly the same as that for someone under more traditional employment conditions. This situation is not straightforward; you may find you are entitled to statutory maternity pay but you can’t take maternity leave. It is extremely important that you are aware of your employment position with the agency, and that with any company you work for on a long-term basis.
When looking at various employment scenarios, it is safe to say that the position of agency workers is the most confusing and one which requires professional advice.
Where you have more than one employer, there is the potential to receive full maternity pay from more than one employer. In order to clarify the situation, you need to look at each employer in isolation and check against the eligibility conditions. It is obviously not illegal to have more than one employer or receive maternity pay from more than one employer. That will surprise many people!
On occasion, there have been situations where individuals have fallen pregnant while already on maternity leave. In this scenario, you are still entitled to statutory maternity pay again, as long as you meet the following criteria:-
- You have worked for your employer for 26 weeks up to the 15th week before your due date – in this scenario, the 26 weeks includes time spent on maternity leave
- You earn at least £120 a week on average after taxation – if you fall pregnant while already on maternity leave, your average wage calculation will likely be based on your maternity pay
Many people wrongly assume that if they are already on maternity leave then they might be ineligible for additional maternity leave. This scenario is probably a lot more common than many people might assume!
Contractual maternity pay is an additional payment above and beyond your employer’s statutory obligation. This does not replace statutory maternity pay; it is simply an additional payment over and above the minimum payment. Statutory maternity pay is the minimum payment your employer is obliged to provide, and no conditions in your employment contract can undermine this in any way, shape or form. This relates to not only maternity pay but also working conditions.
You will find any contractual maternity pay details in one of the following:-
- Employment contract
- Employers maternity policy booklet
While you would assume that all information should be together in your employment contract, this is not necessarily the case. As a consequence, it may be sensible to approach your HR department to confirm whether or not your employer offers contractual maternity pay.
Due to the different eligibility status for statutory maternity pay and contractual maternity pay, this can create a surprising scenario. You may find that you are not eligible for statutory maternity pay but you are eligible for contractual maternity pay. If you are confused, speak to your employer and then take independent advice!
As a side note, if you decide not to return to work after maternity leave then there may be various conditions which come into play – regarding contractual maternity pay. Assuming you are eligible, your statutory maternity pay is safe and cannot be reclaimed or reduced in any way. However, there may be conditions in your employment contract/employers maternity policy regarding potential repayment of contractual maternity pay.
For example, you may need to return to work for a minimum of six months, at which point your employer will not be able to reclaim any contractual maternity payments. Obviously, it is important to be aware of this situation and how it might impact your finances. Where you may end up with a repayment obligation, remember that even during your maternity leave your holiday entitlement will increase as normal. As a consequence, using up your full holiday entitlement will reduce any contractual maternity repayment obligations.
While statutory maternity pay is provided by your employer, maternity allowance payments are provided by the UK government. As with statutory maternity pay, there are various eligibility conditions to take into account:-
- You must have been employed/self-employed for 26 weeks in the 66 week period before your due date
- Your earnings can be no less than £30 a week for at least 13 weeks of the 26 week period
- If your spouse/partner has their own business, which you have been helping with, you may be eligible for maternity allowance
In the midst of the COVID pandemic it is important to note that your average wage over the 26 week period is calculated using your regular pay, as opposed to your reduced furlough payments. For those who work intermittently, or help out with their spouse/partner’s business, this can have a big impact on your eligibility. It is important that you use the correct figures.
If in any doubt about your eligibility for maternity allowance, check the following government website:-
On occasion, whether or not you are eligible for maternity pay/maternity allowance, there may also be additional benefits to which you are entitled. These might include:-
- Universal credit
- Employment and support allowance
- Working tax credits
Even if you are eligible for maternity pay/maternity allowance, and receive additional payments from your employer, it is still worth checking whether you can claim additional financial assistance. Some of these schemes may be means tested, while others may not have any restrictions.
If you believe you are eligible for maternity pay, but your employer is refusing to fulfil their obligation, you can take action. HMRC should be your first port of call. They will take details of your claim and contact your employer for further information.
*Note, when addressing the issue of maternity pay your employer is obliged to give you reasons for non-payment on a “SMP1” form. You should have this document with you when contacting HMRC.
While many people will be aware of statutory maternity pay and contractual maternity pay, the maternity allowance will be something new for many people. Thankfully, the various rules, regulations and eligibility tests ensure that the majority of pregnant employees will receive some level of financial assistance. However, it is important to be aware of your rights to maternity pay and ensure that you are in receipt of your full entitlement.