Statutory Maternity Pay is something all business owners need to pay their staff while they’re on maternity leave. But should a company pay more than the legal minimum?
This is a question that all business owners will need to answer, and they could enhance the amount they give new parents with occupational maternity pay. But what is it? And should it be offered to staff?
We will answer this question and many more in this guide.
What is occupational maternity pay?
When a member of staff goes on maternity leave, an employer must pay them Statutory Maternity Pay as set out in UK law. There is a minimum amount of SMP an employer must pay staff each month (see later in the article). And it is paid in the same way as the employee’s normal salary.
On top of this, an employer might decide to enhance the amount of pay they give to new parent employees. This can be done using occupational maternity pay.
What is statutory maternity pay?
Statutory Maternity Pay is paid to new mothers for up to 39 weeks. This is to allow the parent to look after their new child and is designed to give them time to bond and recover from the trauma of birth.
How much is Statutory Maternity Pay?
New mothers are entitled to 90 percent of their average weekly pre-tax earnings for the first six weeks.
How much occupational maternity pay should an employer pay?
Occupational maternity pay is an optional payment used for enhancing an employee’s Statutory Maternity Pay. As such, it requires an employer to add money on top of the statutory maternity payments, creating a larger payment. How much is added to the payments is entirely up to the employer.
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Do employers have to pay tax and National Insurance on occupational maternity pay?
We’re sorry to say, you’ll have pay-as-you-earn (PAYE) tax and National Insurance deducted from occupational maternity pay as it counts as regular earnings.
Who pays occupational and statutory maternity pay: is it the government or the employer?
The rule for who pays Statutory Maternity Pay depends on the size of the business. In the first instance, the employer will pay Statutory Maternity Pay to an employee. An employer, however, can claim potentially all, or most, of this money back from HM Revenue & Customs (HMRC) depending on their class one National Insurance contributions.
The rule for who pays occupational maternity pay is far simpler – because an employer is not compelled to pay this to an employee, they will have to foot the bill entirely if they choose to provide it as a benefit.
Should business owners give staff occupational maternity pay?
There’s no clear-cut ‘yes’ or ‘no’ answer to this question. It comes down to what the business owner thinks is best for the business. If the added cost would hurt the business, then our advice is don’t pay it. Occupational maternity pay is optional after all.
If an employer does pay it to staff, they are far more likely to show gratitude towards the businesses generosity when they return to work by being loyal and productive. This might lead to a higher retention rate of staff retention as staff members will speak highly of how the business treats them. A good reputation can go a long way when a business is looking to hire new talent.
Can an employer ask an employee to repay occupational maternity pay if I don’t go back to work?
This is a tricky one to answer. Your employer cannot ask you to repay Statutory Maternity Pay if it is paid at the legally minimum rate.
They can ask you to pay any extra money they have paid due to their own policies (occupational maternity pay), but this will need to be detailed in the company policies to be legal. Check the fine print of your contract of employment and any other relevant policies to see if you have to repay anything if you don’t go back to work.
Will I still receive occupational maternity pay if I don’t intend on returning to work?
An employee can still get occupational maternity pay even if they do not plan to go back to work or their job ends after the 15th week prior to your baby’s due date. Whereas employees do not have to pay Statutory Maternity Pay back if they don’t return to work, they may have to pay back occupational maternity pay if their contract or other work-based policies state so.
How else can an employer support maternity leave for an employee?
As well as ensuring that Statutory Maternity Pay and occupational maternity pay is paid as expected to the employee, an employer can also offer a range of other support measures, including:
- Checking on the staff member periodically to see if everything is ok.
- Offering a staggered return to work or a change in hours on return.
- Offering a modified workstation or even role to the employee to support their return.
It’s important to note that there is no legal requirement for an employer to offer anything above the statutory pay and leave set out in law.
Having a child can be a joyous and stressful time but Occupational Maternity Pay is something that employers can offer staff to lessen the financial burden on them. Try Papershift’s Payroll automation software to manage statutory disbursements and stay on the right side of law.
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We hope you have enjoyed this guide. For more useful workplace information, check out the rest of our website.