When an employee takes maternity leave, they may be entitled to up to 39 weeks of statutory maternity pay (SMP) at the following rates:
The first six weeks are paid at 90% of the employee's average weekly earnings.
The remaining 33 weeks are paid at the lower of 90% of the average weekly earnings, or the statutory rate.
The average weekly earnings are calculated using the earnings in the relevant period.
You'll first need to determine the relevant period, before calculating the average weekly earnings in that period.
Determine the relevant period
Before you can check the earnings in the relevant period, you first need to establish the dates of the relevant period. To do this:
Tip: When determining the weeks, always start the week on a Sunday, ending on a Saturday.
Check the expected week of confinement (EWC). This is the week in which the baby's due date falls.
Using the Saturday at the end of the EWC, count back 15 weeks. This is the Qualifying week and the end of the relevant period.
Using the Saturday of the Qualifying week, count back 8 weeks.
The following day (Sunday), is the start of the relevant period. The Saturday of the qualifying week, is the end of the relevant period.
Tip: You can use HMRC's maternity table of dates to check the qualifying week, or HMRC's parental pay calculator to check the relevant period.
Example
The baby is due on 15 August 2023.
Therefore the EWC is from Sunday 13 August to Saturday 19 August.
Counting back 15 weeks from Saturday 19 August, takes us to Saturday 6 May.
Therefore the qualifying week is from Sunday 30 April to Saturday 6 May.
Counting back 8 weeks from Saturday 6 May takes us to Saturday 11 March.
Therefore the relevant period is from Sunday 12 March, to Saturday 6 May.
Calculating the average weekly earnings
Next, you can use the earnings in the relevant period to calculate the average weekly earnings.
Add together all of the earnings subject to national insurance in the relevant period. I.e., after salary sacrifice deductions have been taken.
Multiply the earnings in the relevant period to reach an annual amount.
E.g., if using two monthly payments, multiply by 6 to get an annual value.
Divide the annual value by 52 to get a weekly average.
Tip: If the employee's average weekly earnings are less than the lower earnings limit (£123 for the 2023-2024 tax year), they are not entitled to statutory maternity pay and you should issue an SMP1 form to the employee.
Example
On 25 March, the employee receives a salary of £2,000, a bonus of £3,000, and a salary sacrifice deduction of £100, their total earnings for NI are £4,900.
On 25 April, the employee receives a salary of £2,000 and a salary sacrifice deduction of £100, their total earnings for NI are £1,900.
Their total earnings in the relevant period are £6,800.
We multiply this value by 6 to calculate the annual value, £40,800.
This value is divided by 52 to get the average weekly value, £784.62.
Calculating the weekly rates to use
Using the average weekly earnings calculated above, work out 90% of the average weekly earnings. This is the rate payable for the first six weeks of their maternity leave.
For the remaining 33 weeks, check which of the two rates is lower between 90% of the average weekly earnings, or the statutory rate which is £172.48 for the 2023-2024 tax year.
Example 1
The average weekly earnings are £150.
90% of the average weekly earnings is £135.
For the first six weeks, they receive £135.
For the remaining 33 weeks, they receive £135 as it's lower than the statutory rate of £172.48.
Example 2
The average weekly earnings are £300.
90% of the average weekly earnings is £270.
For the first six weeks, they receive a weekly rate of £270.
For the remaining 33 weeks, they receive a weekly rate of £172.48 as it's lower than the 90% of the average weekly earnings rate of £270.
Calculating the SMP due in this period
In PayFit, there are three methods of paying SMP.
Daily (Calendar days) - Weekly rate is divided by 7 days a week.
Daily (Working days) - Weekly rate is divided by the number of days in the week that the employee usually works.
Weekly - Weekly rate, usually paid for 4 or 5 weeks per month.
Using the weekly rates calculate earlier, you should now be able to calculate the SMP due, based on the number of calendar days, working days or weeks in the month.
For further information about eligibility and entitlement to SMP, please refer to this Help Centre article. Or for information about setting up maternity leave and pay in PayFit, please refer to this Help Centre article.