Employment News

News added on 01.06.2021

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Maternity rights

Enhancing maternity pay

According to a recent survey, 65% of employers now pay some form of enhanced maternity pay. If you decide to introduce a contractual enhanced maternity pay scheme, what do you need to consider?

The law requires that you pay statutory maternity pay (SMP) for up to 39 weeks of an employee’s maternity leave, where they meet the SMP eligibility conditions. The first six weeks are paid at a higher rate of 90% of the employee’s average weekly earnings and the remaining weeks are paid at the standard rate of, currently, £151.97 per week (or 90% of average weekly earnings if lower). However, there’s no statutory requirement to provide enhanced maternity pay, so this is an entirely contractual matter.

Where you do decide to provide a contractual enhanced maternity pay scheme, matters to consider include:

  • what level of enhancement will you provide and for how long? You can’t pay less than SMP but otherwise you have a wide remit here. The survey showed that the most common form of enhancement is full pay for six weeks followed by the standard SMP rate, and the second most common is full pay for three months again followed by SMP. In each case, the enhanced rate is inclusive of any SMP due
  • will there be a qualifying period of employment for access to the contractual scheme, e.g. one year? Will employees who have previously been on maternity leave be required to work for a similar period before qualifying again for enhanced maternity pay?
  • will you similarly enhance paternity pay and shared parental pay?
  • will you make enhanced maternity pay dependent on the employee returning to work following their maternity leave? You can’t do this for the SMP element, but you can do it for any enhancement, provided you clearly state this in the terms of your scheme, e.g. by providing that an employee who doesn’t return to work for a minimum period of, say, six months or a year after their maternity leave must repay all or a part of their enhanced maternity pay which is over and above SMP. Note that, to enforce any repayment obligation (whether by way of a deduction from wages or otherwise), the employee’s prior written agreement is required  
  • if enhanced maternity pay is dependent on a return to work for a minimum period, will you exclude the obligation to repay where you dismiss the employee for reasons other than gross misconduct?

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