Chartered Certified Accountants
and Business Advisers
An outline of an employer's obligations to pay statutory payments such as Statutory Sick Pay (SSP), Statutory Maternity Pay (SMP), Statutory Paternity Pay (SPP) and Shared Parental Pay (ShPP). As the scheme payments are statutory, it is important that rules are adhered to. If you are an employer in the London area we, at Sloane & Co LLP, can provide you with assistance or any additional information required.
Statutory Sick Pay (SSP), Statutory Maternity Pay (SMP), Statutory Paternity Pay (SPP) and Shared Parental Pay (ShPP) are important regulations to understand as they enforce minimum legal requirements on employers. Each operates in a different way.
This factsheet sets out the main principles of the regulations and what an employer needs to consider.
SSP applies to all employers, regardless of size and represents the minimum payments which should be paid by law.
It is possible to opt out of the scheme but only if an employer’s occupational sick pay scheme is equal to or more than SSP. There would still be a requirement to keep appropriate records, etc.
We have outlined the general principles below but first we need to explain some of the special terms used.
Where PIWs are linked it is only the first three days of the first PIW which are WDs.
All employees who, at the beginning of a PIW or linked PIWs, have had average weekly earnings above the Lower Earnings Limit (LEL) of £116 for 2018/19.
Employees must have notified you about their sickness - either within your own time limit or within seven days.
They must give evidence of their incapacity. Employees can self-certify their absence for the first consecutive seven days: thereafter, form Med3 (Fit Note) is required from their General Practitioner.
The weekly rate of SSP is £92.05 for 2018/19 but it is computed at a daily rate.
The daily rate may vary for different employees. It is calculated by dividing the weekly rate by the number of qualifying days in a week. For example an employee with a five day working week would have a daily rate of £18.41 for 2018/19.
Only QDs qualify for SSP and remember the first three days (WDs) do not qualify.
The maximum entitlement is 28 weeks in each period of sickness or linked PIW.
Employers are not able to recover SSP paid for sickness absences.
SSP is included in gross pay and PAYE is operated as normal.
Employers should monitor sickness absence and maintain detailed records as these will be required for PAYE purposes.
SMP is paid to female employees or former employees who have had or are about to have a baby.
The payment of SMP is compulsory where the employee fulfils certain requirements.
SMP is payable provided the employee has:
It is important to note that mothers have a legal entitlement to take up to 52 weeks off around the time of the birth of their baby, whether or not they qualify for SMP. This means that mothers can choose to take up to one year off in total.
The rates of SMP, SPP, statutory shared parental pay and statutory adoption pay are £145.18 per week (or 90% of the person's average weekly earnings if that is less than £145.18 for 2018/19.
SMP is payable for a maximum of 39 weeks. The date the baby is due, as shown on the MATB1 certificate, determines the maternity pay period entitlement and not the date the baby is born. The rates of SMP are as follows:
SMP is treated as normal pay.
AWE need to be calculated for two purposes:
The average is calculated by reference to the employee’s relevant period. This is based on an eight week period up to the end of the qualifying week, which is 15 weeks before the baby is due. In some instances subsequent pay rises have to be taken into account when calculating SMP. Earnings for this purpose are the same as for Class 1 NICs and include SSP.
92% of SMP paid can be recovered by deduction from the monthly PAYE payments.
Employers may qualify for Small Employers’ Relief (SER). SER is 100% of SMP plus 3% compensation.
To qualify for SER, the current limits are:
OSPP is paid to partners who take time off to care for the baby or support the mother in the first few weeks after the birth. OSPP was previously known as SPP.
The partner must have:
OSPP is payable for a maximum of two weeks: it must be taken as a block either one week or a complete fortnight but not two single weeks at the following rates:
OSPP is treated as normal pay.
The calculation of AWE and the recovery of OSPP are subject to the same rules as for SMP.
Fathers will have the right to take unpaid leave to attend up to two antenatal appointments.
To qualify for Statutory Adoption Pay (SAP), an employee must meet the same earnings and service criteria as an employee seeking to qualify for SMP. An employee must provide his or her employer with evidence of the adoption and a declaration that he or she has elected to receive SAP. HMRC form SC4 provides a declaration form that can be used. A matching certificate from the adoption agency must be produced to the employer. SAP is paid at the lower rate of SMP and follows the same rules with regard to recovery.
SPL is available to parents whose babies are due on or after 5 April 2015. In the case of adoptions SPL applies in relation to children matched with a person or placed for adoption on or after 5 April 2015.
Employed mothers are still entitled to 52 weeks of maternity leave. The mother can curtail her right to SMP and leave and opt to take SPL and Shared Parental Pay (ShPP). SPL and ShPP will be available provided the parents satisfy the eligibility requirements. The main elements of the scheme are:
Proposals have been announced to extend SPL to allow grandparents to take time off work. The system of shared grandparental leave will allow a mother to share her leave with one nominated working grandparent. SPL is currently limited to the mother's partner. No start date has been set for this extension.
As the scheme payments are statutory it is important that rules of Statutory Sick, Maternity and Paternity Pay are adhered to. If you are an employer in the London area we will be more than happy to provide you with assistance or any additional information required. Please do not hesitate to contact us at Sloane & Co LLP.