Statutory Maternity Pay
15th Mar 2010
‘Small’ employers can reclaim 104.5% of SMP payments to employees. To work out the average salary you would get the EWC (Expected Week of Confinement) then go back 15 weeks before baby is due then 8 weeks or 2 months prior to that.
If paid weekly ÷ the total by 8, if paid monthly add the 2 months x 6 ÷ 52 to give an average then 9/10 of the average is paid for the first 6 weeks then the lower rate for 33 weeks. To qualify as a ‘small’ employer your Gross National Insurance payments, that is EE’s and ER’s, must be £45,000.00 or less. Any wage must be ‘reasonable’ and be able to withstand the ‘wholly and exclusively’ test. Clearly salary payments to a wife/partner who has been receiving a minimum wage which is then boosted significantly during the 15 week period to then fall back to the original minimum wage are going to be liable to attack by H M Revenue & Customs. There is no published guidance as to what might be acceptable however I propose that for our clients in circumstances where the wife/partner has been in receipt of the NI free maximum – currently £5,720 per annum, that the client is advised not to increase the salary above the National Minimum Wage figure of 35 hours x £5.80 = £10,556. To receive the flat rate £123 per week the weekly wage needs to be at least: For 2009/10 £137 per week £7,124 per year For 2010/11 £139 per week £7,228 per year Employers who are not ‘small’ can only recover 92% of SMP payments.Author: Emma Glover (emma.glover@rowlandsaccountants.co.uk)