Statutory Sick, Maternity and Paternity Pay
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.
Period of incapacity for work (PIW)
A PIW consists of four or more calendar days of sickness in a row. These do not have to be normal working days.
Where one PIW starts within eight weeks of the end of a previous PIW the periods can be linked.
Qualifying days (QDs)
These are usually the employee’s normal working days unless other days have been agreed.
SSP is paid for each qualifying day once the waiting days have passed.
Waiting days (WDs)
The first three QDs in a PIW are called WDs. SSP is not payable for WDs.
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 £112 for 2015/16 and 2016/17.
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 £88.45 (for 2015/16 and 2016/17) but it is computed at a daily rate.
The 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 currently have a daily rate of £17.69.
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.
Recovery of SSP
With effect from 6 April 2014 the Percentage Threshold Scheme (PTS) which enabled employers falling within certain limits of the scheme to recover some of their SSP has been abolished.
The PTS enabled employers to recover some of the SSP paid to their employees if the total SSP paid in a tax month is greater than 13% of their gross Class 1 NICs (employers' and employees') liability for that month.
Employers will have until the end of 2015/16 to recover SSP paid for sickness absences occurring before the end of 2013/14.
PAYE and records
SSP is included in gross pay and PAYE operated as normal.
In line with the abolition of the Percentage Threshold Scheme and the introduction of the Statutory Sick Pay (Maintenance of Records) (Revocation) Regulations, with effect from 6 April 2014, employers are no longer required to maintain minimum statutory SSP records to demonstrate compliance with SSP obligations.
However, it is best practice to continue to 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 amount payable
The rates of statutory maternity pay, statutory paternity pay, statutory shared parental pay and statutory adoption pay are frozen as for 2015/16 at £139.58 per week (or 90% of the person's average weekly earnings if that is less than £139.58).
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.
Average weekly earnings (AWE)
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 NIC and include SSP.
Recovery of SMP
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:
Glossary of terms
Week baby due
The week in which the baby is expected to be born. This starts on a Sunday.
Qualifying week (QW)
The 15th week before the week baby due.
The week baby due and QW are easy to establish using software or online calculators which are available through GOV.UK Basic PAYE tools.
Maternity Pay Period (MPP)
The period of up to 39 weeks during which SMP can be paid.
Maternity certificate provided by a midwife or doctor. This is available up to 20 weeks before the baby is due. SMP cannot be paid without this.
Ordinary Statutory Paternity Pay (OSPP)
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 Statutory Paternity Pay.
It is available to:
The partner must have:
The amount payable
OSPP is payable for a maximum of 2 weeks, it must be taken as a block either 1 week or a complete fortnight but not 2 single weeks at the following rates:
the lower of:
OSPP is treated as normal pay.
The calculation of average weekly earnings and the recovery of OSPP are subject to the same rules as for SMP.
Fathers 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.
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 same rates as SMP and follows the same rules with regard to recovery.
Shared parental leave (SPL)
Shared Parental Leave is available to parents whose babies are due on or after 5 April 2015. In the case of adoptions SPL will apply 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 ShPL 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:
Employees who take ShPL are protected from less favourable treatment as they will have the right to return to the same job if the total leave taken is 26 weeks or less in aggregate, even if the leave is taken in discontinuous blocks.
Any subsequent leave will attract the right to return to the same job, or if that is not reasonably practicable, a similar job.
It is up to the parents how they share ShPL – they can take it in turns or take time off together, provided they take no more than 52 weeks of this leave, combined in total.
Additional paternity leave and pay was abolished for babies due from 5 April 2015.
ShPP is calculated in the same way as SMP.
Plans to extend SPL to grandparents
SPL is to be extended 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. Shared parental leave is currently limited to the mother's partner, this is due to be implemented during 2018.
As the scheme payments are statutory it is important that rules are adhered to and we will be more than happy to provide you with assistance or any additional information required. Please do not hesitate to contact us.
For information of users: This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.
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Richard is a qualified CIMA accountant with around twenty years’ experience and runs his own accountancy practice in Windsor & Maidenhead. Richard joined The Children’s Heart Federation (CHF) in 2000 where...