Key changes for the new 2017/18 Tax Year
Child related statutory payments can be very confusing and complicated to calculate. The relationship between employee and child will decide how much pay and leave the employee is entitled to. Leave and possible pay is available for, Biological mothers and fathers, Adoptive parents and Parents of a surrogate child. There is a maximum amount of leave and pay stipulated by legislation and some individuals may qualify for leave but not pay.
Different types of child related leave and pay
Statutory maternity leave – Employees who are pregnant
Entitled to 52 weeks leave, the first 26 weeks being ordinary maternity leave and the last 26 weeks being additional maternity leave. An employee must take a minimum of 2 weeks leave, or 4 weeks if working in a factory. The leave can start up to 11 weeks before the due date, the day after the baby is born (if born early) or automatically if pregnancy related illness 4 weeks before due date. Employees are entitled to 39 weeks of pay, the first 6 weeks at 90% of their average weekly earnings and then 33 weeks at 90% of their average weekly earnings or £151.97 whichever is lower.
Statutory Paternity leave – For people supporting the mother/primary carer, (they can be either male or female when adopting).
Statutory paternity can be considered in situations where a child’s main caregiver will be, having a baby, adopting or surrogacy arrangement. A minimum of 1 week and max of 2 weeks can be taken, they must be completed by day 56 of the birth. Employees are entitled to 1 or 2 weeks at 90% of their average weekly earnings or £151.97 whichever is lower.
Statutory adoption leave – Employees who adopt, either on their own or as part of a couple.
If adopting as a couple only 1 person can take statutory adoption leave, the other person has to apply for statutory paternity leave. Entitled to 52 weeks leave, the first 26 weeks being ordinary adoption leave and the last 26 weeks being additional adoption leave. The leave can start the day the child starts living with the employee, up to 14 days before, when employee has been matched, day the child arrives in the UK or the day or day after it is born (surrogacy). Employees are entitled to 39 weeks of pay, the first 6 weeks at 90% of their average weekly earnings and then 33 weeks at 90% of their average weekly earnings or £151.97 whichever is lower.
Statutory parental bereavement leave.
If a death of a child under the age of 18, including unborn (at least 24 weeks into pregnancy) occurs the employee is entitled to 2 weeks statutory leave which can be taken as 2 weeks together or single weeks, but must be used within 56 weeks. Employees are entitled to 1 or 2 weeks at 90% of their average weekly earnings or £151.97 whichever is lower.
Terms and conditions of employment – it is worth knowing that an employee on child related statutory leave and pay is entitled to the same terms and conditions as they had before going on leave.
There are 4 qualifying conditions to be eligible for leave and pay:
1 – Employment service test – must be continuously employed for at least 26 weeks continuing into the ‘qualifying week’ - the 15th week before the expected week of childbirth to receive statutory pay, this does not affect statutory leave.
2 - Average earnings tests – Must have an AWE’s if £120 per week to receive statutory pay, does not affect statutory leave.
3 – Documentary evidence - statutory maternity pay, must submit MAT B1 certificate. Statutory Paternity pay, must provide SC3 by the end of the mothers qualifying week (SC4 if adoption SC5 over sees), statutory adoption pay, evidence must be received no later than 28 weeks before leave starts and statutory parental bereavement pay must submit SPBP3
4 – Notifying the employer - statutory maternity leave, must give notice no longer than 15 weeks before the baby is due, statutory paternity leave, must give notice no longer than 15 weeks before the baby is due or if adopting 7 days before being matched, statutory adoption leave, UK adoptions, must be within 7 days of being matched, overseas must be within 28 days of adoption notice and surrogacy must be 15 weeks before the baby is due. Statutory parental bereavement leave, the notice must be given before the employee is due to start work.
Employer recovery of child related statutory payments
The employer is responsible for funding and paying for statutory leave, they can however recover a proportion of the payments. HMRC does not pay the money back the employer recovers the amount by reducing the value of their monthly PAYE and NIC’s. Most employers can claim 92%, small employers can cam 103%.