You’re about to start maternity leave and want to know what your options are. Firstly, what maternity pay can you get and how is it calculated? Secondly, what would the impact be on your maternity pay if you start a new job or a new freelance role or business during your maternity leave?
If you are entitled to statutory maternity pay, it is paid for a period of up to 39 weeks as follows: –
The first 6 weeks are payable at the higher rate of SMP, which is 90% of your “normal weekly” earnings;
The remaining 33 weeks are paid at the lower rate of SMP (currently £145.18 per week) or 90% of your average weekly earnings, whichever is less.
The rate payable therefore depends on your “normal weekly” earnings. These are calculated as a weekly average of your total gross earnings from your employer (and associated employers) during a particular reference period (the “relevant period”).
As a rule of thumb, the earnings taken into account for monthly paid employees are those set out on the last two payslips before the Qualifying Week (which is the 15th week before your Expected Week of Confinement / Childbirth). For weekly paid employees, the last eight payslips before the Qualifying Week are taken into account.
Looking in more detail, the relevant period ends with the last normal pay day on or before the end of the Qualifying Week and begins after the last normal payday at least 8 weeks earlier (Regulation 21(3) of the SMP Regulations). Therefore, to calculate maternity pay, find the relevant period:-
- Take the last normal payday on or before the end of the Qualifying Week. (If you have already given birth by then, take the last normal payday before the week of birth). That normal payday is the last day of the relevant period.
- Count back 8 weeks from that day.
- Take the last normal payday before that date. The day after that payday is the first day of the relevant period.
NB: if no “normal payday” is identifiable from your contract or from the employer’s normal practice, actual payment days are used.
What happens to SMP if I do other paid work on maternity leave?
The good news is that you can do self-employed work during maternity leave without any impact on your Statutory Maternity Pay
However, if you do not qualify for SMP and are in receipt of Maternity Allowance
you cannot do more than 10 paid Keeping in Touch Days during your maternity leave until your maternity pay is stopped.
Many women who run their own businesses worry about the implications of taking leave for the continuity of their business. Workingmums.co.uk
receives lots of questions from women who are worried about how to keep their business ticking over while they are on maternity leave. The advice is that your maternity pay will only end if you do paid work during your maternity leave. However, you can draw down profits from the business without maternity pay being affected.
If you start a new paid job during maternity leave you should inform HMRC and give your due notice. If you do not give in your notice, you will still be considered an employee of the first company. Your SMP will stop the week you start the new job. You can get round this by starting the new job in the unpaid part of your maternity leave [after nine months]. If you have not given in and served your notice, you should also check your contract to see if you are required to inform your employer if you take up another job. For example, you may be required to obtain permission from your manager. Such permission should not be unreasonably withheld.
For enhanced maternity pay policies, you need to check your company’s policy as some include a clause about paying back the enhanced part of your pay if you do not return to work after maternity leave, usually for a specified period.