Right to maternity pay as a sole-trader: ask the expert

I’m currently on maternity leave getting statutory maternity pay. In my time on maternity leave I have started a business as a sole trader. I’m pretty sure my employer know this now as we use the same social networks. Am I jeopardising my maternity pay by starting this business?

The general rule is that if you begin a new job after your Statutory Maternity Pay (SMP) has started, you lose your entitlement to SMP (s.165(6) Social Security Contributions and Benefits Act 1992). However, this rule only applies if you start work for another ’employer’. As you are working as a sole trader and are self employed, then there is an argument that this rule does not apply to you and your employer should continue to pay your SMP. The other issue that may arise however, is your duties to your employer. If the new business you are setting up is in competition with your employer’s, this may be a breach of your contract of employment. You should check your contract to identify whether you are permitted to start a new business and if so you should bear in mind your existing duties to your employer e.g. to keep their confidential information confidential.

Comments [1]

  • Anonymous says:

    Hello, I was wishing to do some freelance work whilst on maternity leave from my current employer. I contact HMRC to register as a sole trader, after reading this information. They advised me that if I register as a sole trader I will lost any maternity entitlement I would have recieved….???

    Editor: I am getting our employment lawyer to respond. The answer will be posted shortly.

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