Statutory Payments - a Guide for Employers

25 January 2017

It is that time of year again when the government announces the changes to the statutory payment rates and it is up to employers to ensure they are ready to comply with the changes.There are a number of Statutory Payments that employers and payroll service managers need to be aware of and these include:

  • Statutory Maternity Pay/Adoption Pay
  • Statutory Sick Pay
  • Statutory Paternity Pay
  • Statutory Shared Parental Pay
  • Statutory Redundancy Pay

Not all employees qualify for statutory payments, however, and a number of factors can affect the entitlement of statutory payments.

The figures for these are announced at the end of the calendar year and are effective from the start of the tax year in April. For Tax Year 2017/2018 the rates for statutory payments are as follows:

Statutory Adoption Pay / Statutory Maternity Pay

As mentioned there are factors that can affect the entitlement of Statutory Maternity Pay (SMP). To qualify for SMP your employee must earn a minimum of £112 per week, prove that they are pregnant (MATB1 form from your Doctor/Midwife) and have worked continuously for at least 26 weeks up to the qualifying week (15 weeks before the due date). If they do not qualify then you must give them a SMP1 form explaining why they cannot receive SMP. They may, however, be able to claim Maternity Allowance, which would be explained on the SMP1 form.

The rate for SMP for tax year 2017/18 is £140.98 per week. Employees can be paid for up to 39 weeks.  However, the first 6 weeks of their SMP is based on 90% of their average weekly earnings (AWE) and the remaining 33 weeks is £140.98 or 90% of their AWE – whichever is the lowest.

Statutory Paternity Pay 

Like SMP, employees who are entitled to Statutory Paternity Pay (SPP) must earn a minimum of £112 per week. If they do qualify for SPP, they can either take 1 week or 2 consecutive weeks.

If an employee is entitled to SPP they will be entitled to £140.98 per week or 90% of their average weekly earnings – as with SMP whichever is lower is what the employee will receive.

Statutory Shared Parental Leave

Employees can receive Statutory Shared Parental Pay (ShPP) if they are eligible for SMP/SAP/SPP.

Before the father can receive ShPP, the mother must give her employer notice of the date she plans to end her Maternity/Adoption Pay. Once the payment has stopped, she cannot restart this.

The rate for Shared Parental Leave is £140.98 per week or 90% of their average weekly earnings – whichever is lower, just like SMP. To receive the pay, your employee must give at least 8 weeks written notice of the date they plan to start.

Employer Reclaim

An employer can claim up to 92% of employees' Statutory Maternity, Paternity, Adoption and Shared Parental Pay. The additional cost over and above this remains an employer burden.

If you qualify for Small Employers Relief, you can reclaim 103% of the statutory payments. Employers qualify for this if they have paid less than £45,00 in Class 1 National Insurance in the last tax year.

To reclaim the payments, Employers should include them in their Employer Payment Summary (EPS) to HMRC.

Statutory Sick Pay         

To qualify for SSP employees must also earn a minimum of £112 per week. They have also got to be off work sick for 4 or more days in a row – this includes non-working days.

If an employee is sick you are required to pay statutory sick pay (SSP) for up to 28 weeks at £89.35 per week. However, in the first three days of sickness no payment is made until the fourth day of absence, when the employee then qualifies to receive statutory sick pay. If an employee has been paid SSP within the last 8 weeks and is then still eligible to receive SSP, they do not require to wait the 3 waiting days before SSP is received.

An employer can no longer reclaim SSP for sick leave and the cost is a full burden on the employer.

Statutory Redundancy pay

This is calculated differently and It doesn’t have a set amount like the other Statutory Payments. It is based on an employee’s age, weekly pay and number of years that they have been in their job. Therefore, the rate can vary. However, an employee will only qualify for Statutory Redundancy Pay if they have worked for you for at least 2 years.

If the employee is aged between these bands they will receive the following for each year they have worked;

  • 18 – 22 would receive half a week’s pay
  • 22 – 40 would receive 1 weeks’ pay
  • 41 years and older would receive 1 and a half weeks pay.

The maximum weekly amount that they can receive is £479 – even if they earn more per week. An employee can also only receive Statutory Redundancy Pay for a maximum of 20 years of work. So for example, if they worked for you for 25 years, they would only receive statutory redundancy pay for 20 years.

Like SSP, Statutory Redundancy Pay is not reclaimable by an employer.

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