Statutory Maternity Pay SMP

Intro to Statutory Maternity Pay SMP?

Statutory Maternity Pay (SMP) is a government-mandated benefit in the United Kingdom that provides financial support to employed women during their maternity leave. This program ensures that eligible employees continue to receive income while away from work before and after childbirth, allowing them to focus on their health and the care of their newborn. For employers and HR professionals, understanding SMP requirements, calculations, and administration is essential for compliance with UK employment law and for supporting employees during this significant life transition.

Definition of Statutory Maternity Pay SMP

Statutory Maternity Pay (SMP) is a UK government-mandated payment made by employers to eligible employees who take time off work to have a baby. It provides financial support for up to 39 weeks of maternity leave, with the employer typically able to reclaim most or all of this cost from the government.

To qualify for SMP, an employee must:

• Have been continuously employed by the same employer for at least 26 weeks by the end of the “qualifying week” (the 15th week before the expected week of childbirth)
• Have average weekly earnings at or above the Lower Earnings Limit for National Insurance contributions
• Provide proper notification of pregnancy to their employer, including the expected week of childbirth and intended start date of maternity leave
• Supply medical evidence of pregnancy, usually in the form of a MATB1 certificate from a doctor or midwife

SMP is paid at two different rates:

• First 6 weeks: 90% of the employee’s average weekly earnings (with no upper limit)
• Remaining 33 weeks: The lower of either the standard rate (£172.48 per week as of April 2023, subject to annual changes) or 90% of average weekly earnings

Employers are legally obligated to pay SMP to eligible employees but can recover some or all of the cost through reduced National Insurance contributions or direct payments from HMRC. Small employers may be eligible to reclaim 103% of SMP paid, while larger employers can reclaim 92%.

It’s important to note that SMP is subject to tax and National Insurance deductions like regular wages. Employees who don’t qualify for SMP may still be eligible for Maternity Allowance, a different benefit paid directly by the government rather than through the employer.

This definition reflects UK regulations as of 2023. As with all statutory benefits, the specifics of SMP—including rates, eligibility criteria, and administration procedures—are subject to change through government legislation.

Importance of Statutory Maternity Pay SMP in HR

Statutory Maternity Pay plays a multifaceted and significant role in organizational HR functions, extending far beyond mere legal compliance:

Legal Compliance and Risk Management: SMP represents a foundational legal obligation for UK employers, with non-compliance potentially resulting in significant penalties, employment tribunal claims, and reputational damage. HR departments bear primary responsibility for ensuring proper implementation of SMP policies, accurate calculations, timely payments, and thorough documentation. This compliance function requires HR to stay current with regularly updated government regulations, including rate changes, qualification criteria adjustments, and procedural requirements.

Talent Retention and Recruitment: Effective SMP management directly impacts an organization’s ability to retain valuable female employees and attract new talent. Women making career decisions often evaluate potential employers partly based on their handling of maternity benefits. Organizations that administer SMP efficiently while potentially offering enhanced packages beyond the statutory minimum gain competitive advantage in talent markets. HR’s approach to maternity support signals broader organizational values regarding diversity, inclusion, and work-life balance, making SMP administration a strategic talent management concern.

Financial Planning and Budgeting: HR departments play a crucial role in forecasting and managing the financial implications of maternity leave, including SMP payments, temporary replacement costs, and reclaim processes. While employers can recover much of their SMP expenditure, the administrative mechanisms require careful management. Proper budgeting for maternity-related costs helps organizations maintain operational continuity while supporting employees, making SMP a key component of workforce financial planning.

Employee Experience and Engagement: The quality of SMP administration significantly impacts the maternity leave experience, which represents a vulnerable and important transition period for employees. Clear communication about entitlements, straightforward application procedures, reliable payment processing, and supportive return-to-work policies demonstrate organizational commitment to employee wellbeing. HR’s handling of these processes directly affects employee loyalty, engagement, and post-maternity productivity.

Gender Equality and Organizational Culture: How an organization approaches maternity benefits, including SMP, reflects and shapes its broader stance on gender equality in the workplace. HR departments that champion comprehensive maternity leave policies and smooth SMP administration contribute to creating inclusive cultures where parenthood and career advancement are not mutually exclusive. This cultural dimension extends beyond legal compliance to fundamental organizational values and social responsibility.

As maternity policies continue to evolve globally, with increasing focus on parental leave equity and family-friendly workplaces, SMP administration has become an important component of strategic HR management rather than simply a transactional process. This evolution mirrors broader trends in leave policy development across different jurisdictions.

Examples of Statutory Maternity Pay SMP

The practical application of SMP varies across different employment scenarios. Here are three realistic examples illustrating how SMP calculations and administration work in diverse situations:

Full-Time Office Manager with Consistent Earnings: Sarah is a full-time office manager earning £2,800 per month (£646 per week). She has been with her current employer for three years when she becomes pregnant. Her baby is due on August 15, 2023, making her qualifying week April 23-29, 2023. Sarah provides her MATB1 form to HR in her 20th week of pregnancy and notifies her employer that she intends to start her maternity leave four weeks before her due date (July 18, 2023).

Sarah’s SMP calculation:

• First 6 weeks: 90% of £646 = £581.40 per week
• Remaining 33 weeks: Standard rate of £172.48 (as this is lower than 90% of her earnings)

Sarah’s employer processes her maternity leave request, confirms her eligibility in writing, and calculates her total SMP entitlement of £9,160.44 (£3,488.40 for the first 6 weeks plus £5,691.84 for the remaining 33 weeks). The HR department sets up the payroll system to automatically switch from the higher to the lower rate after 6 weeks and ensures the payments continue even during a company-wide system upgrade scheduled during her leave. They also document the calculation method and relevant dates for HMRC reporting and reclaim purposes.

Part-Time Retail Assistant with Variable Hours: Priya works as a part-time retail assistant with variable hours, typically between 15-25 hours per week at £11 per hour. She has worked for the retail chain for 18 months when she becomes pregnant. In the 8-week relevant period for calculating her average weekly earnings (spanning the qualifying week and the previous 7 weeks), her earnings varied as follows: £165, £220, £192.50, £247.50, £165, £220, £192.50, £247.50, creating an average of £206.25 per week.

Priya’s SMP calculation:

• First 6 weeks: 90% of £206.25 = £185.63 per week
• Remaining 33 weeks: £172.48 (as this is lower than 90% of her average earnings)

Priya’s employer must carefully document how they calculated her average weekly earnings, given her variable hours. The HR team maintains records of her weekly work schedules and corresponding pay during the relevant period to demonstrate compliance with SMP regulations. They also explain to Priya why her SMP amount differs from her colleague who works standard hours, helping her understand how the variable hours calculation works.

Senior Executive with Enhanced Maternity Package: Emma is a senior marketing executive earning £85,000 annually (approximately £1,634 per week). Her employer offers an enhanced maternity benefit that provides full pay for the first 12 weeks of maternity leave, half pay plus SMP for the next 12 weeks, and then standard SMP for the remaining 15 weeks. Emma has been with the company for five years when she becomes pregnant.

Emma’s maternity pay structure:

• Weeks 1-12: Full salary of £1,634 per week (the employer’s enhanced benefit)
• Weeks 13-24: £817 (half salary) plus standard SMP of £172.48, totaling £989.48 per week
• Weeks 25-39: Standard SMP rate of £172.48 per week

In this case, the HR department must track both the statutory element (SMP) and the company’s additional contribution separately for proper financial reporting and government reclaim purposes. They provide Emma with a detailed breakdown showing how her maternity pay is structured across different periods and which portions are statutory versus enhanced benefits. The payroll system is configured to automatically transition between the different payment phases, and the finance department accounts for the enhanced portion as a business expense while reclaiming only the statutory component from HMRC.

These examples demonstrate how SMP calculations and administration must be tailored to different employment situations while maintaining compliance with statutory requirements. They also illustrate the interaction between statutory obligations and enhanced company benefits, as seen in the third example where the employer provides maternity pay above the legal minimum, a practice increasingly common among organizations seeking to enhance their leave policy offerings.

How HRMS platforms like Asanify support Statutory Maternity Pay SMP

Modern HRMS platforms have developed sophisticated capabilities to streamline and enhance the management of Statutory Maternity Pay, offering comprehensive support throughout the entire process:

Automated Eligibility Assessment: Advanced HRMS systems automatically evaluate SMP eligibility by analyzing employment tenure, earnings history, and other qualifying criteria. These systems track the continuous employment requirement (26 weeks by the qualifying week) and monitor whether earnings meet the Lower Earnings Limit threshold. When employees register a pregnancy in the system, the platform can immediately perform preliminary eligibility checks, alerting HR to potential issues before formal leave requests are processed. This automation reduces the risk of eligibility determination errors that could lead to compliance failures or employee dissatisfaction.

Precise Calculation Engines: HRMS platforms incorporate up-to-date SMP calculation rules, automatically determining the correct payment amounts across both rate periods. For employees with variable earnings, these systems can intelligently analyze pay history during the relevant period to establish accurate average weekly earnings. The calculation engines automatically adjust to annual rate changes announced by the government and apply the appropriate formula (90% of earnings or standard rate, whichever is lower) for the second payment period. This precision eliminates manual calculation errors and ensures employees receive exactly what they’re entitled to.

Integrated Leave and Payroll Management: Sophisticated HRMS solutions seamlessly connect maternity leave tracking with payroll processing, automatically implementing payment changes at the appropriate times. These systems schedule the transition from the higher rate (first six weeks) to the standard rate, coordinate maternity payments with regular payroll cycles, and properly apply tax and National Insurance deductions. The integration ensures that SMP payments continue uninterrupted throughout the maternity period, even during payroll processing changes or system updates.

Documentation and Compliance Support: HRMS platforms maintain comprehensive records of all SMP-related documentation, including MATB1 certificates, leave notifications, eligibility assessments, and payment histories. These systems generate the required notices to employees confirming SMP entitlements and expected payment schedules. For compliance purposes, the platforms create audit trails documenting how calculations were performed, what evidence was considered, and when payments were made. This thorough documentation supports both internal governance and external requirements for HMRC reclaim processes.

Government Reclaim Processing: Advanced HRMS solutions automate the complex process of reclaiming SMP payments from the government. These systems track SMP payments separately from other compensation, calculate the appropriate recovery percentage (103% for small employers, 92% for larger ones), and prepare the necessary data for quarterly returns. Some platforms can directly integrate with government systems to streamline the reclaim process, helping organizations recover costs efficiently while maintaining compliance with reporting requirements.

Employee Self-Service and Communication: Modern HRMS platforms provide employee portals where expectant mothers can submit pregnancy notifications, upload required documentation, view eligibility status, and track upcoming SMP payments. These self-service capabilities improve the employee experience by providing transparency and reducing anxiety about payment timing or amounts. Communication templates within the system help HR teams provide consistent, accurate information about SMP entitlements and procedures, ensuring employees understand their benefits throughout the maternity journey.

By integrating these capabilities, HRMS platforms transform what would otherwise be a complex, error-prone manual process into a streamlined, accurate, and positive experience for both HR teams and employees.

FAQs about Statutory Maternity Pay SMP

When and how should an employee notify their employer to claim SMP?

Employees must notify their employer of their pregnancy, expected due date, and intended maternity leave start date at least 15 weeks before their due date (though earlier notification is beneficial for planning purposes). This notification should be in writing, though no specific form is required. Employees must also provide medical evidence of their pregnancy, typically through a MATB1 certificate issued by their midwife or doctor, usually around the 20th week of pregnancy. While the 15-week notice requirement is the legal minimum, employers can request (but not require) earlier notification. If circumstances change, employees can modify their intended start date by providing 28 days’ notice of the new date. Employers must respond to maternity leave notifications within 28 days, confirming the leave dates and SMP entitlements in writing. Late notification doesn’t automatically disqualify an employee from receiving SMP if there was good cause for the delay, such as lack of awareness of the pregnancy.

How is average weekly earnings calculated for SMP when an employee has variable pay?

For employees with variable earnings, average weekly earnings for SMP are calculated using the “relevant period” – the 8-week period ending with the last payday before the end of the qualifying week (the 15th week before the expected week of childbirth). All gross earnings subject to National Insurance contributions during this period are totaled and divided by 8 (or the actual number of weeks worked if the employment started within this period) to determine the average. This calculation includes regular wages, overtime, bonuses, commission, and statutory sick pay. For monthly-paid employees, the calculation converts monthly pay to weekly equivalents by multiplying the monthly amount by 12 and dividing by 52. If an employee had no earnings or unusually low earnings during the relevant period due to pregnancy-related illness, family leave, or certain other statutory absences, an adjusted calculation using a “reference period” before the affected time may be used. This ensures that temporary reductions in earnings don’t unfairly reduce SMP entitlement.

Can an employer offer enhanced maternity pay above the statutory minimum?

Yes, employers can and often do offer enhanced maternity pay packages that exceed the statutory minimum requirements. These enhancements might include: extending the higher rate (90% of earnings) beyond the first 6 weeks; topping up the statutory rate during the lower rate period; offering full pay for a specified period; extending payments beyond the 39-week statutory period; or providing lump-sum bonuses for returning to work after maternity leave. Enhanced schemes must be clearly documented in the employment contract or company policies, specifying eligibility criteria and calculation methods. Importantly, any enhanced scheme must include at minimum the statutory entitlement—employers cannot offer alternative benefits in place of SMP. When administering enhanced schemes, employers must still separately track the statutory portion for government reclaim purposes, as only the statutory element can be recovered through reduced National Insurance contributions. Enhanced maternity benefits have become an important recruitment and retention tool, particularly in competitive industries or for specialized roles.

What happens to SMP if an employee decides to return to work early?

If an employee returns to work before exhausting their 39 weeks of SMP entitlement, their SMP payments will stop immediately. Any work performed for the employer (even a single day) terminates the SMP period, and payments cannot resume later even if the employee takes additional time off. However, “Keeping in Touch” (KIT) days are an exception to this rule—employees can work up to 10 KIT days during maternity leave without affecting their SMP entitlement. These days allow employees to stay connected with the workplace through training, meetings, or partial returns. Employees should provide at least 8 weeks’ notice of their intention to return earlier than originally planned, though this is for planning purposes rather than a legal requirement for SMP. If an employee decides to leave their job entirely during maternity leave, they remain entitled to receive their full SMP for the remainder of the 39-week period, provided they met the eligibility criteria initially. This entitlement continues regardless of resignation, redundancy, or dismissal (except in cases of gross misconduct).

How does an employer recover the cost of SMP payments?

Employers can recover all or most of their SMP expenditure through reductions in their National Insurance contributions or direct payments from HMRC. Small employers—those whose total National Insurance contributions in the previous tax year were £45,000 or less—can reclaim 103% of SMP paid, providing a small financial incentive above the actual cost. Larger employers can reclaim 92% of SMP paid. The recovery process works primarily through the PAYE system, where employers deduct the recoverable amount from their monthly or quarterly National Insurance payments to HMRC. If the recoverable amount exceeds the employer’s National Insurance liability, they can either carry forward the excess to future periods or apply to HMRC for a direct payment. To support these claims, employers must maintain detailed records of SMP payments, including evidence of eligibility, calculation methods, and payment dates. These records must be retained for at least 3 years from the end of the tax year to which they relate. For employers using HMRC’s Real Time Information (RTI) system, SMP reclaim information is included in the Full Payment Submission (FPS) and Employer Payment Summary (EPS).