Calculating maternity pay
Entitlement to Statutory Maternity Pay and to Maternity Allowance is worked out based on your expected week of childbirth (sometimes referred to as expected week of confinement or EWC).
There is a calculator to help you on the government website.
For the purposes of working out Maternity Pay, a week always begins on a Sunday and ends on a Saturday. Your expected week of childbirth is the week in which the due date falls, according to form MATB1, which is given to you by your doctor or midwife. It does not matter if you have the child earlier or later – even if the actual date of childbirth is planned, e.g. an elective caesarean.
Example – Linda is given a MATB1 form with the date of 18th June 2018. The midwife tells her she will be induced on the 1st of June for medical reasons. Linda’s expected week of childbirth is 17th June – 23rd June 2018 inclusive.
How do I calculate my Statutory Maternity Pay?
To work out entitlement to Statutory Maternity Pay you need to check (i) your length of service and (ii) if you have earned enough. An important date for Statutory Maternity Pay is the 15th week before the week the baby is due – this is called the qualifying week. For Linda this is the week 4th – 10th March 2018.
(i) Have I worked long enough?
To have worked for long enough to get Statutory Maternity Pay, you need to have worked for the same employer continuously for 26 weeks by the end the 15th week before the week the baby is due. Being employed for just one day in the qualifying week will count. For Linda this means that she would have had to have started employment on or before 16th September 2017, and still be employed on 4th March 2018.
(ii) Have I earned enough?
To get SMP, you need to have earned at least the lower earnings limit on average in the calculation period. The calculation period is the eight weeks ending with the last payslip you receive before the end of the qualifying week.
This will usually be two month’s payslips, or if you are paid weekly, eight weeks of payslips.
If you are paid weekly, you add up the total amount paid in the calculation period and divide it by the number of weeks it represents (this will usually be eight but where someone is paid early or late it might be a different amount).
If you are paid monthly, you must add together the two payslips then multiply by six to get an annual figure, which you then divide by 52. For the first six weeks, SMP is paid at 90 per cent of your average earnings in the calculation period. For the next 33 weeks, it is paid at the same 90 per cent or at the flat rate, whichever is lower.
So if Linda is paid £4,000 in two months of payslips in the calculation period, she must multiply this by 6 to get an annual figure of £24,000 and divide by 52 to get a weekly average of £461.54. Her Statutory Maternity Pay will be £415.38 for 6 weeks, then drop to the flat rate for 33 weeks.
If a pay-rise is awarded whilst you’re on maternity leave (and you would have received it if you were not on maternity leave), you are still treated as receiving it. To determine how much Statutory Maternity Pay (SMP) you should get, your employer should recalculate your average weekly earnings as if these earnings included the pay-rise. The rule is that your SMP is calculated according to your average earnings during an eight-week reference period ending with the Qualifying Week . But, a pay-rise which is (or would have been) awarded after the start of this eight week reference period but before the end of statutory maternity leave must be taken into account in calculating SMP, as if the pay rise had taken effect at the start of the reference period. In effect, this means that the pay rise is backdated for SMP purposes, and you – on maternity leave – will receive it earlier than other employees. Even if the pay rise is awarded in the last week of statutory maternity leave (by which time the you may have already exhausted your entitlement to SMP), your whole SMP entitlement from day one will have to be recalculated and a top-up payment made.
How do I calculate my Maternity Allowance?
To work out Maternity Allowance you also need to work out if you meet an earnings condition and an employment condition, but they are very different from SMP.
(i) Have I worked long enough?
In the 66 weeks before the expected week of childbirth, you must have worked, or been treated as working, for 26 weeks. These weeks do not have to be consecutive or for the same employer. You can mix employed and self employed work. For Linda, the 66 weeks begins on 12th March 2017. The Maternity Allowance claim form has a handy table telling you when the 66 weeks start.
(ii) Have I earned enough?
You need to provide payslips for 13 weeks where you have earned at least £30 per week. This is part of the 26 weeks of work, not in addition to it. Where you are employed you would use your actual earnings. You are expected to pick the weeks where you have earned the most to maximise your Maternity Allowance.
If you are self employed and have paid 13 weeks of class 2 National Insurance in respect of weeks in your calculation period, your earnings are assumed to be enough to get you maximum Maternity Allowance of £140.98 per week (£145.18 from April 2018). At current rates that would mean your earnings were assumed to be £156.64 per week (90% of £156.64 = £140.98) At April 2018 rates that would mean your earnings were assumed to be £161.31 (90% of £161.31= £145.18) . If you are self employed and haven’t been paying Class 2 National Insurance, you are treated as having earnings of £30 per week (and will only receive 90% of £30 = £27 per week).
Because Class 2 isn’t paid now until the end of the tax year, when you claim MA, you will be given the opportunity to pay Class 2 early if this will help you qualify for the higher rate of MA.
Geena has being doing a combination of employed and self employed work. She worked for five weeks as an employee earning £100 per week. Then she started a small business alongside the employed work, but didn’t pay any Class 2 as she hadn’t reached the end of the tax year. However after three weeks she was made redundant from her employed work and only did the self employed work.
5 x 100 = 500
3 x 130 = 390
5 x 30 = 150
Total = 1040. £1040 / 13 = £80 per week average. Geena’s Maternity Allowance will be £72 per week (90% of £80). When she claims, the DWP will let her know how many weeks of Class 2 she would need to pay to be treated as having earnings of £156.64 (or £161.31 from April 2018) and so get the maximum rate of MA. For Geena, that will be 13 weeks because she has never earned this much from employed work either.