By Nic Hart & Liam Hutton
The UK Government guidance sets out the employers obligations for family leave and the ability to claim for enhanced (earnings related) contractual pay through the scheme. As below;
Individuals who are on or plan to take Maternity Leave must take at least 2 weeks off work (4 weeks if they work in a factory or workshop) immediately following the birth of their baby. This is a health and safety requirement. In practice, most women start their Maternity Leave before they give birth.
If your employee is eligible for Statutory Maternity Pay (SMP) or Maternity Allowance, the normal rules apply, and they are entitled to claim up to 39 weeks of statutory pay or allowance.
Employees who qualify for SMP, will still be eligible for 90% of their average weekly earnings in the first 6 weeks, followed by 33 weeks of pay paid at 90% of their average weekly earnings or the statutory flat rate (whichever is lower). The statutory flat rate is currently £148.68 a week, rising to £151.20 a week from April 2020.
If you offer enhanced (earnings related) contractual pay to women on Maternity Leave, this is included as wage costs that you can claim through the scheme.
The same principles apply where your employee qualifies for contractual adoption, paternity or shared parental pay.
Questions have been asked whether an employee may be furloughed whilst on maternity leave. It is not completely clear that an employee will either be on maternity, paternity, adoption leave or furlough leave (given enhanced contractual pay can be claimed through the scheme). In the absence of complete clarity this raises the question whether an employee may cut short maternity leave and be placed on furlough leave.
The Maternity and Parental Leave etc. Regulations 1999 (reg. 11.1) state that an employee has to give eight weeks’ notice to return early from maternity leave, however an employer and employee can agree a shorter notice period, or no notice period at all, to return to work and then be placed on furlough leave.
If an employee reduces their maternity or adoption leave (or Maternity Allowance) and pay entitlement, the remaining leave will be available as Shared Parental Leave and the remaining weeks of pay will be available as Shared Parental Pay.
This remaining leave with can be shared with the employees partner if they are also eligible for Shared Parental Leave. The Shared Parental Leave can be taken until the child is one year old (birth parents) or one year from the date the child was placed with the employee (for adoption).
With regard to Paternity Leave, the employee can take one or two weeks’ paternity leave within the first 56 days following the child’s birth and one or more periods of shared parental leave at any time before the child’s first birthday. However, reg. 4 of the Paternity and Adoption Leave (Amendment) Regulations 2014 (SI 2014/2112) provides that an employee cannot take paternity leave if they have already taken a period of shared parental leave in relation to the same child. Therefore, an employee can choose to take both paternity leave and shared parental leave, but the period of paternity leave must come first. Therefore, any employee taking paternity leave must take this before he goes on furlough leave if he wishes to take shared parental leave at a later date.
With regard to employees who are on unpaid Maternity/ Adoption/ Parental Leave, the guidance states that “Employees on unpaid leave cannot be furloughed, unless they were placed on unpaid leave after 28 February.”
The Working Families group raised this issue with HMRC. HMRC confirmed on Twitter on 31 March that if an employee is coming back from unpaid maternity/adoption/parental leave, they can be treated like an employee whose pay varies. This means, an employer could claim for the higher of either:
- the same month’s earning from the previous year (dependent on when the employer applies to the scheme)
- average monthly earnings from the 2019-20 tax year
- If an employee has been employed for less than a year, the employer should claim for an average of the employees monthly earnings since they started work.
For More Information
Please contact Nic Hart or Liam Hutton, or another member of the Duane Morris London Office.