Providing employees with enhanced contractual rights when it comes to maternity pay can help to attract and retain top talent within the workforce. However, employers should first understand how enhanced maternity pay provisions operate in practice, from how these differ to statutory maternity pay to the conditions that can be used to qualify any enhanced pay rights that a new or expectant mother may be contractually entitled to.
What is enhanced maternity pay?
As a matter of law, all UK employers must meet a worker’s minimum statutory rights, including the right to statutory maternity pay (SMP). This means, as an absolute minimum, the employer must pay at least the SMP rate for the qualifying number of weeks to any eligible worker. However, the employer may want to offer a higher contractual rate and/or a longer contractual payment period. This is known as enhanced maternity pay.
Enhanced maternity pay is any form of maternity pay offered by an employer under the terms of the worker’s contract of employment, which provides a new or expectant mother with additional rights, over and above those to which they would otherwise be entitled.
How is enhanced maternity pay different to statutory maternity pay?
Enhanced maternity pay is maternity pay provided by an employer to a new or expectant mother at a higher rate than the statutory minimum. SMP is paid for up to 39 weeks at a rate of 90% of an individual’s average gross weekly earnings for the first 6 weeks, and £156.66 or 90% of their average gross weekly earnings, whichever is the lower, for the following 33 weeks. For example, enhanced maternity pay could be where the employer offers to pay a qualifying worker at their full rate of pay for a period of 6 weeks, reverting to either a half rate of pay and/or the standard rate of SMP for the remaining period.
Additionally, the employer may be prepared to extend the period over which enhanced maternity pay will be given. For example, the employer could agree to pay a qualifying worker for the full duration of their time off work, where employees are entitled to take 52 weeks’ statutory maternity leave. If a worker takes the full 52 weeks’, the last 13 weeks will usually be unpaid, unless their employment contract offers enhanced maternity pay.
The employer could also choose to impose more or less onerous qualifying conditions for a worker to be eligible for enhanced maternity pay. For example, a worker’s contract could include provision for enhanced pay as a day one right, without the need for any qualifying period of service, or removal of the minimum earnings requirement that must be satisfied to be eligible for statutory pay. To qualify for SMP, a worker must earn on average at least £123 a week for 8 weeks before the ‘qualifying week’ and have worked for their employer continuously for at least 26 weeks continuing into the ‘qualifying week’. The qualifying week is the 15th week before the expected week of childbirth.
Conversely, however, to be eligible for enhanced maternity pay, the employer could decide to set a longer period of service than that required for SMP, so as to reward loyal employees. It is not uncommon for employers to require a period of 52 weeks’ service for enhanced maternity pay rights. Whilst the employer cannot make it more difficult for an individual to qualify for SMP, they are free to decide what conditions a person must meet to qualify for any enhanced rights, either for everyone or even on a case by-case basis.
Why offer enhanced maternity pay?
It is entirely at the employer’s discretion whether they choose to offer enhanced maternity pay. However, where an employer opts to provide a higher contractual rate and/or a longer contractual period of maternity pay, this can act as an effective incentive for recruiting and retaining top talent. Very often, women will be deterred from working for an employer unless they are offered enhanced contractual rights when it comes to maternity pay.
Given that enhanced maternity pay is reportedly provided for by around two-thirds of UK organisations, any employer failing to offer more than the statutory minimum may find it difficult to compete in the current labour market, where demand for good workers is high. As such, many employers may form the view that the recruitment and retention benefits from offering enhanced maternity pay, not to mention the potential to boost employee engagement and employee wellbeing, easily outweighs the additional costs involved.
However, there is a significant degree of variation in existing enhanced maternity pay schemes, going from offering a slightly higher rate than the statutory minimum to a markedly better rate over much longer periods. In broad terms, the three main variations of enhanced maternity pay schemes adopted by UK employers are as follows:
- Full pay for 6 weeks, rather than 90% pay, followed by 33 weeks at standard rate SMP
- Full pay for 12/13 weeks, followed by 27/26 weeks at standard rate SMP
- Full pay for 13 weeks, followed by 13 weeks at half pay and reverting back to standard rate SMP for the remaining 13 weeks.
The majority of employers opt for either the first or second schemes, these often being the most cost effective for the business, whilst still balancing the needs of new and expectant mothers. However, there are all sorts of different variations of maternity pay provisions, where it may come down to how much a business can realistically afford to offer.
When should enhanced maternity pay start?
The point at which enhanced maternity pay becomes payable is again at the employer’s discretion. In many cases, enhanced maternity pay provisions will operate alongside the right to statutory maternity leave and the point at which this can be taken.
Statutory maternity leave can be taken at any time from 11 weeks before the expected week of childbirth and will run for a total of 52 weeks or, alternatively, the day after the birth if the baby is early. An enhanced maternity pay scheme will therefore typically run from the day the baby is born or the 29th week of pregnancy, whichever is earlier, or any time thereafter when the new or expectant mother decides to start her period of leave. In some cases, enhanced maternity pay might even run for the fall duration of that leave.
In all cases, however, regardless of the terms agreed, enhanced maternity pay provisions must be set out clearly, in comprehensible language. This is so the new or expectant mother can easily assess when and what rate of pay will fall due once maternity leave begins, as well as for long that pay will continue, and any variations or reductions in the rate.
Having agreed to pay an enhanced rate and/or period of maternity pay, possibly with or without any qualifying period of service or minimum earnings requirement, the employer will then be contractually bound by those terms. A contract of employment is a legally binding agreement between the employer and employee where, once signed, this binds the parties to those terms. As such, where a worker takes maternity leave during the course of their employment, and they meet the requirements for enhanced maternity pay, this must be paid in accordance with the terms of the employment contract for the period required.
Even if an individual does not qualify for an enhanced rate of maternity pay under the terms of their contract, the employer must still pay any SMP, provided the new or expectant mother meets the qualifying conditions for this. The employer may also want to consider alternative benefits where an individual does not qualify for enhanced maternity pay, or the business has been unable to offer enhanced pay, in this way fostering a more supportive environment for women in the workplace. These could include things like flexibility around working hours, or allowing the employee to work remotely or return to work part-time.
In the same way that the employer is bound to pay enhanced maternity pay, the employee is also bound by any contractual conditions attached to these enhanced rights.
It is not uncommon for an employer offering enhanced maternity pay to attach certain conditions within the contract of employment. For example, the employer might require an individual to repay some or all of the enhanced amount if they do not to return to work when their maternity leave comes to an end or they leave shortly after. The clawback is usually the difference between the EMP and SMP amounts, where the worker cannot be asked to pay back anything below the statutory rate of pay to which they would have been entitled. In this way, the employer can protect the business from worker’s seeking to take advantage of favourable maternity pay conditions, being paid where they plan to leave.
However, any clawback conditions attached to a worker’s right to receive enhanced maternity pay must be clearly set out within their contract of employment. The employer should also remind expectant mothers, either formally or informally, at the point at which notice of maternity leave is given to the employer, of their reciprocal contractual obligations and the employer’s right to recoup any additional pay in certain circumstances.
As with any provisions for enhanced maternity pay, contractual clawback conditions can vary. For example, these can range from a minimum length of time an employee must return to the business before no repayment is required, commonly 3-6 months, to a sliding scale of repayments depending on the period of time the employee has been back at work.
The policy may even provide a financial bonus on a person’s return to work, in this way enticing women back into the workplace, rather than imposing clawback conditions.
What notice should an employee give for enhanced maternity pay?
In almost all cases, as with statutory maternity pay, the employer will require the worker to provide proof of pregnancy and notice as to when they would like their statutory maternity pay to start. This will usually be a prerequisite to being entitled to enhanced maternity pay, in this way allowing the employer to plan in advance for temporary cover. The proof and notice requirements will also usually mirror the requirements to qualify for SMP.
To qualify for SMP, a worker must tell their employer that they want to stop work to have a baby and the day they want their SMP to start. They must give at least 28 days’ notice, and in writing if the employer requests this, together with proof that they are pregnant within 21 days of the SMP start date. This could be a letter from a doctor or midwife, or a MATB1 certificate, which will be issued by doctors and midwives no more than 20 weeks before the due date. The employer must then confirm within 28 days how much SMP the individual will get, as well as when this will start and stop. If the employer decides that the individual is not eligible, they must issue Form SMP1 within 7 days setting out their reasons.
For statutory maternity leave, the notice period that must be given to the employer is much longer, where the employee must tell their employer at least 15 weeks before their due date when the baby is due and when they want to start their maternity leave. The employer can again ask for this in writing, and must write to the employee within 28 days confirming their start and end dates. However, most women give notice for SMP at the same time as notice for maternity leave, where SMP also usually starts at the same time as maternity leave and is paid in the same way as a person’s wages are normally paid, for example, monthly or weekly. Income tax and National Insurance contributions will also be deducted.
When it comes to enhanced maternity pay, the employer can require the employee to provide notice for maternity leave and maternity pay at the same time.
DavidsonMorris are experienced HR advisers and employment law specialists offering guidance and support to employers in relation to statutory and enhanced maternity leave, pay and rights. To discuss your maternity offering, contact us.
Enhanced maternity pay FAQs
What does enhanced maternity pay mean?
Enhanced maternity pay refers to any contractual rights to be paid over and above the statutory minimum, for example, the right to either a higher weekly rate of pay and/or to be paid over a longer period of time.
Do you have to pay back enhanced maternity pay?
Whether or not enhanced maternity pay has to be paid back will depend on your employment contact. Some contracts include clawback provisions requiring repayment of the difference between enhanced and statutory maternity pay if a worker doesn’t return to work.
How common is enhanced maternity pay?
Enhanced maternity pay is now reportedly paid by around two-thirds of all UK employers, where any failure to pay more than the statutory minimum in the current labour market may affect the recruitment and retention rates of a business.
Is enhanced maternity pay in addition to SMP?
Enhanced maternity pay (EMP) is not in addition to statutory maternity pay (SMP), rather EMP is classed as anything over and above SMP, either in terms of the weekly rate or the duration over which payments are made.
Last updated: 20 December 2022