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SMP calculation first 6 weeks. What counts as overtime payments

(26 Posts)
Marabou Fri 04-Feb-11 10:31:07

Hello everyone,

I was wondering if anyone would know if in calculating the SMP rate for the first six weeks only contractual overtime payments are taken into account?

Having looked on the DWP-guidance for SMP, I see that "Sick pay, overtime, bonus payments, arrears of pay and even, in most circumstances, holiday pay, must all be included if you actually get them at this time. It is when you get the money that counts, not when it was earned.

Average earnings should include all earnings and contractual benefits on which you pay National Insurance contributions, except Class 1B contributions which arise from a PAYE tax settlement agreement which your employer makes with HM Revenue and Customs."

To me, quite simply, this means any payments for which you pay NI-contributions.

I will be doing quite a lot of overtime within the eight weeks before my maternity leave begins and for this I will receive a payment according to the company overtime policy. But my employer is now saying that these overtime payments will not be taken into account in calculating the SMP rate for the first six weeks, because it is not contractual overtime, but overtime at an "ad hoc"-basis...

flowery Fri 04-Feb-11 10:35:37

DWP is right - it's literally whatever payments you receive during the relevant period. It makes no difference whether it's overtime, bonus, contractual or non-contractual. If you are paid it during that time, it must be included in the calculation.

AuntieBacterial Fri 04-Feb-11 10:38:30


I'm not an expert but have done a lot of digging on SMP payments due to some issues with my employer calculating my first 6 weeks of SMP incorrectly.

My understanding is that ad-hoc overtime payments do count in the average weekly earnings calculation. But it's not the last 8 weeks earnings before your maternity leave starts that are used for the calculation, it's the 8 weeks before your Qualifying week which are used.

Your qualifying week is the 15th week before your baby is due.

I'm sure an expert will be along soon to explain more...

flowery Fri 04-Feb-11 10:41:30

Auntie is right - sorry hadn't spotted that. It's not the 8 weeks before your leave begins, it's weeks 17 - 25 of your pregnancy.

Marabou Fri 04-Feb-11 11:28:08

Hello ladies,

And many thanks for the quick replies!

Ok that's how I understood it as well. Just to clarify, does the "relavant period" mean 8 weeks backdated from the last pay date before your qualifying week? "As a general rule, your earnings will be averaged over a period of at least 8 weeks up to and including the last pay day before the end of the qualifying week. This period is called the 'relevant period'."

So in other words, if my last pay day before the qualifying week falls on week 24, the relevant period is calculated for pregnancy weeks 16-24 rather than weeks 17-25, as my next pay day would be in pregnancy week 28, which is already after the qualifying week. Sorry guys if I'm not making any sense, I'm just a bit confused about this..

flowery Fri 04-Feb-11 12:36:10

That sounds right yes.

Marabou Fri 04-Feb-11 12:57:04

Ok, thanks a lot again!

Lol73 Sat 05-Feb-11 18:00:22

hi ladies ,

i have a question hope someone can help, im due 14th june 11 and my qualifying week is 27th feb to 5th march. I get my monthly pay paid on 22nd feb, but get my yearly bonus paid on 28th feb , so separate pay roll runs , im hoping my bonus is taken as its in the qualifying week to work out my calculation do they add these two amounts together? . does anyone now how this works? thanks a lot lorraine

cmere Sun 06-Feb-11 21:03:47

Hi Ladies

I am one of these so called "experts" AuntieBacterial talks of. Sorry it's taken me a few days to find you!

Before I can answer your questions, could I just ask a few of my own?

Can I just check that both you Marabou and you, Lorriane earn more than £97 per week or £421 a month and have been with your current employer since you became pregnant? Have you informed them that you are pregnant and passed on your MATB1 form from your midwife (if you've had it)?

Marabou: When is your baby due? Do you have a date to start your maternity leave? Are you paid monthly or weekly?

Lol73: Is the 22nd of the month your usual pay day?

Look forward to your replies.

Lol73 Sun 06-Feb-11 21:15:17

yes i earn more than £97 per week i have been with my current employer 5 years , i get my matb1 this thursday , hr are aware im pregnant and have been on a maternity workshop. yes 22nd is my normal pay day each month. Thanks Claire
from Lorraine

LIZS Sun 06-Feb-11 21:17:19

Yes it takes into account any payments over the qualifying time period then averages it by no. weeks.

Lol73 Sun 06-Feb-11 21:37:59

thx LIZS , so do you think they will add pay on 22nd and bonus on 28th together. payroll are getting back to me this week.

cmere Sun 06-Feb-11 21:45:03

Tricky one, Lorraine, as technically the bonus pay day is not your "normal" pay day, which is used to make up the relevant period for your SMP calculations.

HMRC state:
Regulations define the “relevant period” as the period between:
the last normal pay day to fall in or before the QW (but if the baby is born before the QW, see SPM20840), and
the last normal pay day falling at least eight weeks before the above.

Regulations define a ‘normal pay day’ as either the pay day specified in the contract, or the day on which they are usually paid if:
they have no contract, or
their contract does not specify a pay day.

Are you able to speak to your payroll department and perhaps ask if it's possible to be paid your bonus in with your normal February pay? That would avoid any complications!

Hope that helps.

cmere Sun 06-Feb-11 21:47:17

Sorry - should have said to please do feel free to inbox me if you'd rather not have your private payroll situation on display!

Lol73 Sun 06-Feb-11 22:03:40

thx Claire , i should find out tomorrow not sure they will pay my bonus earlier as everyone gets paid it on the 28th. i will speak with my hr dept tomorrow. thx again

Marabou Tue 08-Feb-11 09:34:12

Hello everyone,

And so sorry for not noticing the new posts on here earlier.

Thank you cmere for your input, much appreciated.

To answer your questions concerning me:

1. my baby is due on 15 May;
2. my maternity leave is due to start on 1 May;
3. I am paid monthly

In the meanwhile, I have received some further confused information by the HR department at my work place. My company pays company maternity pay, which for the first 6 weeks is 100% of your normal salary instead of the 90% set by the SMP rules. The company says that their company maternity pay includes what the employee would have received at SMP. Therefore, I think they would have to follow the SMP rules in calculating company maternity pay.

However, my employer is now telling me that they do not calculate the company maternity pay in accordance with the SMP rules and therefore, they are excluding all non-contractual payments (i.e. in my case the "ad hoc"-overtime payments) received within the relevant period.

Is this right? I would have thought they could not claim the SMP payments back from the state without following their rules..

flowery Tue 08-Feb-11 10:08:02

They can calculate the enhanced portion however they like, and if they normally don't include overtime for those purposes, that's up to them.

As long as they use the right amounts to calculate the SMP portion they will be fine claiming back from HMRC.

So you must get the right amount of SMP, but how much they top it up by is up to them.

SMP is 90% of average weekly pay calculated by reference to a set period.

Your company's maternity pay is 100% of 'normal salary', as defined by them, probably whatever is is your contract. As long as that figure isn't less than the SMP calculation that's fine.

Marabou Tue 08-Feb-11 10:46:38

Hey again flowery and thanks for your reply!

That's what I gathered as well; the 90% portion must go in accordance with the SMP rules and the remaining 10% they can determine themselves.. So in other words, my employer blatantly informing me that they do not calculate the Company Maternity Pay according to the SMP rules is wrong...

Having quickly calculated what I should get, I see that I would be worse off, if they go ahead with their calculation, so I'm going to contact them again..

cmere Tue 08-Feb-11 10:51:30

Hi Marabou

Flowery has it spot on re. your company's materntiy pay. As long as they have the statutory SMP part covered and calculated correctly, their "top up" should be as stated in your contract (which looks like it'll be based on your normal monthly salary without any overtime payments etc I'm afraid).

Your qualifying payments are your December and January payments.

If you want me to go through things in more detail, please inbox me.

Hope that's helpful.

Lol73 Tue 08-Feb-11 12:45:33

Hi Flowery/claire my payroll dept got back to me and my bonus will be inlcuded in working out my smp. but im not sure how this works as I receive 6 months full pay and then 3 months smp.

My smp calculation for first 6 weeks will be higher than normal pay due to my bonus. so do they pay me 6 weeks higher rate smp, then go to normal salary up to 6 months, then smp again up to 9 months. thanks Lorraine

Marabou Tue 08-Feb-11 12:53:39

Hello Claire and thanks again for your reply!

I just got a reply from my HR department and they explained that they will basically compare the payment with the SMP-rate against the payment with the Company rate and they will pay me whichever is higher. They also confirmed my qualifying period, so I think it's clear for me now..

Gosh I find this system very complicated smile..

cmere Wed 09-Feb-11 21:23:33

Great news on both parts Lorraine and Marabou!
I love a happy SMP story, and do believe Mummies should get as much possible to see them through their materniy leave.

If you have any more questions, please just ask.

TealAqua Thu 10-Feb-11 19:33:54

Hello cmere - any hope for me?

Surely I am not the only future Mum that gets paid different amounts different months because bonuses and commissions are paid on a quarterly and annual basis rather than every month? Isn't performance related pay quite widespread?

So why do HMRC insist that you can only calculate the average pay, and therefore work out how much Statutory Maternity Pay you get, over a particular 2 month period?

This means that the employer can get away with paying a lot less than 90% of my real average pay. (Makes a difference of £500 approx. to me.)

It also means that two women with the same pay structure and same performance would get different amounts depending on when the due date falls.

How do I best highlight this to the powers that be so that a fairer system can be put in place?

cmere Thu 10-Feb-11 22:11:43

Hi TealAqua

It's all the luck of the due date really I'm afraid.

Do you have any kind of company maternity pay? If there is, perhaps you have more of a chance of highlighting the unfairness of the calculations.

In recent years, HMRC have been forced into taking pay increases into account for the calculations.
Perhaps a more fair way of calculating SMP is possible one day too...

We live in hope!

TealAqua Fri 11-Feb-11 15:29:48

Thanks for the reply Cmere. No there is no company maternity pay. I think I will write to my MP. It happens to be Nick Clegg. Let's see what he can do.

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