Complicated statutory maternity pay question

[PaythePiper]

Hopefully someone can help me unravel this one!

My DH owned and ran a business as a sole trader, but he decided upon the birth of our baby last last year to sell it so as to have more time at home with our family. When he put it on the market in December, we knew at the time that one of our part time employees was pregnant. She had been working for us for over a year. However, she told us she was planning on leaving anyway before the start of the summer, whether or not the business was sold.

DH accepted an offer on the business back in February. The entry/transfer date was today (Monday) and the payment has gone through- we handed over the keys and the premises this morning.

Last month, our pregnant employee handed in her notice, giving a month's notice in accordance with her contract. Her last date was Friday last week. She is now 27 weeks pregnant. Today we had an email from her asking us to fill in the form to allow her to claim Maternity Allowance, on the basis that DH as the employer would not or could not pay it.

We are a bit confused as to how to proceed. Strictly speaking, DH is not her employer anymore, as he doesn't own the business anymore. I thought perhaps she would approach the new owner but given that she's now finished up under the terms of her notice, is she still even an employee?

I should add that we'd like to help this person as best we can to receive whatever she is entitled to as far as payments but we don't want to either falsify information as to the facts of her employment nor incur any liability for additional payments on a business DH doesn't actually operate anymore, especially given that he's going to need to advise the tax office that he is no longer self employed.

What to do?

I think you need proper professional advice, or a call to the HMRC helpline, rather than mumsnet here.

However, my guess is that the sale of the business would include such liabilities as the duty of administering Maternity Pay. If any form needs filling out it would then be the new owners of the business who should do it. However, the new business owner should be able to recover 100% of the SMP paid to her (unless it's a massively successful business now, I'm assuming it's still a relatively small enterprise, but if the NIC bill for the business is over £45,000p/a they can only claim back 92%) so they shouldn't really refuse. Normally employers are supposed to pay the SMP then claim it back off HMRC, but if there is a cashflow problem they can apply to have it in advance. Unless you sold the business with express legal conditions stating that you/your DH are personally retaining any liabilities of the company and only selling the assets, and unless her contract was with you/your DH personally rather than the business, it is the business that is her employer and you shouldn't be involved.

I agree you need professional advice here. But if she is not an employee of either you or the new business owner (as she handed her notice in) then I would not think you as an ex-employer would have anything to do with her claim for MA.

If she was still working for the company in her qualifying week - 25 weeks pregnant, then she is entitled to stat mat pay, whether or not she is still working for the company now. See this link:

www.dwp.gov.uk/publications/specialist-guides/technical-guidance/ni17a-a-guide-to-maternity/statutory-maternity-pay-smp/eligibility/

Given that you sold the company, she needs to ask the new owner about this. If she wasn't employed in her 25th week, then she will probably qualify for MA - she needs a form to be signed to state that the company won't pay her SMP and giving the reason, so that she can send this off to claim MA. Either way, I don't think you should do anything, its for the new owner of the company to sort out.

(I don't have any special experience, just had to research all this for myself recently.)

Read the OP guys, this is not a company.

If the employee had given you notice a few weeks ago ( see here: "to claim maternity leave you must tell your employer no later than the end of the qualifying week (this is the 15th week before the week your baby is due)" your DH would be obliged to pay SMP, and he could recover if from HMRC plus 3% compensation in advance.

Maternity Action are a great charity who may be able to advise.

They have an advice line - 0845 600 8533

www.maternityaction.org.uk/

MrAnchovy you read the OP yourself, this is a business and the employee is employed by the business which has just been sold.

(correction, has been employed, having now completed her notice. But she wasn't directly employed by the DH)

see page 23 in the Employer's SMP Handbook - it covers various scenarios for change if business ownership & SMP payment. (I'm not sure exactly which one applies from your OP details) If not covered in here then the HRMC Employer helpline should be able to help you.

"But she wasn't directly employed by the DH"

Yes she was, this is what 'sole proprietor' means. The only contract of employment was between the DH and the employee, and this contract was terminated prior to the date of acquistion so TUPE cannot apply (to this contract, it may be relevant to other employees). The only person that can be liable for SMP is the DH, if an application was made in time.

Mr Anchovy is right based on the OP. OP, you say your DH was a sole trader, which means he must have employed the pregnant employee himself as he didn't have a company to do it.

Based on the above, the employee ceased to be employed prior to the transfer of the business (which I assume was a transfer of a business as a going concern) to the new owner, so the new owner is not responsible for dealing with her now unless there was specific provision for it in the sale and purchase agreement. Is there anything that you could point to in there which transfers that liability across?

Thanks for everyone's replies.

I phoned HMRC and like suburbandweller suggests, they advised my DH would remain liable to pay it unless the sale and purchase agreement had covered the transfer of the employee. The sale agreement was frankly pretty informal and so vague on that point, hence I don't think we could say the liability had transfered. In any event, what HMRC suggested was applying for advance funding to cover the maternity payments, which we can do. That should tie up all the loose ends and ensure the employee gets paid but we're not out of pocket while trading has ceased.