Bonus consideration during/outside qualifying period for SMP

[georgina127]

Hello

I just found out that my personal qualifying period for SMP is during the 8 weeks before the 3rd March 2013 (the baby is due on 22nd June 2013; please correct me if I?ve miscalculated my qualifying period). I?ve been working for my current employer for 7.5 years now, continuously and full-time, but won?t receive any maternity pay from him in addition to SMP.

I read on DWP?s website 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.? Bad luck then, that my annual bonus was paid two months before my qualifying period, in November 2012, and won?t be considered at all! (Again, please correct me if I?m wrong!) I find this a grossly unfair rule, as my employer awarded me the bonus for my loyalty and professional achievements throughout the year and so it should, in my opinion (of course), be factored into the calculations for the first 6 weeks of SMP (90% of my salary). It would make a big difference for us financially, as my boyfriend and I will be struggling immensely as it is.

I?m wondering if anybody has any advice on how I could get my bonus considered in the SMP. Persuading my boss to pay another bonus during the qualifying period (i.e. with the next monthly payroll the latest) which can be taken off my salary again after the qualifying period? Any clever ideas that are legal but also fair with respect to my personal situation are very welcome!

Thank you!

Thems the rules, unfair or not.

If you can persuade your boss to pay you an extra 'bonus' then it will be included in the calcs.

It's not 'grossly unfair', they have to draw the line somewhere in terms of a period to work out SMP.

Plus SMP is supposed to be 90% of salary, so including a bonus distorts that figure and in many cases, takes the 90% over the actual salary the employee would be getting if they were working. Great for the employee, obviously, but it's not 'grossly unfair' if that doesn't happen, simply a symptom of having to draw the line somewhere, it's always the way that some will win and some will lose as a result of that line.

Anyway, as I say, they have to draw the line somewhere. If you can persuade your boss to pay you another bonus, then go for it.

It would be fair, if either bonus payments or other one-off extras would not at all be considered for calculating the SMP, or if the basic gross pay including those extras would be averaged out over the last 12 months (or the maximum time an employee has started working at a company). Extras like bonus/holiday payments usually occur once a year, and average sick/annual leave payments are better represented over such a period. Why base them on 2 random months, during pregnancy, when many women are more vulnerable and prone to pregnancy related illness, and at a time when most employers will know about the pregnancy and might be less willing to pay extras?

Draw the line somewhere - yes, but it should be a reasonable one that represents a working lady's average annual income more realistically. Instead, under the current rule, two random months are chosen which, in some lucky cases, resemble an undeserved lottery win (i.e. if you happen to be paid a bonus during those 2 months, which, I agree, will distort the figures to an unfair degree). As long as the rule is this random though, the less lucky ones will of course feel treated unfairly!

Plus, people paying themselves a salary will be able to use this to their advantage, while others can't! The loopholes mostly work for those who need them least...

Firstly, you don't have to tell your employer that you are pregnant until 9th March.

Secondly, the calculation period for pay is January 13th - March 9th. This is because the week goes from Sunday-Sat.

The obvious logic behind this system, is that the earnings are meant to be an average of an employee's normal pay and by calculating it based on 8 weeks before a woman is obliged to tell her employers, the pay can't be manipulated by unscrupulous employers, who may be advantaged, say, by reducing an employee's overtime.

Those two months are a perfectly reasonable line to draw. You couldn't make it as long as 12 months, partly because you don't need to have worked there that long, and also because women who'd been promoted or had a pay rise during that time would end up losing out.

The idea is to ensure that women only have a 10% reduction in their salary when they start maternity leave, which presumably you are?

Whatever reference period was chosen, there will always be people who will happen to have been better off if the line had been drawn somewhere else. That doesn't make it an unfair system, it makes it irritating for you.

Thank you, lougle, for correcting the dates of my personal qualifying period.

Even if not having to tell an employer about the pregnancy until week 25, many women are ?showing? sufficiently quite some time before that date. Indeed soon enough for the employer to ?know? without being told and thus enabling him to take cut measures that he really shouldn?t be taking.

If the logic was (and this is in fact the logic that I advocate) that the earnings are meant to be an average of an employee's normal pay, then bonus, holiday, sick and leave pay shouldn?t be included during such a short qualifying period. That?s my point!

Let?s put the reasons for my personal irritation aside again... A 12 months? period (or longest period a woman has worked in a particular workplace) surely would better represent a woman?s average earnings than a 2 months? window, in order to make it fairer between all the women out there. A pay rise is already being considered in the SMP calculation according to current legislation (even if it occurs after the qualifying period SMP has to be recalculated accordingly!), but this is more proportional, being based on a period that more truly reflects the average normal pay - a far more agreeable approach. Of course a line will have to be drawn somewhere, and any change regarding the reference period will make a slight difference to each individual. I could live with that. However, the currently defined qualifying window is IMHO far too narrow to reflect earnings as an average of an employee?s normal pay in a way that makes it fair enough between all the women out there.

Anyway, I am (i) not going to revolutionise the government?s regulations on this board; (ii) in fact not the type of person to ask my employer to enlist 'tricks'; and will (iii) henceforth quietly stick to my thoughts, as it seems that everyone else is rather happy about the rules here.

Georgina, that's a bit of an odd tone to take, you had three responders, all of whom were clarifying the legal position in response to your question about getting your bonus considered in SMP. If you want to start a "wouldn't it be fairer if SMP worked this way?" thread, people would respond more with their opinions than with the advice you asked for.

The issue with bonuses, I would think, is that there are some workplaces where you are eg told your bonus in December but not paid it until march - so if you leave inthe meantime, you don't get it. In that sense, it is a discrete payment which is not treated by the employer as an average over the year, so it would be difficult for HMRC to view it differently.

I agree with you that the "week 25" limit for telling your employer you want to take maternity leave is a bit odd as in practice almost all employers would have noticed by then!

Your note about people who are paying themselves a salary needing it least is an interesting one but in practice, a pretty high proportion of people who run their own business wouldn't necessarily have the cash flow to pay themselves a big bonus in the qualifying period and in any event will often be more directly affected than an employee in a big business by not being available for work for a while.

I suppose the system works to best advantage to those who familiarise themselves with the rules before getting pregnant and then who are able to agree with their employer to delay a bonus payment for a few weeks to hit the right period - but plenty of employers wouldn't do this, plenty don't pay bonuses anyway etc. Or women who decide to do extra overtime in this period - but again, not everyone gets overtime payments.

The holiday pay etc I've always thought was to clarify that taking your usual holiday in this period wouldn't penalise you.

@TheDoctrineOfSciAndNatureClub (and all responders): Thank you for your helpful comments.

In our company, the bonus is specifically awarded by our employer for our achievements and loyalty over the respective whole year (as we don't get any other form of extras or benefits nor any contribution to maternity pay even if we've stayed with the company for over 7 years), and this is why I've come to think that the relevant proportion of it, for whatever period is being considered, should be included (as the current rules generally do allow bonus payment to be considered after all). I understand that in many other cases extra payments might be more discrete though and so it becomes more difficult to handle by HMRC, as you say.

I agree with you that the cases where self-employed women have a choice to pay themselves a good salary or even a bonus are probably rare, as most are likely to be struggling to survive. The fact that it can and has been done before though, shows that where there is a loophole and people can make best use of it, they will; though only if they know, or get advice on how to go about it. In the hope that I might get some ideas for my particular situation, I asked my question here. I am usually terribly useless and non-clever about opportunities that could lead to personal financial gain, and only because I will be struggling badly while on maternity leave (having to leave my DH behind to live with my family outside UK for half a year as we won?t be able to afford the rent during that time), I thought it would be a good moment to start getting a bit more savvy about financial details.

You're right, the system works best for those who can plan ahead and influence proceedings. Since many women are not in this position, however, it doesn't seem a fair basis to count and rely on. Had I, for instance, known about the bonus rule AND my pregnancy a few weeks earlier, there would be no problem as I am sure my employer would have been happy to pay my bonus in January rather than November. My view is that the law shouldn?t be so reliant on chance, good luck, 'cleverness' and position of power.

Just a note about the 'tone' comment: I am indeed very grateful for the contributions relating to legal information that were made by the responders. My original question/query was about getting advice regarding bonus regulations or other ideas with respect to what I might be legally entitled to - like planning ahead, only with very little time left as I am in the middle of my qualifying period now! The responses, however, somewhat shifted the focus to interpretations of fairness, ranging from 'these are the rules and you won't change them' to 'the rules are fair' and 'the system is logical'. I objectively stated my view on these interpretations as I do not agree with them, and used an example to make this clearer. If I sound frustrated in the very last part of my last sentence, then this is due to being left feeling like everybody agrees with the current system, with only me being weird for finding the rules unfair, while my actual call for help has disappeared into the background. I apologise if anyone felt offended, this was not my intention.

I totally agree that this fairness-of-SMP debate would be worth a separate thread rather than moving this thread away from the original question. For the moment, however, my main and urgent interest remains in receiving any advice available regarding the question 'what can I do now in my situation that isn't illegal or unfair'. If anyone can think of anything...

Thanks to all for reading so far and for making an effort to contribute to the discussion.

Georgina, thanks for that post, it was really fair and it must be super stressful to contemplate moving away from your DH during mat leave.

I think when you are on maternity leave you will still have some entitlement to the bonus being paid in November 2013 which might help? - see www.equalityhumanrights.com/advice-and-guidance/guidance-for-workers/pay-and-benefits/decisions-about-pay-and-benefits-for-women-and-men-equal-pay/pay-benefits-and-bonuses-during-maternity-leave/

Georgina, thanks for that post, it was really fair and it must be super stressful to contemplate moving away from your DH during mat leave.

I think when you are on maternity leave you will still have some entitlement to the bonus being paid in November 2013 which might help? - see www.equalityhumanrights.com/advice-and-guidance/guidance-for-workers/pay-and-benefits/decisions-about-pay-and-benefits-for-women-and-men-equal-pay/pay-benefits-and-bonuses-during-maternity-leave/

If you're self employed, you don't get SMP, you get Maternity Allowance a d just get the flat rate, not the 90% of average pay for 6 weeks.

@TheDoctrineOfSciAndNatureClub:
Many thanks for your words and link - very helpful indeed!

@trixymalixy:
Oh dear, that's even less for self-employed women then. I didn't know that.