SMP much higher than enhanced maternity for 6 weeks - employer pocketing difference

[username131024]

Hello

Fortunate position that I would get high SMP due to qualifying period being a bonus period. Employer offers enhanced maternity pay. However it seems my employer pockets the higher SMP and offsets it against 6 months full pay. It means I get much less than SMP for the first 6 weeks, although I get paid more than SMP after that period.

My question is can an employer benefit where an employees SMP is higher than their monthly salary - rather than giving the employee the SMP directly for that initial period. I.e. my employer isn’t topping my salary up to 100% from 90%, they are reducing my entitlement significantly to bring it down to 100% of salary.

Happy to answer clarifying questions.

Call the maternity rights advice line, they should be able to help you or at least give you the number of which government helpline to call if they can’t answer that.

What does your employers enhanced mat pay policy say?

@JumpstartMondays - it says we pay your full salary for 6 months. I’ll need to go over it again in details but surprisingly lacking in detail around this very unique circumstance. It hasn’t arisen before in the company I’m told.

Thanks @WarshipRocinante - I’ve read online but with bank holiday everything is closed. Can pick up Tuesday.

If they are pocketing govt maternity money I expect the govt would be very interested to know about it. I’d consult acas but I’d also say clearly if I’ve qualified for this level of support and you are instead keeping it then that would be stealing. It’s not given to you to keep for yourself. (If I’ve understood correctly that they are receiving this money)

@Codlingmoths - they are paying me 6 months full salary. They claim back all SMP from the government.

So they are paying me money over a much longer period - but overall they pay me the SMP. For the SMP period of 6 weeks they are paying me considerably less than I would get if they paid me the SMP straight up.

I don’t know if legally they can use the SMP in this way. Overall I get marginally more than the SMP amount but it’s spread over six months.

@IslandsintheOcean are you absolutely sure you have understood the situation correctly?

SMP is the lower of £184.03 or 90% of your salary. So if your actual salary is £170.00 you would get £153.00. Your employer can only claim the £153.00.

Employers who pay 6 months full pay always top up SMP to full pay and reclaim the 92% of SMP.

@Harassedevictee

yes I’m referring here to the first six weeks part per below

Work out Statutory Maternity Pay

When you have worked out the average weekly earnings, work out how much Statutory Maternity Pay is due and pay it on the same day that you would normally pay wages and for the same period.

Statutory Maternity Pay is payable:

• 90% of the employee’s average weekly earnings for the first 6 weeks
• £184.03 or 90% of their average weekly earnings (whichever is lower) for the remaining weeks

https://www.gov.uk/guidance/statutory-maternity-pay-manually-calculate-your-employees-payments

What’s unusual here is in the qualifying period I got a substantial amount of variable pay - so 5x my usual salary due to a sales commission.

That being said if they only paid SMP I’d be getting 5x 90% of my usual salary. Instead they are only paying my normal salary and saying they are entitled to offset over six months.

Read your post again and edited to say Speak to the company about it. Some use the qualifying period, some don't I think if they are offering enhanced anyway.

The OP is correct that the first six weeks are paid at 90% of their pay. The 90% or lower of £184 is for any period after the first six weeks.

Unfortunately I think they can op.

SMP can be offset against any contractual remuneration your employer owes you, such as pay for a keeping in touch day or occupational maternity pay, but SMP cannot be offset against other benefits that you are entitled to during your maternity leave.

https://maternityaction.org.uk/advice/maternity-pay-questions/

I don't understand how you are worse off? The first six weeks you get 90% of your average salary . Then you get a minimum of smp (assuming you're full time) but possibly more.

How are you worse off?

Are you saying you have been earning more but they will only give 90% of your basic salary despite the fact the gov will pay 90% of your average salary which is currently higher.

So say you normally earn £200 pw. But last six months you earned £400 pw. Govs paying £360 but you are only getting £180?

If that's the case that doesn't sound right but I've no idea if it's legal

https://www.acas.org.uk/managing-your-employees-maternity-leave-and-pay/types-and-amount-of-maternity-pay

'If an employer offers enhanced maternity pay, it must always be higher than statutory maternity pay.'

Your company cannot do what they have proposed. In your case they have to pay at least SMP for the first 6 weeks

However, for the following 33 weeks they can take the lower figure

@IslandsintheOcean thanks for the clarification.

You are correct that for SMP, including the first 6 weeks they are required to use your actual
income in the qualifying period.

I suggest you give your HR/Payroll the following documents
https://www.gov.uk/hmrc-internal-manuals/statutory-payments-manual/spm171000

https://www.gov.uk/government/publications/maternity-benefits-technical-guidance/maternity-benefits-technical-guidance#statutory-maternity-pay-smp

In addition you can refer them to the alabaster judgement.

Amazing @Harassedevictee - I think the Alabaster judgment doc is along the right lines.

While they can choose to top up SMP where below usual salary, my initial thought was surely they can’t pay less than SMP by a significant amount during the initial period.

For others commenting - SMP is calculated in a particular way that means unique events in salary may mean it’s higher than any usual pay period for the initial six weeks.

Im just looking for guidance or case law that says employers cant take the SMP and overage it over a longer time period than the relevant amount was due to be paid - ie pay lower SMP for the first six weeks because they pay more than SMP for the following weeks.

Employers can always claim 92% of SMP Its working out well for them this time because of your earnings in the qualifying period but thats a glitch in the system I don't see the problem as long as you're being paid accurately?
Alabaster isn't relevant as this isn't related to a payrise.

The two links give you the HMRC technical guidance I.e. your employer has to follow this.

I can’t work out why they’re ’pocketing money’ / you end up worse off?

Six months full pay is very good! There’s no way they’re making money off the government offering this.

You could request not to get the enhanced pay and just take statutory pay

Hi @Figgygal - I think Alabaster links to the principle that you can’t be paid less than legal SMP for the first 6 weeks. So if your employer has an enhanced OMP the rest of the period may not need adjusted, but they do have to adjust the SMP portion to enhance employees position. The AWE cannot be less than SMP is what I am reading @Harassedevictees link is saying. So it should be a parallel.

My understanding is that I should be paid the higher of SMP or my employers enhanced maternity pay for the qualifying 6 week period, and for the additional period, again the higher of the enhanced maternity pay or SMP for the remainder of the qualifying period.

Being paid less than SMP for the initial six week period seems like the employer is taking the benefit of the monies from the government to avoid paying what they ordinarily would have if I didn’t have such a high qualifying period. It seems to be to be indirect discrimination to benefit from what is a pregnant woman’s tax rebate. I can’t see where they might do this to men. Ie same wouldn’t happen for paternity leave.

If they pay smp only, and no enhanced smp at all during your maternity period are you still better off overall?

Your employer must pay you at least the SMP rate for the first 33 weeks. If they choose to top up above that amount, then that's a business policy/decision. It cannot be less than the statutory entitlement.

Report them to HMRC if needed. It may be an innocent mistake but it's still incorrect.

Hi crumpet - very marginally. Maybe by £2k. However the total overall amount is then paid over 6 months instead of six weeks. I am much delayed in receiving the SMP portion.

There is a query over how much is repayable if I don’t return as they’re using the SMP to pay enhanced maternity pay. I am sure it has other tax / pension implications I haven’t thought of.

How much are they saying they will pay you for the initial 6 weeks?