Statutory Maternity Pay (SMP)
Statutory Maternity Pay is often an area of worry and concern for parents as it is often incorrectly assumed that they will incur large costs should their nanny become pregnant and go on Maternity Leave. Whilst there is indeed a direct inconvenience and perhaps increased indirect costs you (as a small employer) will not have to pay the cost of your nanny’s Maternity Pay.
Qualifying for SMP
Statutory Maternity Pay is paid to employees that have (a) worked for an employer for a long enough period (b) are still working for the employer at a specific time and (c) have been paid enough during a set period. If these criteria are not met then your nanny will need to make a claim for Maternity Allowance using a form SMP1.
Your nanny will need to have started work for you 41 weeks before her expected week of confinement (due date often referred to as an EWC). As a rule of thumb this means that if your nanny is already pregnant when she starts her work with you it is unlikely she will qualify for Statutory Maternity Pay from you.
She will also need to still be in your employment 15 weeks before her baby is due, so if her contract comes to an end before that point this will eliminate her entitlement for statutory maternity pay. Finally, she needs to be earning an amount of money that is over the lower earnings limit, currently £123.00 per week gross (for the 2023-2024 tax year).
How to process her SMP
Assuming these criteria are all met your nanny then needs to pass to you her MATB1 certificate which gives you her official due date. This certificate is then forwarded onto our office so we can make a final assessment of her claim for SMP, if we feel she is not entitled to the money we shall return the MATB1 back to the nanny along with her form SMP1 so she can make her own claim.
Assuming she is entitled to SMP your nanny should then decide when she would like to stop working for you and start her paid Maternity Leave. This can be up to 11 weeks before her baby is due.
Payments to your nanny
Once on paid leave your nanny is entitled to 90% of her gross wage for the first 6 weeks and then £172.48 gross per week (for the 2023-2024 tax year) for the next 33 weeks or 90% whichever is the lower of the two amounts.
Before you start any payments to your nanny, NannyPaye requests from HMRC a payment to cover all of your maternity costs including the Income Tax and NIC payments. This leaves parents without the burden of having to wait for HMRC to refund money whilst paying out an additional salary to a cover nanny.
NannyPaye will request this payment 2 weeks before your nanny is due to start her maternity leave, however, the payment can take up to 6 weeks to arrive, therefore families may find that they have to cover 1 or 2 payments to the nanny before they receive the cheque from HMRC. As her employer you are still required to make these payments on her regular pay day and cannot withhold them in waiting for the HMRC payment to arrive.
During her SMP
When your nanny started her maternity leave she may have given you a date that she intends to return back to work. If she has not given you a date you should assume as her employer that she is taking 1 year of leave from work. The last three months of that year are unpaid.
Your nanny then needs to give you at least 8 weeks’ notice of any change to that date or any other date that she may have given you. This allows you time to give notice to any employee that may be covering her leave.
Your nanny is entitled to return to her position (assuming it still exists) under the same contractual terms as when she left. This means that (unless this was your original agreement) you do not have to accept the nanny returning to work with her baby with her. Please call the NannyPaye office for expert guidance on this subject to ensure you meet your employer obligations.
What if she doesn’t qualify
If your nanny doesn’t qualify for SMP then she will still be entitled to the same amount of leave as an employee who did qualify and the same rules apply, however, she will not receive any pay from the employer during this period. When we receive the MATB1 and do an eligibility assessment for you, if she does not qualify we will send you an SMP1 form so that she can contact her local Job Centre Plus to apply for Maternity Allowance instead. Maternity Allowance is still paid for 39 weeks in total, but it is all at the lower rate (i.e. no 6 weeks higher rate).
Further Support
You will find more information, including template letters and a guide, in your Members Area under 'Your Legal Documents'.