Statutory Maternity Pay (SMP) is what you need to pay your staff while they're on maternity leave.
But should you pay more than the legal minimum?
You could enhance the amount you give new parents with occupational maternity pay. But what is it? And should you offer it to your staff?
Let us explain.
What is occupational maternity pay?
Never heard of it? You might know it as enhanced maternity pay or contractual maternity pay.
It's an optional payment that you choose to give your staff on top of SMP. And just like SMP, you pay it for a set amount of time.
Usually, you give staff occupational maternity pay under the condition that they return to work after maternity leave.
But this isn't the only condition you could enforce.
You might only let your staff qualify for additional pay after a year of working for you. You could also state that your staff have to repay all or part of the money if they don't return to work.
Whatever you decide, put your occupational maternity pay scheme terms in your employees' contracts. This will help your staff understand the scheme and acts as a reference document to help with queries in the future.
How much is occupational maternity pay?
Occupational maternity pay should be more than SMP. Here's what SMP is over 39 weeks:
- First six weeks: 90% of your staff's average weekly earnings before tax.
- Next 33 weeks: £145.18 per week or 90% of your staff's average weekly earnings.
There's no set figure of occupational maternity pay entitlement. The amount you give your staff is up to you.
You don't have to make a fixed payment, either. You can give your staff a combination of their full pay and half pay.
Here's how you could divide occupational maternity pay:
- Full pay for the first eight weeks.
- Half pay for the next 10 weeks.
- SMP for the remaining 21 weeks of the paid period.
You could even give staff a return-to-work bonus as an extra incentive.
Should I offer occupational maternity pay?
The main downside to occupational maternity pay is the extra cost.
Paying your staff more than the legal minimum could put a strain on your business. Especially if two or more eligible employees go on maternity at the same time.
But, there are benefits to introducing your own occupational maternity scheme. If you enhance your staff's maternity benefits, they're more likely to want to stay working for you once their maternity leave ends.
They'll feel a sense of loyalty towards you, which could help with staff retention. When you keep committed and valuable staff working for you, it saves you from needing to replace them.
And that's not all. Enhancing staff pay during maternity leave is a benefit that'll attract other working parents to your business.
Want to know what other benefits you could offer new parents? Read up on flexible working.