By Michelle Quince, Senior accountant at Hive Business

By employing staff, you are making a large contribution to society.  But what happens if some of your staff are unable to work for some reason?  Will the government give you a helping hand to keep your business on track?  In most cases, the answer is “YES” and that’s where statutory payments come in.

What if a staff member becomes sick?

If an employee has been sick for 4 or more days in a row, they may be entitled to ‘Statutory sick pay’ or SSP which is paid at a rate of £88.45 per week (2015/16). SSP is payable for a period of up to 28 weeks.

Unfortunately, SSP can no longer be recovered from HMRC. When the government introduced the £2,000 employment allowance a couple of years back, they took away the ability of employers to recover SSP. Therefore, although you are legally obliged to pay SSP you don’t get any direct help from HMRC to make such payments.

What if a staff member becomes pregnant?

‘Statutory maternity pay’ or SMP is paid to an employee for a period of time to enable them to have some income whilst they bond with their new little bundle of joy.  And the amount you pay to the employee can generally be recovered from HMRC … plus, dependent on the size of your business, you may be able to recover an extra 3% for your trouble!

An employee is entitled to take up to 52 weeks of maternity leave however, they are only entitled to 39 weeks of paid maternity leave.  The first 6 weeks is paid at 90% of their normal weekly wage, with the remaining 33 weeks being paid at the government-set rate of £139.58 per week (2015/16).

SMP is paid to the employee during the normal payroll run and then is recovered from HMRC by deduction from the usual P32 payment  So in fact there is a small timing difference between the payment to your employee and it’s recovery but, if for any reason you can’t afford to make statutory payments to the employee, HMRC do have an advanced payment facility to assist businesses further (please contact me if you would like further details on this subject).

There are some important things to note when it comes to SMP, firstly the employee is only entitled to SMP from your business if they actually got pregnant whilst in your employment – i.e. they were on the payroll at least 41 weeks before their baby’s due date.  Also, the employee will need to provide you with medical evidence of the pregnancy, which normally comes in the form of something called at “MATB1 Form” and is issued by their doctor or midwife.

What other types of statutory payments are there?

Statutory paternity pay (or SPP):

Is paid at the rate of £139.58 for a period of up to two weeks after an employee’s partner has given birth.  This can be recovered from HMRC.

Statutory adoption pay (or SAP):

Works in exactly the same way as statutory maternity pay although the conditions for its payment are slightly different.  Again, this can be recovered from HMRC.

Shared parental pay (or ShPP):

Is a new statutory payment for parents of children that are born or adopted after 5 April 2015.  It allows a lot more flexibility in who takes care of the baby after the birth.  The mother must take a minimum of two weeks leave after the birth but after that she can elect to forgo the rest of her maternity leave, and share the remaining pay and leave with her partner – pay of up to 39 weeks and leave of up to 52 weeks.  ShPP is paid at the same rate as SMP – £139.58 per week.  And again, this can be recovered from HMRC.

Please note that all of the above are examples of the minimum pay requirements to employees during any period of absence.  Your employee’s contract may outline additional payments that they are entitled to, such as a period of full paid sick leave or an addition to the amount of maternity pay.  Such contractual payments will be specific to your business and will not be recoverable from HMRC.

Hopefully, this has given you an insight into how HMRC and the government help small businesses to continue to function if employees are unable to work.  If you would you like some further information on any of the points raised above or have any other questions relating to payroll, please call 01872 300232 or email us at hello@hivebusiness.co.uk.