It is a legal minimum payment that UK employers must provide to eligible employees in specific situations. It covers things like:
Each type has its own qualifying rules, payment rates, and length of time it can be paid for. Employers must calculate and pay correctly to stay compliant with employment law and HMRC requirements.
It’s important to understand which type applies, who qualifies, and how to calculate the correct amount. Employers must check each employee’s eligibility for example, whether they’ve worked for you for long enough and if they earn at least the minimum required amount.
For statutory sick pay, maternity, paternity, adoption, or shared parental pay, you’ll need to:
Understanding the basics helps employers stay compliant, support staff properly, and avoid costly mistakes.
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Not every employee automatically qualifies they must meet certain rules for each type. Here’s how eligibility generally works:
Length of Employment:
Most statutory payments require an employee to have worked for you for a minimum period. For example, to get Statutory Maternity Pay (SMP) or Statutory Paternity Pay (SPP), employees usually must have been employed continuously for at least 26 weeks up to a qualifying week (such as the 15th week before the baby is due).
Minimum Earnings:
Employees must earn at least the Lower Earnings Limit (LEL) this is set by HMRC each year. If their average earnings are below this limit, they won’t qualify but may still get other benefits.
Notice and Evidence:
Employees must give proper notice and provide evidence if required for example, a fit note for SSP or a MAT B1 form for SMP.
Employment Status:
Statutory pay usually applies to employees and some workers on contracts. Self-employed people don’t qualify but may get other support instead (like Maternity Allowance).
Employers must check the specific rules for each type of statutory pay to make sure payments are only made to employees who qualify and to avoid errors when reclaiming costs through payroll.
Once you know an employee qualifies, paying correctly is essential to stay compliant with employment law and HMRC rules.
Calculate the Correct Amount:
Use HMRC’s latest rates for sick pay, maternity, paternity, adoption, or shared parental leave. Rates often change every tax year, so double-check you’re using the right figures.
Pay Through Payroll:
It is normally paid through your normal payroll process. It should show clearly on the employee’s payslip and be taxed as normal pay (income tax and National Insurance usually still apply).
Reclaim What You Can:
Small employers may be able to reclaim some statutory payments for example, small businesses can usually recover 92% or even 103% of SMP through their PAYE. Report what you reclaim through your payroll software or EPS (Employer Payment Summary).
Keep Records:
Keep detailed records of how you worked out the payments, proof of eligibility, and any recovery claims. HMRC may check this if you’re audited.
Stay Organised:
Use payroll software or speak to your payroll provider to make sure payments are made accurately and on time. Errors can lead to underpayments, fines, or disputes with employees.
What is statutory pay?
It is the legal minimum amount employers must pay eligible employees during certain life events like sickness, maternity, paternity, adoption, or shared parental leave.
Who pays statutory pay?
Employers pay through their normal payroll. Some employers can claim back some statutory payments from HMRC, depending on their size and circumstances.
Who qualifies for statutory pay?
Employees usually need to meet minimum length of service and earnings thresholds. They must also give proper notice and provide any required evidence.
What is Statutory Sick Pay (SSP)?
SSP is paid to eligible employees who are too ill to work for more than 3 consecutive days. It’s paid at a fixed weekly rate for up to 28 weeks.
How much is Statutory Maternity Pay (SMP)?
SMP is usually paid for up to 39 weeks: 90% of average weekly earnings for the first 6 weeks, then a fixed rate or 90% of average earnings (whichever is lower) for the remaining 33 weeks.
Can employers reclaim statutory pay?
Yes many small employers can reclaim some statutory payments like SMP or SAP through their payroll by reducing the amount of tax and National Insurance they pay to HMRC.
Is statutory pay taxed?
Yes statutory pay is treated like normal earnings, so income tax and National Insurance contributions usually apply.
What happens if an employer pays the wrong statutory pay?
Employers who underpay or pay incorrectly can face fines or disputes with staff. Keeping accurate payroll records and using up-to-date rates helps avoid costly mistakes.
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