If you’re a contractor or small business / freelancer or even sole trader, you may be wondering what maternity benefits are available to you and what you are entitled to claim.
You may be an employee, searching the internet for answers to what you’re entitled to when you decide to start a family.
As an employee, by law you are entitled to either Statutory Maternity Pay (SMP) as long as you meet the essential criteria, or alternatively, to Maternity Allowance (MA). Any company/employer should have policies in place to guide you through maternity and the structure of what you would be entitled to.
Statutory Maternity Leave / Pay
Statutory maternity leave is 52 weeks and broken down into two sections:
- Ordinary Maternity Leave – the first 26 weeks,
- Additional Maternity Leave – the last 26 weeks
You do not have to take 52 weeks, but you must take at least 2 weeks after the baby is born, and four weeks if you work in a factory.
Statutory Maternity Pay is paid for 39 weeks and is broken into two sections:
- 90% of your average weekly earnings – first 6 weeks
- £145.18 or 90% of your average weekly earnings (whichever is lower) for the next 33 weeks
SMP is paid the same way as your earnings, therefore if you receive wages on a monthly basis, you will receive SMP the same way. Tax and national insurance will be deducted from these payments.
To be eligible for SMP, you’ll need to have earned at least £116 a week (on average) and have worked for your employer for at least 26 weeks continuously up to the 15th week before the expected due date of the baby.
You will need to provide proof of your pregnancy prior to SMP being agreed, this is via a MATB1 form given by your midwife, for you to give your employer. This will enable a company to work out correct calculations of your expected pay. If you are not eligible for SMP, for example you have not worked for the organisation for long enough, you will be given an SMP1 form which will explain why. You may then be entitled to Maternity Allowance.
- Maternity Allowance for 29 weeks.
If you are an employee who cannot get SMP, a sole trader, self-employed and pay Class 2 National Insurance or you’ve recently stopped working, you may be entitled to Maternity Allowance.
To be eligible you must have been been working for at least 26 weeks within the last 66 weeks prior to the baby being due and earning at least £30 a week in at least 13 of those weeks. The weeks do not have to be together but must be within the time scale.
Or, if you are self-employed, you must have paid Class 2 National Insurance for at least 13 weeks of the 66 weeks prior to the baby being due.
The DWP (Department for Work and Pensions) can check if you have paid enough when you make your claim.
The full rate of Maternity Allowance is £145.18 week, however if you have not paid enough NI, you could get £27 a week for 39 weeks, but you’ll still need to meet the other criteria to be eligible.
The good news is, that if you find that you’ve not paid enough National Insurance, you have an opportunity to catch up on payments. You can contact HMRC and arrange to top-up your NI contributions, which should bring you in line with what you need in regard to requirements.
- Maternity Allowance for 14 weeks
If you do not meet the criteria for the above MA, you may be eligible to receive payments for 14 weeks instead. HMRC outlines the requirements as per the following:
- you’re married or in a civil partnership
- you’re not employed or self-employed
- you take part in the business of your self-employed spouse or civil partner
- the work you do is for the business and unpaid
- your spouse or civil partner is registered as self-employed with HMRC and should pay Class 2 National Insurance
- your spouse or civil partner is working as self-employed person
- you’re not eligible for Statutory Maternity Pay or the higher amount of Maternity Allowance (for the same pregnancy)
If you lose the baby
You may still qualify if the baby is either:
- stillborn from the start of the 24th week of pregnancy
- born alive at any point during the pregnancy
The above may sound complicated but your employer or an accountant can advise you if you run into information overload! Here at Kara we provide payroll services for many local businesses and self-employed businesses and can advise if you are a contractor or run your own business of what your options would be. Get in touch for an initial chat and let’s ensure you’ve got the right information for your future.