Following the governments Autumn Statement on 17th November 2022 and indication that benefits would rise by 10.1%, it has been confirmed that the standard rate for:
- Statutory Maternity Pay (SMP)
- Shared Parental Pay (ShPP)
- Statutory Paternity Pay (SPP)
- Statutory Adoption Pay (SAP)
- Statutory Parental Bereavement Pay (SPBP)
will increase from the current £156.66 to £172.48 per week (or 90% of average weekly earnings – whichever is lower), for full parental pay weeks starting on or after Sunday 2nd April 2023.
The earnings threshold to qualify remains frozen at £123 average earnings per week.
What day should I start my parental leave?
Any day may be chosen to start parental pay, however, for those whose leave will cross the 2nd April 2023, it may be seen as more beneficial to start the leave on a Sunday.
If a weeks statutory parental leave commences before 2nd April 2023, then the weekly rate is £156.66. So an employee starting their parental leave on Saturday 1st April 2023 will receive the old rate for that week until 7th April 2023.
However, if the leave week commenced on Sunday 2nd April through 8th April 2023, the new rate of £172.48 would be due, some £15.82 more.
What about daily rates?
There are no official daily rate for statutory parental payments. Employers and employees can align payment with the regular pay period by splitting the weekly payment value, however a week is still a week when the parts are added.
So does a part week before the 2nd April get applied at the old rate and the remaining split of a week at the new?
No. The weekly rate applies to the whole week even if split into two different pay periods. Only full weeks or part week starts that are from Sunday 2nd April 2023 are entitled to the new standard payment rate?
The government departments responsible for statutory payments: BEIS, DWP and HMRC, have previously confirmed that the increase to National Minimum Wage and National Living Wage do constitute a pay rise under the Alabaster rule. Employers would be required to recalculate the average earnings to reflect this pay rise.
Salary Sacrifice and Statutory Payments
Can you reduce or deduct from a statutory payment to cover salary sacrifice arrangements?
Simply: No. it is not permitted to sacrifice any statutory payment. Equally there are right to continued access to employer contributions (including enhanced employer contributions), and continued right to non-cash benefits in kind.
Voluntary deductions and standard employee contribution based on the lower statutory payment may be deducted, however, these are no salary sacrifice arrangements.
Some may consider swapping to avoid the employer facing a cost is an option, however, such activity could be considered maternity discrimination.