What HR policies can you include to enhance statutory pay?
Something more generous might be to top up to full salary for the first three months. We’ve even seen policies which top up to full pay for six months. It is entirely up to the business, but you should have a consistent policy. You can have a minimum service requirement as part of your policy, where the enhanced pay will only apply to those with more than one or two years of service.
We are often asked about how a business can reclaim the enhanced maternity pay if the employee decides not to return. This is where is becomes more complicated and we’d recommend you talk to us about the practical implications. For instance, we’ve found reclaiming money from a resigning employee at the end of maternity is challenging, there is little pay owing (unless they have accrued holiday) and they are not in a good financial position to repay you a lump sum. It’s certainly something you can introduce, but it’s not always easy in practice!
Your policy for enhanced pay cannot make it a condition that the employee must return early because you should not aim to reduce their entitlement to a year off work with their new baby. You can encourage them back with a bonus upon return, but not as an incentive to end their maternity leave early. This type of bonus usually has a minimum time period for their return and this can work well. For instance it’s paid at the end of their first six months after their return.
Enhanced Maternity Pay – For and Against:
For
Encouraging generous terms
We always want to encourage more generous terms for women on maternity and to encourage their return to the workplace and our vote would always be to try and enhance when you can – even with just 100% of pay rather than 90% during the first six weeks.
Don’t forget that the statutory amount of maternity pay (SSP – the 90% for six weeks and weekly allowance for the other 33 weeks) is reclaimable against your NI contributions for the year ahead. The actual cost to the business is only 10%, leaving scope to consider an enhancement.
Generates loyalty
Prioritising your family friendly approach and providing a great environment for working mum’s is a real selling point to new hires and generates loyalty.
Bonuses on return can encourage a new mum to give work a try, if she was doubtful and help with all her initial costs. Once she’s welcomed back and found a new routine, she’s more likely to stay.
Against
The difficulty of clawback
Our usual advice is to minimise or not aim for any clawback of enhanced pay during maternity – this is meant to support her while she’s off, not be a debt she will owe you back. If you do want repayment, be really clear on the terms and provide this in writing to allow the employee to set aside the additional pay in the event they decide to resign.
Enhanced maternity pay doesn’t encourage a return to work; Use bonuses paid on or after return if you want your enhancement terms to encourage your employee to return.
New employees benefit and leave
If you want to reward loyalty and past commitment, then only apply your enhanced terms to those with minimum service and avoid committing yourself to higher payments during the first couple of years of employment.
When you’ve decided on the maternity pay arrangements that will work well for your business, we recommend putting this into a maternity policy and writing to your employee to confirm the arrangements. They will have questions about their time off, when they need to come back, their holiday allowance and their pay. Plus what you will pay into their pension while they are away. Ask us to help you when a maternity situation arises and we can plan out and confirm in writing all the terms and benefits that apply.
If you have any queries regarding the above, please do get in contact with us below: