Maternity Pay for a small business

Baby_A

Hi,

Looking for some guidance for a friend. She has a small hair and beauty shop employing two employees. One of the ladies who has been employed 11 months is preganant, is my friend required to pay her maternity pay and keep her job open for her?

When she was employed it was all verbal, so no official documentation was given confirming terms of employment. It was agreed that it would be a temporary arrangement, and to see how it goes.

My friend cant afford to pay maternity pay and employ another person.

Any ideas where she stands?

Thanks

needaspirin

Statutory Maternity Pay:-

To qualify for SMP a woman must have been continuously employed by the same employer for at least 26 weeks ending with the qualifying week
The qualifying week is the 15th week before the week in which the baby is due.
She must also have average earnings of at least £84.

HM Revenue and Customs (HMRC) has produced an interactive SMP calculator which employers and employees can use to work out how much SMP they are entitled to. It can be found at www.hmrc.gov.uk/calcs/smp.htm. Alternatively, an employer can contact the HMRC's employer helpline.

it's not all one-sided against the employer though:-

An employer who has made any payment of SMP is entitled to be reimbursed 92 per cent of the payment, or, if s/he is a small employer, the whole amount of the actual payment plus an additional payment to cover the employee's share of NI contributions paid on SMP.

Small employers are those who pay £45,000 or less annually in gross national insurance contributions (not including Class 1A). They are entitled to be reimbursed 104.5 per cent of the SMP payment.

Hoddie_2

Your friend's employee would be treated as having a contract of employment even though nothing written has actually been prepared. In the absence of a written contract (which should have been in place from the third month), the conditions that have applied since the employment began would be deemed as agreed terms (so far as they are legal). In addition to that, as needasprin has said, a contract is not necessary for SSP to be paid - as long as the qualifying conditions are met, SSP is due. If your friend were to fail in her responsibilities as an employer it may cost more in the long run.

needaspirin

In addition, employing someone for 11 months can hardly be viewed as a temporary arrangement.
Terminating her employment after finding out she is pregnant will lead to an automatic finding of unfair dismissal at an Employment Tribunal.

As I have pointed out, it is unlikely to cost your friend anything to pay her SMP anyway and may be able to claim it back in advance of paying it.

All women have the right to return to the same job after SML.