In April 2007, changes made in the Employment Rights Act 1996 start taking effect, which improve the entitlements for employees who become pregnant. I’ve been reading a bit about what these entitlements will become.
I started by reading up on what expectant mothers are entitled to…
Women who become pregnant can take up to 52 weeks maternity leave.
The first 26 weeks of maternity leave are called Ordinary Maternity Leave (OML). During OML, women still get all the same rights under their normal contract. For example, they still build up holiday, and are elegible for things like pay raises and pension contributions that they would normally be. After OML, they can come back to the same job.
The next 26 weeks of maternity leave are called Additional Maternity Leave (AML). During AML, women still get some of the same rights under their contract, but not all. For example, terms and benefits such as pay raises and holiday pay do not have to be continued during this. After AML, they should be offered their old job back, unless this is not reasonably practical.
Statutory Maternity Pay (SMP) defines how much women are entitled to earn while on maternity leave. For the first 6 weeks (of OML), SMP is 90% of average earnings. For the next 33 weeks, it is a flat rate of £108.85 per week.
It’s worth pointing out that I think maternity leave is a great idea. When my wife took a year off work after our daughter was born, this made a big difference for us, and we are very pleased that she was able to do it. I only had a month off for paternity leave, and wished it could have been longer.
That said… from an employer’s perspective, this was all sounding a bit expensive. If you lose a key employee for a whole year (and in a small business, this loss is often felt all the more keenly), this has a significant impact. A temporary replacement needs to be found, which means recruitment – never a lot of fun. And for 39 weeks, you’re paying two people to do the same job. For any small business, this is a worrying prospect. For a small charity, even more so. We started to do some back-of-the-envelope calculations wondering if SYA could afford this… it didn’t look great.
A little bit of Googling later and I’d uncovered information intended for employers, with some reassuring news. The DTI guidance (pdf) says that:
You should find out about claiming back the SMP you pay. You are entitled to claim back at least 92 percent. Small employers are able to claim back all the SMP plus some compensation.
How small is a “small employer”? I found the answer on the HMRC website:
companies with an annual liability for National Insurance contributions of £45,000 or less are entitled to claim back 100% of the SMP plus 4.5% additional as compensation for the NI contributions paid on the SMP
The problems of losing a key member of staff for a while and having to find an effective temporary replacement remain. But it looks like the system is geared up so that it shouldn’t cause small businesses a massive financial burden. I should’ve guessed, really.
Oh – and if you haven’t guessed where my sudden interest in maternity pay has come from? Here’s a clue – as a trustee of Solent Youth Action, I’m a director of a small company employing seven members of staff. All of them women.