Outsourced Payroll Specialists

How Does Parental Leave Affect Payroll?

Parental leave is something that all businesses face and handling the various aspects involved with it is something that needs to be done in a standardised way.  From covering the staff to organising the payroll, businesses need to have a system in place to ensure everyone gets their rights and is treated fairly.

Maternity leave – the rules

Eligible employees are allowed to take up to 52 weeks maternity leave.  The first 26 are called ‘ordinary maternity leave’ while the remaining 26 are called ‘additional maternity leave’.  The earliest that leave can be taken is 11 weeks before the expected date of the child’s birth unless the baby comes early. Employees have to take at least two weeks after the birth or four weeks if they work in a factory.

Statutory Maternity Pay (SMP) can be paid for up to 39 weeks.  Normally the first six weeks are paid at 90% of the average weekly earnings before tax then the remaining 33 weeks are paid at either £14098 or 90% of their average weekly earnings, whichever is lower. Tax and national insurance still need to be deducted where applicable.

Paternity leave – the rules

Employees may be eligible for Statutory Paternity Leave and Pay for three main reasons:

  • They are having a baby
  • They are adopting a child
  • They are having a child through a surrogacy agreement

In this situation, they can take either one or two weeks consecutive leave.  This can’t start before the birth and needs to start from either the actual date of birth, an agreed number of days after the birth or an agreed number of days after the expected week of the birth of the child.  Leave has to finish within 56 days of the baby’s birth or due date if the baby comes early.  Dates may be a little different if you are adopting.

Statutory Paternity Pay is either 90% of their average weekly earnings or £145.18 a week, whichever is lower.  Tax and national insurance still need to be deducted where applicable.

Organising maternity and paternity pay

Within the rules, companies then need to create a policy to ensure that all staff are clear on the notification required and how their leave will work.  The policy can be included as part of the employee handbook so that everyone knows what the policy is and what to expect.

This also allows for the payroll department to be able to have a clear note of the start and end dates of maternity and paternity to leave to ensure staff are paid the correct amounts and also their tax and NI is correct.

Trace Payroll offer full payroll services that can help your business better manage maternity and paternity leave, allowing you to concentrate on other aspects of the business such as staff cover for these times.  We can cover the whole payroll system including issuing payslip (printed or electronically which is a standard part of our TracePay) and also ensuring that BACS transfers are made to the account on time to avoid late payments.  Our system also ensures that tax code information is updated for staff in changing situations.

You can get in touch with our expert team by using the information below.

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To find out more about fully managed payroll outsourcing with a personal touch, contact Trace Payroll Services today.

Call Trace Payroll Services on 0845 873 5619