Forthcoming changes to Statutory Payments

Following publication of information relating to the forthcoming changes affecting Statutory Payments in the last edition of the Employer Bulletin and the Notes for Software Developers we have been asked a number of supplementary questions.

The purpose of this note is to bring everyone up to date with the latest information on how the various changes are expected to operate and to provide some examples.

Age Discrimination and SSP

Scenario 1

An employee aged 67 becomes sick on 20th September and was disallowed SSP because of his age. He is still sick on 1st October and should now be paid SSP.

Questions:

Q1 Is the employee eligible for the complete PIW or just the portion that is after the 1st October.

A1 Entitlement to SSP can only arise after 1.10.06 and so it is only that part of the period of incapacity which falls after the introduction of this provision which can be considered as an eligible period for SSP. There is no provision to pay for the earlier period, but specific provision has been made in this amendment to enable payments to be made for the later period.

SSP would have been disallowed for the period prior to 1.10.06. Entitlement will need to be reconsidered as though it was a new PIW starting on 1/10/06.

Q2 If it is just the portion of the PIW occurring on or after 1 October that is payable should waiting days have to be served starting on 1 October, or should payment commence for each qualifying day and waiting days ignored?

A2 All the normal qualifying conditions will apply as though the period of incapacity started on 1.10.06.

Waiting Days will need to be served from 1.10.06. This is because, as previously stated there was no entitlement prior to 1.10.06 and therefore any days prior to that would not be qualifying days and so could not be part of the first three “qualifying days”.

Scenario 2

An employee aged 67 became sick on 1September and was disallowed SSP (because of age). He returned to work on 20 September but fell sick again on 3 October. Despite the link to the earlier period of incapacity for work he is entitled to SSP.

Questions:

Q1 Is he eligible for just the absence after the 1st October or because of the link to the earlier absence is that linked absence also eligible?

A1 You should only consider SSP for the PIW starting on 3 October. The previous period of incapacity would have been disallowed [in accordance with the rules applicable at that time] due to employee’s age.

We have made a special provision that removes the requirement to link such periods with earlier PIWs. (The Employment Equality (Age) Regulations, Schedule 8, Para 13(2) & (3)).

This prevents the 2nd PIW from being disallowed.

Under the existing linking provision the 2nd PIW would link to the first and entitlement could not then arise in the 2nd PIW...

Q2 If the link to the 20 September PIW is to be ignored, then should the 3 October PIW be treated as unlinked and waiting days will have to be served on the 3 October PIW before payment commences for the ensuing qualifying days?

A2 Yes - Again entitlement only arises following the introduction of these Regulations on 1 October. Any period of incapacity after that date is treated as though it were a first PIW and will be subject to the requirement for waiting days.

Statutory maternity pay changes

These changes are subject to Parliamentary approval. The Government published draft regulations which are available at www.dti.gov.uk/workandfamilies

Extending Statutory Maternity Pay (SMP) to 39 weeks towards a goal of 52 weeks

• SMP will be extended to 39 weeks for those women whose expected date of confinement is on or after 1 April 2007 and further facilitate extension to 52 weeks by the end of this Parliament.
• Statutory Adoption Pay (SAP) will also be extended to 39 weeks for those whose child is expected to be placed with them for adoption on or after 1 April 2007. Measures in the Work and Families Bill further facilitate extension to 52 weeks by the end of this Parliament.

Further SMP easements

These easements will apply to those women whose EWC is on or after 1 April 2007.

Start date of the Maternity Pay Period

Currently the first day of the SMP payment period will either be a Sunday or, where the start of a woman’s maternity leave and pay is triggered by the birth of the baby or by a pregnancy related illness, the day after the birth or the day after the first day of absence from work for such illness.

Providing an “any day start” rather than a Sunday start date will allow women to start their maternity pay on the day their maternity leave begins, rather than the Sunday after their last day at work. This will align the start of SMP with that of maternity leave and also with the “any day” start date of Statutory Paternity Pay and Statutory Adoption Pay.

The start of the maternity pay period will not be changed for cases which are triggered by the birth of the baby or pregnancy illness.

Calculation of a daily rate

SMP is paid on the basis of the weekly rate for a total of 26 weeks. The legislation does not provide for SMP to be calculated at one seventh of the weekly rate.

Many women are paid in periods that are not readily divisible into exact numbers of weeks. In particular many are paid by the calendar month and this leads to employers having to pay SMP in patterns of weeks which do not relate to the woman’s normal pay period. To help resolve this difficulty, legislation will be amended to allow SMP to be calculated at one seventh of the weekly rate where this will help employers to align payments. The objective is that where it is necessary to calculate a day’s rate of statutory maternity pay the rate might be taken as being 1/7th of its weekly rate.

Keeping in Touch days

Currently a woman loses one weeks SMP (at the lower rate first) for each week in which she does any work for her employer under her contract of service.

Easing this rule to enable women to undertake the odd days training or to go into work on occasion to “Keep in touch” without losing her SMP for that week would be helpful to women and ease their eventual return to work for the employer.

The Legislation will be amended to allow a woman to work under her contract of service for up to a number of days in total (to be specified), not necessarily consecutive without losing any SMP. Whether the woman just goes in for 1 hour or a whole day, it will still be counted as a day for “Keeping in Touch” purposes.

The decision to undertake “Keeping in Touch” days must be made in agreement with the woman and her employer.

The employer has no right to demand that any such “Keeping in Touch” work is undertaken and the woman has no right to undertake such work.

Important - The number of “KIT” days has still to be decided following the consultation exercise.

The above easements will also apply to Statutory Adoption Pay (SAP). The daily calculation will also be applied to Statutory Paternity Pay (SPP).

Here are some scenarios relating to the increase in SMP week’s payable from April 2007 all of them assume that all SMP entitlement conditions are met.

Scenario 1

EWC is 01/04/2007 (i.e. the very first day of the next tax year).
Baby’s actual birth date is 01/02/2007 (i.e. born in the current tax year)

Question: Is employee entitled to the new 39 weeks, of payable SMP?

Answer

This woman's expected date of confinement is on or after 1 April 2007, therefore this woman will qualify for 39 weeks SMP regardless of when her baby is actually born.

Scenario 2

EWC is 15/04/2007 (i.e. well into the next tax year).
Baby’s actual birth date is 01/03/2007 (i.e. born in the current tax year)

Question: Is employee entitled to the new 39 weeks, of payable SMP?

Answer

This woman's EWC is w/c 15 April 2007 and she will qualify for 39 weeks SMP regardless of when her baby is actually born.

Scenario 3

EWC is 25/03/2007 (i.e. EWC is in the current tax year).
Baby’s actual birth date is 14/04/2007 (i.e. in the next tax year)

Question: Is employee entitled to the new 39 weeks, of payable SMP?

Answer

This woman's EWC is w/c 25 March 2007. Only women expecting babies on or after 1 April 2007 qualify for 39 weeks SMP. This woman will qualify for 26 weeks SMP even though her baby was actually born after 1 April 2007.

Important

It needs to be emphasised that women expecting babies on or after Sunday 1 April 2007 (in other words with an Expected Week of Confinement of 1 April 2007 or later) will qualify for SMP under the new rules.

It is the date the baby is expected to be born which determines whether she gets 39 weeks SMP, not the date the baby is actually born.

SAP Entitlement

Important

It needs to be emphasised that where it is expected that the child will be placed on or after Sunday 1 April 2007 the adopter will qualify for SAP under the new rules.

It is the date the child is expected to be placed which determines whether the adopter gets 39 weeks SAP, not the date the child is actually placed. The adopter is required to give evidence of the expected date of placement, for example on a matching certificate from the adoption agency.

Here are some scenarios relating to the increase in SAP week’s payable from 1 April 2007. All of them assume that all SAP entitlement conditions are met.

Scenario 1

The child is expected to be placed for adoption on 01/04/2007 (i.e. the very first day of the next tax year). Child’s actual date of placement is 21/03/2007 (i.e. placed in the current tax year).

Question: Is employee entitled to the new 39 weeks, of payable SAP?

Answer

The expected date of placement is on or after 1 April 2007, therefore this employee will qualify for 39 weeks SAP regardless of when the child is actually placed.

Scenario 2

The expected date of placement is 15/04/2007 (i.e. well into the next tax year). Child’s actual date of placement is 31/03/2007 (i.e. placed in the current tax year).

Question: Is employee entitled to the new 39 weeks, of payable SAP?

Answer

The child’s date of placement is 15 April 2007 and this adopter will qualify for 39 weeks’ SAP regardless of when the child is actually placed.

Scenario 3

The expected date of placement is 25/03/2007 (i.e. in the current tax year). Child’s actual date of placement is 14/04/2007 (i.e. in the next tax year).

Question: Is the employee entitled to the new 39 weeks, of payable SAP?

Answer

The expected date of placement is 25 March 2007. Only adopters of children expected to be placed on or after 1 April 2007 qualify for 39 weeks SAP. This adopter will qualify for 26 weeks’ SAP only even though the child was actually placed after 1 April 2007.

Keeping in touch days

Important: At the time of publishing the number of “KIT” days an employee on SMP or SAP will be allowed is still subject to agreement by Ministers.

So in order to be able to provide some worked examples for illustration purposes only we have used 5 KIT days in the examples below.

Scenario 1

An employee starts their period of absence from work for either Maternity or Adoption leave on Monday 6 August 2007 and plans to return to work on Monday 29 July 2008. The period of 39 weeks paid Statutory Payment (SP) runs from Monday 6 August 2007 to 4 May 2008.

Question

The employee returns to work for one day a month from October 2007 to February 2008 (inclusive) a total of 5 days would they lose any week of paid SP?

Answer

No because they have not exceeded the total number of allowed KIT days in the SP pay period.

Question

The employee returns to work for one day in each of the months October, November and December 2007. In February and March 2008 they again return for 1 day in each month. Making a total of 5 days. In April they go into work for a further 2 days would they lose any week of paid SP?

Answer

Yes because the last two day’s of attendance took the total of days attendance over the limit of 5 days they will lose the payment of SMP or SAP for the week in which the limit was exceeded and any subsequent weeks in which they work.