During the flurry of furlough, we had several queries from our clients in respect of how to calculate statutory maternity pay (SMP) for employees who were on maternity leave but had been furloughed.
In normal circumstances, entitlement to SMP and the rate at which it is payable depends on an employee’s “normal weekly earnings”, which are calculated as a weekly average of the employee’s total gross earnings during a reference period (the “relevant period”). For SMP purposes, the relevant period ends with the last normal payday on or before the end of the 15th week before the expected week of childbirth (which is known as the “qualifying week”) and begins after the last normal payday at least eight weeks earlier.
But what happens to the calculation when an employee who is on maternity leave is furloughed, and are only being paid 80% of their normal weekly earnings?
The Maternity Allowance, Statutory Maternity Pay, Statutory Paternity Pay, Statutory Adoption Pay, Statutory Shared Parental Pay and Statutory Parental Bereavement Pay (Normal Weekly Earnings etc.) (Coronavirus) (Amendment) Regulations 2020 (we will call them the Regulations for short!) came into force on 25 April 2020 and helpfully confirm the position.
In the case of SMP, the Regulations provide that where an employee is on furlough during part or all of the relevant period and her pay is reduced, as a result, her normal weekly earnings for the purposes of eligibility and the rate payable for SMP will be calculated based on the pay she would have received if she had not been furloughed.
The Regulations make similar amendments in respect of maternity allowance, statutory paternity pay, and other rates of pay ensuring that those affected employees are not disadvantaged in relation to how their statutory pay is calculated as a result of being furloughed.
The Regulations apply where the first day of the period in which the relevant payment or allowance is payable is on or after 25 April 2020.
If you require advice on furlough or have queries on how to manage your staff during the pandemic, our employment law team are on hand to support you.