HMRC GOV UK EMPLOYERS SML SALARY SACRIFICE PDF

You cannot salary sacrifice from statutory maternity or paternity pay. in their salary sacrifice sheet, the tax requirements of salary sacrifice schemes. Usually The effect of a salary sacrifice arrangement on is available at: The use of the Salary Sacrifice regime as a tool to save employee Tax and NIC and on maternity leave – .

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Employees are able to take time off work on becoming a parent and where qualifying conditions are met, are entitled to statutory payments for some of all of that period. This topic looks at statutory maternity, statutory paternity pay, statutory adoption pay and shared parental pay.

It also looks at maternity, paternity and adoption and shared parental leave. All employers, regardless of size, are responsible for paying eligible employees a minimum payment for periods of leave relating to the birth or adoption of a child. A woman must meet certain eligibility criteria in order to qualify for statutory maternity pay SMP.

She must have at least 26 weeks’ continuous service regardless of number of hours worked per week by the end of the qualifying week which is the 15th week before the expected week of childbirth EWC. Her average weekly earnings over the eight-week period up to the end of the qualifying week must be over the lower earnings limit for National Insurance purposes. She must provide notification of her intended maternity absence in accordance with her employer’s rules and at least 28 days before her absence from work is due to begin.

This does not apply to a woman who leaves her employer because she is dismissed or her employment is terminated without her consent after the beginning of the 15th week before the EWC. A woman is not disqualified from receiving SMP if she leaves work for any reason including a resignation after the start of the 15th week before the EWC, as long as she meets the criteria above. All women are entitled to take 52 weeks maternity leave, irrespective of whether they meet the conditions for payment of statutory maternity pay.

If the conditions for entitlement to SMP are not met, the leave may be taken unpaid. These rules apply to a woman who is awarded a pay rise or would have been awarded a pay rise had she not been absent on maternity leave.

Benefits maternity leave-changes affecting salary and benefits

While a woman is dalary maternity leave, she remains entitled to her contractual non-cash benefits such as a company car, private medical insurance, etc throughout her maternity leave. Failure, without good reason, to maintain or produce the required records, or to fraudulently or negligently produce an incorrect record, is a criminal offence. Statutory paternity pay and leave is available to help the partners of those who give birth or adopt a child.

It zml not limited to biological fathers. An adoptive parent sxlary is not taking statutory adoption leave is also eligible to paternity pay and leave. This legislation applies to all employers, regardless of the size of the workforce. An employer must keep an SPP record for three years after the end of the tax year in which they paid SPP to an employee.

If an employee adopts a child, he or she is entitled to take statutory adoption leave of up to 52 weeks. This entitlement applies to any employee newly adopting a child up to the age of 18, but hrc step-family adoptions.

Statutory Maternity, Paternity, Adoption and Shared Parental Pay: In-depth | Croner-i

The entitlement to leave applies irrespective of whether the employee is entitled to statutory adoption pay SAP. Where a couple adopt a child, only one partner is eligible for adoption leave and SAP. The adoptive parents can decide which of them takes the adoption leave, the other parent being entitled to statutory paternity leave and pay. The other partner may also be eligible for shared parental pay and leave.

SAP is the minimum payment an eligible employee can receive while on adoption leave. Payment is made for a maximum of 39 weeks.

Where a baby is due or a child is placed for adoption, subject to the eligibility conditions being met, parents may share leave and pay. If the mother or adopter returns to work early, the remainder of the leave period may be taken as shared parental leave SPL to a maximum of 50 weeks.

Statutory Maternity, Paternity, Adoption and Shared Parental Pay: In-depth

Where the mother or adopter returns to work before the end of the maternity or adoption pay period, Shared Parental Pay ShPP may be paid for the remainder of the period to a maximum of 37 weeks. The following table summarises the offences in respect of which penalties may be charged and the associated penalty. The provision of incorrect information or documents either fraudulently or negligently gkv response to a formal information employes.

Anyone who fraudulently or negligently makes an incorrect statement or declaration to establish entitlement to Statutory Payments. An employee must meet the continuous employment test in order to be eligible for SMP. This requires her to have been employed for 26 weeks by the end of the qualify week which the 15th week before the week in which the baby is due known as the expected week of childbirth EWC.

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To check if this test is met, the employer should obtain a statement from the woman confirming the date on which her baby is due.

The EWC can then be identified as the week commencing on the Sunday prior to the date or on the Sunday on which the baby is due, and ending with the following Saturday. In order to establish the beginning of the qualifying week, count back 15 weeks from the beginning of the EWC a Sunday.

The qualifying week starts on a Sunday and ends on a Saturday. To find the latest date that the employee can start work and meet the continuous employment test, count back 25 weeks from the Saturday of the qualifying week.

Provided that she would otherwise have qualified for SMP, if a woman is dismissed by her employer before the qualifying week in order to avoid liability for SMP, she will continue to be eligible for payment. Thus, the employer cannot escape liability. Sacrifoce table showing key dates is available on the GOV. In the case of a premature birth, payment of SMP should be employes the day following the baby’s birth if the woman has not already started her maternity leave.

If a woman has two separate jobs, she will be entitled to receive SMP from both employers, provided she meets the qualifying conditions in dml of each employment, particularly the minimum earnings criteria.

Where the two employers for whom the woman works are associated companies, or where she has two contracts with the same employer, there may be an entitlement to have the two sets of earnings aggregated for the purpose of calculating her earnings. Such aggregation will, however, not be xacrifice if it is not reasonably practicable for the employer because, for example, earnings under the different contracts are calculated separately.

In these circumstances, the woman may not qualify for SMP at all if her earnings in each contract fall below the minimum level required to qualify. Companies are associated if one company controls the other, or if both companies are controlled by the s,l third party.

Eligibility for SMP is not in any way connected with, or dependent on, the woman’s decision whether or not to return to work after maternity leave. Thus, if sacrfiice woman resigns from employment or is dismissed eg for redundancypayment must still be made provided she meets all the qualifying conditions.

Are employees allowed to receive childcare vouchers, or other benefits, whilst on maternity leave?

She is not employed by her employer during the qualifying week ie the 15th week before the EWC. She works for another employer after the childbirth and during the maternity pay period. Working for Other Employers. If a woman is ineligible for SMP, the employer must provide her with an exclusion form form SMP1 so that she may claim state maternity allowance MA instead. MA is payable by the Department for Work and Pensions DWPprovided the woman satisfies the contribution conditions based on her previous employment or self-employment.

Casual workers must meet the same eligibility tests as other employees in order to qualify for payment of SMP, including the continuous employment test. However, an employee may still be eligible for SMP even if she did not work every week during the week period up to the end of the qualifying week.

Where this is the case, entitlement to SMP will depend on the reason why she did not work. If the employee did not work during a week because the employer did not have any work to offer her, she will still be eligible for SMP.

However, if work was offered and she turned it down, she will lose entitlement to SMP unless the reason she turned the work down was for permitted reasons see www. There are two SMP rates: SMP is treated as pay; therefore, tax, NICs and where appropriate pension contributions, etc should be deducted in the usual way. SMP cannot be paid over and above salary, so it must be stopped if the employee returns to work before the end of the MPP. Average Weekly Earnings for the purpose of calculating SMP are the woman’s actual average weekly earnings over the reference period.

This is the eight-week period up to and including the qualifying week ie the 15th week before the EWC. Average Weekly Earnings for this purpose includes any remuneration on which the employer is liable to pay Class 1 NICs. This therefore includes overtime, commission and bonus payments, whether or not these payments form part of the employee’s contractual rights. A woman’s AWE could be inflated if, for example, an annual bonus is paid during the reference period.

This would increase the SMP payable in the first six weeks of her maternity leave. Employers should also take into account any pay rise occurring between the start of the reference period and the end of her maternity leave. For employees who are paid weekly, the calculation of average weekly earnings will usually be a simple process of adding the woman’s actual gross earnings for the sacrifiec eight weeks and dividing the total by eight.

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For employees who are paid monthly, the relevant amount can be calculated by multiplying the total of the woman’s two gross monthly payments in the reference period by six and dividing the result by If the child is born before or during the employyers week, the conditions for the calculation hmr SMP are modified so that the dalary NWE is calculated by reference to the eight-week period immediately before the week in which the baby was born.

This is available sqlary www. If the period during which an employee is receiving the standard rate of SMP spans an increase in that rate ie she is receiving SMP in the first Sunday in Aprilthe employee will receive the old rate for pay periods beginning before the rise and the new rate for pay periods beginning on or after the rise.

An employer may calculate SMP on a daily basis by dividing the weekly rate of SMP by seven, in order to align such payments with the employee’s usual pay pattern. The daily rate of SMP applies only for the employees of allowing payments of SMP to be made in accordance with normal payment intervals. SMP is a weekly payment payable at a weekly rate and szcrifice is on a weekly, rather than daily, basis. A salary sacrifice arrangement is an agreement between the employer and the employee whereby the employee gives up part of his or her cash salary in return for non-cash benefits.

Entitlement for SMP is dependent on the employee having average weekly earnings that are at least equal to the lower earnings limit for National Insurance purposes. Employees should be made aware of this before entering into a salary sacrifice arrangement.

As SMP is payable for the first six weeks at a rate of 90 per cent of average weekly earnings, entering into a salary sacrifice arrangement may reduce the amount of SMP payable for the first six weeks. The amount of SMP payable may also be affected for the remainder of the maternity pay period if average weekly earnings are less than the standard amount or if they fall below the standard amount as a result of the salary sacrifice arrangement.

However, the employee will be able to enjoy the non-cash benefits taken in exchange for the hjrc foregone during her entire maternity leave.

If the benefits are significant, this can outweigh any reduction in SMP arising from sacrificed salary. SMP may be paid for a week or a part of a week, and the MPP can start on any day, eg the day on which the woman has notified her employer that her maternity leave will begin that is not earlier than the beginning of the 11th week before EWC. If a woman’s employment is ended after the beginning of the 11th week before the EWC but before the start of the MPP, the MPP will start on the day following the day on which her employment ended.

If a woman gives birth before she has begun her maternity leave, the MPP and therefore ealary ordinary maternity leave will start on the day after the day childbirth occurs. For example, if a woman gives birth to a child on a Tuesday, her MPP would start the next day, ie Wednesday. Similarly, if a woman who has not yet started maternity leave is absent from work during the four-week period prior to the EWC due to a pregnancy-related illness, the employer may elect to start the MPP on the day after the first day of absence.

For example, if a woman is absent from work due to a pregnancy-related illness on a Thursday, her MPP starts the next day ie Friday.

The amount of pay eg a day’s pay for working on a KIT day is a matter for agreement between the employer and the employee and should be set out clearly in advance, along with the amount of pay the employee will receive for that particular week. However, such an agreement must comply with other employment legislation in relation to paying employees, such as the Equality Act In other words, the rate of pay for working on a KIT day cannot be lower than the hourly rate of the National Minimum Wage to which the woman is entitled and must be equal to the pay that a male employee would receive for performing the same work or work of equal value.

Once the woman is within four weeks of the EWC provided she is still workingshe may still be paid Statutory Sick Pay SSP if she is off sick, but only when the sickness absence is not related to her pregnancy. If a woman entitled to maternity leave is sick after the end of her leave, normal sick pay arrangements will apply.

Note that any periods of absence taken in connection with the pregnancy or childbirth should not be counted vov determining the period of salaty for the purpose of calculating occupational sick pay and any other related benefits.