Boosting your maternity pay
You might know the basics of Maternity Pay. 90% of your earnings for 6 weeks, then £148.68 for 33 weeks.
If your employer is more generous, your maternity pay is still likely to be expressed as a percentage of your salary.
But 90% of your earnings, what are your earnings…. ?
It is actually 90% of your gross average weekly earnings in the Relevant Period.
The Relevant Period is roughly the 8 weeks if you count 16 to 24 weeks back from your expected week of childbirth. The actual calculation is a bit more complicated and you can find it at the bottom of this page.
So, what does this mean? The more you earn in those 8 weeks the more maternity pay you get.
7 Ways To Get More Maternity Pay – Finesse Your Relevant Period
Do work overtime
Do get a bonus
Do earn lots of commission
Do sell any excess holiday (some employers pay this in one lump, others spread it over the year)
Don’t be off sick, or take unpaid leave
Don’t work part time
Don’t salary sacrifice your pension (remember switch it back on again later!)
Clearly some of these are harder to control than others! But if there is anything you can do to boost your earnings in these magic 8 weeks then you should do so.
Let’s see an example:
Identical twins Lucky Libby and Unlucky Ursula do the same sales job for the same employer and earn the same money. They live nearly identical lives and are thrilled when they both discover they are both pregnant, Libby is due in August and Ursula two months later in October.
However, there are some things that happen whilst they are pregnant that we will see make a big difference to their maternity pay.
April is their year-end and they get £1000 annual bonus, it’s also a really busy sales time with some extra sales incentives as the whole business tries to meet targets. They both do well and earn £800 commission in March, they both also do some weekend work and get £300 of overtime. They both also have 10 days left over holiday and March is the holiday year end. Libby sells it all in March, and buys it back in the new holiday year in April (the cost gets spread over the next year). Ursula just carries the holiday over from one year to the next.
In May they are both less fortunate when they get ill, and can’t work. They recover fully, but because they were ill, they earn only £50 of commission and are on statutory sick pay for the whole month.
As Summer comes to an end and Autumn arrives, they each have their baby. As Christmas comes around Libby seems happy to buy lots of presents, but Ursula is struggling on her maternity pay. They don’t understand why their identical lives suddenly feel very different and compare maternity pay…
Their employer is quite generous – they both get 3months full and 3 months half salary in the first 6 months of maternity leave, reverting to statutory maternity after that.
However, what they actually receive couldn’t be more different:
Unlucky Ursula will earn a total of £8,295 (before tax) in the first six months of maternity.
Lucky Libby however is very lucky – she will earn £22,350 in the same period. More than two and half times as much as her Unlucky twin will get, and more even than her normal annual earnings would have been.
How can this be? Their lives were identical:
They both earn £36,000 per year, and average £500 commission a month.
Their take-home pay is exactly the same* over the year so how do they end with such different outcomes?
Here are their gross earnings over the year:
(this is a slight over-simplification, but it is close enough and makes the point)
Now remember that their maternity pay is based on the “relevant period” – the two months that are 16 to 24 weeks before their baby is due.
Because Libby’s relevant period includes the bumper earnings month of March, her maternity calculation is hugely favourable.
Because Ursula’s relevant period doesn’t include the bumper March, and does include May when they were off sick, her maternity pay is very low.
It can get even worse than this – if your employer accidentally under or over-pays you during your relevant period, they are not supposed to adjust this
This seems hugely unfair, and frankly it is. Unfortunately for Ursula and Luckily for Libby them’s the rules.
How to calculate your relevant period
Would you like us to calculate your Relevant Period? Contact us and we will do it for you! If enough of you do then we’ll build a calculator to put on this site.
Calculating your exact relevant period can be rather complicated. You can find logic for working it out here: https://www.gov.uk/government/publications/maternity-benefits-technical-guidance/maternity-benefits-technical-guidance#statutory-maternity-pay-smp
You are probably best to ask your employer to tell you when they think your relevant period is.
The main objective of this page is to demonstrate how the SMP calculation is really unfair – not to suggest that you try to manipulate it.
While Statutory Maternity Pay must be calculated using the relevant period, if your employer pays additional maternity pay, they may have contractual clauses to exclude bonuses, commission etc.
Your employer can reclaim the majority (93%) of SMP from HMRC. However, if they pay above this amount then they are footing the bill.
Every employer should absolutely give you all the maternity pay you are eligible for. But if you try hard to absolutely maximise your maternity pay, you should think about what your employer (and potentially your colleagues) might think about you. Ultimately it might lead to the employer reducing maternity benefits for everyone.