What is Statutory Paternity Pay and when should you pay it?
This accounts for paid time taken off by an employee, including you as a director, after their partners pregnancy or adoption to provide care, and falls under two distinctions ,Ordinary Paternity Pay and Additional Paternity Pay (for information on claiming Adoption Paternity Pay see bottom).
It may initially appear confusing, but its much easier to wrap your head around once you understand that there are key differences to qualify for Paternity Pay as opposed to Paternity Leave, so where your employee may be eligible for leave they are not necessarily entitled to the pay that accompanies it.
Once thats cleared up you then need to note that there are further conditions which separate applying for Ordinary and Additional paid leave, so where an employee may qualify for Ordinary Paternity Pay it may not necessarily follow that theyre eligible for any Additional Paternity Pay.
If an employee meets the requirements for the initial Ordinary Paid Leave they can be granted 1-2 weeks replacement salary.
APP can also be applied for if an employee is applying for Additional Paternity Leave, and can provide anywhere from 2-26 weeks paid leave, but depends entirely on their partners unused Maternity Leave, and their ability to meet the conditions.
Essentially this means that if the childs mother has been granted Statutory Maternity Leave or Statutory Maternity Pay but has then returned to work before her allotted leave/pay is up, the time off can be effectively transferred over to the partner if they meet the conditions listed below.
What are the employee conditions for Ordinary Paternity Pay?
Initially a claimant must be recognised as an employee and not a worker, be sure to verify the difference if youre uncertain!
To be eligible for OPP an employee must have accrued 26 weeks of continuous work by the end of the 15th week (known as 'the qualifying week') before the expected week of childbirth.
The employee must be earning a minimum of £112 per week before tax and maintain employment up to the birth.
As the employer you need to have received an SC3 form, or if you have your own equivalent, 28 days prior to when they want their cover pay to start.
For all forms you may need click here.
What are the employee conditions for Additional Paternity Pay?
There are slightly more requirements, some of which are optional, when an employee is applying for APP.
Firstly, youre within your rights to request a copy of the childs birth certificate and the employment details of the mother, which will need to be returned to you within 28 days of your request.
Depending on the circumstance of the child, whether its birth or adoption, your employee will need to submit one of the following forms, SC7 (birth), SC8 (UK adoptions), SC9 (overseas adoption), SC10. Providing you're not using a company specific form, these forms can all be found on HMRC website;
Rate of pay:
The statutory weekly rate of Ordinary Paternity Pay and Additional Paternity Pay is £139.58 or 90% of your average weekly earnings (whichever is lower).
Payment has to be made on the same day as an employee would usually be paid and is subject to tax and national insurance deductions.
What can you claim back?
How much you can recover depends on the accumulative amount of Employer and Employee National Insurance you have contributed to HMRC in the relevant tax year, which is the year in which the qualifying week of the pregnancy or matching week of the adoption falls.
This simply means if youve paid up to £45,000 in the relevant tax year you can recover 100% of your paternity payments and an added 3% compensatory pay out known as small employers' relief. However, if youve paid over £45,000 in contributions youre only entitled to 92%.
If you can't afford to pay the initial payments you can apply for funding from HMRC, click here for more information.
For more information on your personal claim contact your Client Manager.
Paternity Pay for Adopting:
If an employee is requesting paternity pay for an adoption they must submit an SC4form or your own equivalent no later than 28 days before they want their payments to start.
For overseas adoptions they need to submit an SC5 form within the date shown on the form.