Bargaining for Better Maternity Pay
Calculation Guide
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This guide helps you to calculate the approximate cost to employers of improving
maternity pay above the statutory minimum. It can also be used to calculate
improvements to statutory adoption pay.
Large employers recover 92% of the cost of maternity pay from Her Majesty’s
Revenue and Customs (HMRC) – the formula takes this into account.
The guide gives you a ‘ballpark’ figure – an approximate not an exact cost.
The maths are simple – even if you are normally ‘phased’ by figures you will be able
to do this!
You will need a calculator.
The maternity pay guide has two stages – the first stage concerns the first six weeks
of maternity pay. The second stage calculates the cost per week from the 7th week of
leave onwards.
The guide assumes the employer currently pays the statutory minimum – ie the first
six weeks at 90% of average weekly earnings and the remaining 33 weeks at £139.58
per week.
If you are not able to get exact figures concerning the take up of maternity pay – the
Government estimate that at any one time 3.5% of the workforce is absent on
maternity leave – so use this figure.
If you are trying to make improvements to a scheme where the employer currently
pays above the statutory minimum or if you need any help at all please feel free to
contact either Ruth Cross, Equalities Officer or Jo Bird, in the Equalities section at
Central Office on 0161 224 2804 or email [email protected]
www.usdaw.org.uk
Bargaining for Better Maternity Pay – June 2015
page 1
The first six weeks
of maternity pay
Step One – Calculate the current cost to the employer of paying maternity pay at 90%
of average weekly earnings for the first six weeks.
Average Weekly Earnings x 0.072 = Employer’s Current Contribution x 6 = Total
£
Average
Weekly
Earnings
x
0.072
=
£
Employer’s
Current
Contribution
x
6
=
£
Total
Step
One
Step Two – Calculate the cost to the employer of paying maternity pay at 100% of
average weekly earnings for the first six weeks.
Average Weekly Earnings x 0.172 = Employer Contribution at 100% x 6 = Total
£
Average
Weekly
Earnings
x
0.172
=
£
Employer
Contribution
at 100%
x
6
=
£
Total
Step
Two
Step Three – Calculate the cost to the employer.
Total in Step 2 minus Total in Step One = The total cost to the employer of paying maternity pay at 100%
£
Total
Step
Two
–
£
Total
Step
One
=
£
Total
Cost
Bargaining for Better Maternity Pay – June 2015
page 2
The remaining 33 weeks
of maternity pay
Step One – Calculate the current cost to the employer of paying maternity pay at
£139.58 per week.
SMP = £139.58 per week minus HMRC contribution (£139.58 x 0.92) = £128.41 per week = Employer’s
Current Contribution of £11.17 per week.
£139.58 – £128.41 = £11.17
Compare this with the examples of improvements to maternity pay set out below:
Example One – What if maternity pay was paid at 50% of Average
Weekly Earnings?
Step Two – Calculate total maternity pay per week.
Average Weekly Earnings x 0.5 = Total maternity pay per week
*Note that if this figure is less than £139.58 (the statutory minimum) do not proceed – try Example Two
at 75%.
£
Average
Weekly
Earnings
x
0.5
=
£
Total
Maternity
Pay
Step Three – Calculate the employer’s contribution.
Total maternity pay per week from Step Two – £128.41 = Improved Employer Contribution (IEC)
£
Total
Maternity
Pay
–
£128.41
=
£
Improved
Employer
Contribution
Step Four – Calculate the cost per week to the employer of making this improvement.
Improved Employer Contribution from Step Three minus Employer’s Current Contribution from Step One =
Cost per week
£
Improved
Employer
Contribution
–
£11.17
=
£
Cost
Per
Week
Bargaining for Better Maternity Pay – June 2015
page 3
Example Two – What if maternity pay were paid at 75% of Average Weekly Earnings.
Step Two – Calculate total maternity pay per week.
Average Weekly Earnings x 0.75 = Total maternity pay per week
£
Average
Weekly
Earnings
x
0.75
=
£
Total
Maternity
Pay
Step Three – Calculate the employer’s contribution.
Total maternity pay per week from Step Two – £128.41 = Improved Employer Contribution (IEC)
£
Total
Maternity
Pay
–
£128.41
=
£
Improved
Employer
Contribution
Step Four – Calculate the cost per week to the employer of making this improvement.
Improved Employer Contribution from Step Three minus Employer’s Current Contribution from Step One =
Cost per week
£
Improved
Employer
Contribution
–
£11.17
=
£
Cost
Per
Week
Example Three – What if maternity pay were paid at 100% of Average
Weekly Earnings.
Step Two – Calculate total maternity pay per week.
Average Weekly Earnings = Total maternity pay per week
£
Average
Weekly
Earnings
=
£
Total
Maternity
Pay
Step Three – Calculate the employer’s contribution.
Total maternity pay per week from Step Two – £128.41 = Improved Employer Contribution (IEC)
£
Total
Maternity
Pay
–
£128.41
=
£
Improved
Employer
Contribution
Step Four – Calculate the cost per week to the employer of making this improvement.
Improved Employer Contribution from Step Three minus Employer’s Current Contribution from Step One =
Cost per week
£
Improved
Employer
Contribution
–
£11.17
=
£
Cost
Per
Week
(These rates are correct for the tax year 2015-2016).
Bargaining for Better Maternity Pay – June 2015
page 4