Parental pay and leave

You can add parental pay in UK Payroll, including Maternity, Paternity, and Statutory Adoption pay.

Before you begin

For guidance on eligibility and entitlement, see:

• HMRC’s Maternity pay and leave
• HMRC’s Paternity pay and leave
• HMRC’s Statutory Adoption Pay and Leave: employer guide

How to set up maternity/paternity leave

1. From the left side bar, navigate to Employees.
2. Select the relevant employee.
3. Select the Maternity/Paternity leave tab.
4. Enter the Expected due date (this can be found on the MATB1/SC3 form), Leave start date, and the Leave end date.
5. The Average weekly earnings are automatically calculated. You can also enter the amount manually.

   Note: If you have transferred your payroll from another provider, you will need to calculate the average weekly earnings. To calculate the correct amount, see HMRC’s Maternity, Adoption, and paternity calculator for employers.

6. If you have set up enhanced maternity/paternity pay, select the policy you would like to implement.
7. Enter the amount of Employer pension contribution your company will maintain during the maternity leave and the Period to maintain contributions from the drop down menu.
8. Mark the box to Maintain employee pension contributions if you wish to continue contributing on behalf of the employee. This is commonly required for employees on Salary Sacrifice pension schemes.
9. Mark the box to Include SMP in pension calculations if pension contributions should be taken from maternity/paternity leave payments.
10. Click Add maternity/paternity leave.

How to set up enhanced maternity/paternity pay policies

1. From the left side bar, navigate to Settings > Company > Policies.
2. Click Create new policy.
3. Select Enhanced maternity pay or Enhanced paternity pay.
4. Enter the Policy name.
5. Define the stages of enhanced pay by entering the number of weeks and selecting the amount of pay (Full pay, Percent of pay, or Percent of pay + SMP) from the drop down menu. You can add as many stages as needed.
6. Click Create policy.

How to add Statutory Adoption Pay to an employee’s payslip

1. From the left side bar, navigate to Payrolls.
2. Select the relevant payroll draft.
3. Select the relevant employee.
4. Click Add pay item > + Gross addition.
5. Select Custom gross addition from the Type of addition drop down menu.
6. Fill in the Title (Adoption Pay) and the Amount of Statutory Adoption Pay due. If the pay isn’t pensionable, toggle off Pensionable.
7. Click Add gross addition.

If there will be recurring adoption payments, you can also set up a recurring pay item. To learn more, see Add one-off and recurring pay items.

How to report Statutory Adoption Pay in the EPS

1. From the left side bar, navigate to Settings > Company > Policies.
2. Enter the year-to-date amount of Statutory Adoption pay you want to reclaim in the Claimed Statutory adoption pay YTD field.

   Tip: To calculate the correct amount, see HMRC’s Maternity, Adoption, and paternity calculator for employers.

FAQs

Why is enhanced pay showing on the payslip, but statutory pay isn’t?
Ensure that you have populated the average weekly earnings.

Why isn’t the maternity/paternity enhanced or statutory pay showing on the payslip?
If an employee is ineligible for statutory or enhanced pay, it will not show on their payslip. An alert will be shown in the Maternity/Paternity tab.

How is enhanced pay calculated?
In pay periods where the enhanced pay covers the full month, UK Payroll automatically tops-up the statutory pay to the equivalent of the employee’s usual monthly salary.

In pay periods where the enhanced pay is pro-rated, the pay is calculated based on the day rate method multiplied by the number of applicable days.

What happens to employee pension contributions during maternity leave?
The employee continues making their pension contributions as usual, but the amount they contribute is based on the actual pay received during maternity leave, not their regular salary. If they are in a salary sacrifice scheme, see the question below.

Sometimes, the employer may choose to pay the entire pension contribution. For example, if the employee was contributing 5% to the pension and the employer 3% before going on maternity leave, the employer could decide to pay the full 8% as if the employee was on full pay.

How do I cover an employee’s pension contributions during their maternity leave if I operate a Salary Sacrifice scheme?
To remain compliant, employers can’t reduce statutory maternity pay by any Salary Sacrifice agreement. Therefore, you’re liable for the both the employee’s and employer’s usual contributions, based on the employee’s salary before going on maternity leave. To process this in payroll:

1. From the left side bar, navigate to Employees.
2. Select the relevant employee.
3. Click into the Pension tab.
4. Amend the Employee Contribution to £0.
5. Amend the Employer Contribution to the sum of the employee’s and the employer’s usual monetary contribution.
6. Click Save changes.

Why can net pay arrangement and relief at source pension contributions be deduced from statutory maternity pay?
Net pay arrangement and relief at source pension contributions are considered authorised deductions from pay, similar to taxes or National Insurance.

A salary sacrifice arrangement, whether for a pension, childcare vouchers, or something else, is not a deduction from pay. It involves changing the employment contract, so it cannot be taken from statutory payments.