Q&A: Calculation of statutory payments for adoption leave

Q. When we have an employee on maternity leave (receiving SMP), we know that when she receives a salary increase we must go back and recalculate her average weekly earnings as if she had been on that increased salary when we calculated SMP in the first place. We have assumed this is the same when someone is on adoption leave (and receiving SAP). Can you confirm this please?

A:  You are correct in that a pay increase at any time in your employee’s maternity leave period means a recalculation of SMP (and paying any excess). So, for example, a salary increase in week 39 of the leave period means going back to look at her average weekly earnings - in the 8-week relevant period. This is written to legislation and included in HMRC's Statutory Payments Manual.

BUT, for any other child-related statutory payment (adoption, paternity etc), you only recalculate the payment if the pay increase was effective in that 8-week relevant period. This is also defined in HMRC's Statutory Payments Manual.

About the Author

Martin Johnson

Partner

With expertise in advising family-owned companies on a range of tax, accountancy and business issues, Martin also has an in-depth knowledge of the automotive and property sectors. In addition, he provides advice on inheritance tax planning and financial management to owner-managed businesses.  Martin leads the firm in developing its expertise in the buy-to-let sector, advising both residential and commercial property owners on relevant tax and legislation issues. A further element to Martin’s role is to build Torgersens’ relationships with banks, financial advisors and specialists in commercial and employment law to ensure that the firm’s clients have access to market-leading guidance.  

To get in touch please e-mail martin.johnson@torgersens.com.