Statutory Maternity Pay (SMP) Calculation – UK

Statutory Maternity Pay is one of those areas of UK payroll where getting the calculation wrong has real consequences – for your employee’s financial security and for your business’s compliance standing. It is not optional, it is not discretionary, and it is not simple.

This guide breaks down exactly how SMP is calculated, who qualifies, what employers must pay, and how to recover costs – written for payroll professionals, HR teams, and finance leads who need clarity without the legal jargon.

Mercans supports UK employers with end-to-end payroll compliance, including accurate SMP calculation and reporting across all employee categories.

What Is Statutory Maternity Pay?

Statutory Maternity Pay (SMP) is a legally mandated payment made by employers to eligible pregnant employees during their maternity leave in the United Kingdom. It is governed by the Social Security Contributions and Benefits Act 1992 and administered through the employer’s payroll – not paid directly by the government.

SMP can last up to 39 weeks and is structured in two distinct rate tiers. The employer funds SMP upfront and then recovers the majority of the cost from HMRC through National Insurance contribution reductions.

Eligibility Criteria

Before calculating SMP, an employee must meet all of the following conditions:

• Employment status: Must be an employee (workers and self-employed individuals do not qualify)
• Continuous service: Must have worked for the same employer continuously for at least 26 weeks into the Qualifying Week (QW) – the 15th week before the expected week of childbirth
• Minimum earnings: Must have average weekly earnings of at least the Lower Earnings Limit (LEL) – £123 per week for 2024/25
• Notification: Must give the employer at least 28 days’ notice of the maternity leave start date and provide a MAT B1 certificate (issued by a midwife or GP no earlier than 20 weeks before the due date)

If an employee does not qualify for SMP, the employer must issue them an SMP1 form within 7 days of the decision, so they can apply for Maternity Allowance through the government instead.

The Two-Tier SMP Rate Structure

SMP is paid in two phases:

The flat statutory rate is reviewed annually by the government and typically rises each April in line with inflation.

Step-by-Step SMP Calculation

Step 1: Identify the Qualifying Week (QW)

The QW is the 15th week before the Expected Week of Childbirth (EWC). Count back 15 complete weeks from the Sunday of the week the baby is due.

Step 2: Identify the Relevant Period

The relevant period is the 8-week window ending with the last payday on or before the last day of the QW. This is the period used to calculate the employee’s Average Weekly Earnings.

Step 3: Calculate Average Weekly Earnings (AWE)

Add up all gross earnings paid to the employee during the relevant period (including bonuses, commission, and overtime paid in that period), then divide by 8:

AWE = Total gross earnings in relevant period / 8

The AWE must equal or exceed the Lower Earnings Limit (£123/week for 2024/25) for the employee to qualify.

Step 4: Calculate the First 6 Weeks

Weeks 1 to 6 = AWE x 90%

There is no cap on this figure. A high-earning employee receives 90% of their full average pay during this phase.

Step 5: Calculate the Remaining 33 Weeks

Weeks 7 to 39 = Lower of (AWE x 90%) or statutory flat rate (£184.03/week)

For most employees, the flat rate applies from week 7 onward. For lower earners, 90% of AWE may be less than the flat rate – in which case the 90% figure is used.

Step 6: Apply to Pay Periods

SMP is paid through the normal payroll cycle – weekly or monthly and is subject to income tax and National Insurance deductions in the same way as regular salary.

Worked Example

An employee has average weekly earnings of £350/week and is taking 39 weeks of maternity leave.

• Weeks 1 to 6: £350 x 90% = £315.00/week (total: £1,890.00)
• Weeks 7 to 39: Flat rate applies – £184.03/week (90% of £350 = £315, which exceeds the flat rate, so the flat rate is used) (total: £6,073.00 over 33 weeks)
• Total SMP payable: £7,963.00

Employer Recovery from HMRC

Employers do not bear the full cost of SMP. HMRC allows employers to reclaim a portion of SMP paid through their payroll submissions:

• Standard employers: Can reclaim 92% of SMP paid
• Small employers (those whose total gross Class 1 NI liability in the previous tax year was £45,000 or less): Can reclaim 103% of SMP paid (the extra 3% is an additional compensation payment for administrative costs)

Recovery is processed through the employer’s Full Payment Submission (FPS) and Employer Payment Summary (EPS) via HMRC’s Real Time Information (RTI) system.

Common SMP Mistakes to Avoid

• Using the wrong relevant period when the employee has variable pay or multiple pay dates
• Excluding qualifying earnings such as bonuses or commission paid during the relevant period
• Failing to issue the SMP1 form when an employee does not qualify
• Incorrect handling of contractual maternity pay on top of SMP – the two must be clearly separated in payroll records
• Missing the SMP recovery claim through EPS submissions, leaving money on the table

Mercans’ UK payroll services are built to catch exactly these errors, applying correct AWE calculations and automated recovery claims through RTI-compliant submissions.

How Mercans Supports SMP Compliance

SMP sits within a broader framework of UK statutory payments – alongside Statutory Paternity Pay, Shared Parental Pay, and Statutory Sick Pay – each with its own eligibility rules and calculation logic. Keeping all of these accurate across a workforce of any size requires a payroll system that is continuously updated with HMRC’s latest rates and thresholds.

Mercans delivers precisely that. Our UK payroll engine is updated every April to reflect the new statutory rates, handles complex scenarios such as salary sacrifice arrangements and employees with irregular pay, and produces compliant RTI submissions automatically. Whether you are managing SMP for one employee or hundreds, Mercans’ global payroll platform ensures accuracy, timeliness, and full HMRC compliance.

Frequently Asked Questions

Does SMP apply to employees on zero-hours contracts?

Yes, provided they meet the eligibility criteria – specifically the 26-week continuous service requirement and the minimum average weekly earnings threshold. Zero-hours workers can present a challenge when calculating AWE due to variable pay, but the same 8-week relevant period methodology applies. Earnings during that window are averaged regardless of how irregular the pay pattern is.

What if an employee becomes eligible for a pay rise during the SMP period?

If an employee receives a pay rise that applies to the period used to calculate AWE – or to any period between the start of the relevant period and the end of their SMP – the AWE must be recalculated to reflect the higher salary. This is known as the Alabaster ruling (following a 2005 Court of Justice judgment) and remains binding on UK employers. Failing to apply this rule is a compliance risk.

Can an employer offer more than the statutory SMP amount?

Yes. Employers may choose to offer enhanced or contractual maternity pay on top of SMP – for example, full pay for the first 12 weeks or a fixed enhanced rate for a defined period. The statutory SMP forms the legal floor; anything above it is at the employer’s discretion and should be clearly documented in the employment contract or maternity policy. Enhanced pay cannot be recovered from HMRC – only the statutory element qualifies for recovery.

What happens to SMP if the employee is made redundant during maternity leave?

If an employee is made redundant after the start of the 11th week before the EWC, their entitlement to SMP is protected – it continues to be paid even though employment has ended. In this situation, HMRC becomes directly responsible for funding the SMP payments. The employee does not lose their statutory entitlement simply because the employment relationship ends.

How does salary sacrifice affect SMP calculations?

This is a frequently misunderstood area. SMP is calculated on actual earnings paid, not the pre-sacrifice salary. If an employee participates in a salary sacrifice scheme – such as for pension contributions or a cycle-to-work scheme – their contractual salary is reduced, and AWE is calculated on the lower post-sacrifice figure. This can result in lower SMP than the employee expects. Employers should flag this to employees in advance and consider whether their contractual maternity policy addresses it. Mercans’ payroll compliance specialists can advise on structuring salary sacrifice arrangements to minimise unintended impacts.