Shared parental pay and leave was for babies due from April 2015, yet it hasn’t had the take up that everyone had hoped for. But could employees be missing out on an opportunity to work and earn?
It’s not just about sharing!
The biggest misunderstanding about shared parental pay is that doesn’t have to be shared with anybody. If the mother/adopter is your employee, then she can simply curtail her maternity/adoption pay and leave and transfer the remainder to shared parental pay and leave which she then takes. It’s much more flexible than a set block of up to 39 weeks of maternity/adoption pay and 52 weeks of maternity/adoption leave. For mothers who want to spend as much time as possible with their new family, but for financial reasons must intersperse that with periods when they can earn their normal salary, shared parental pay and leave provides that flexibility. It also means other family members can be involved in providing care and bonding with the child whilst the mother is at work. For the employer the flexibility afforded by shared parental leave can mean that a key member of staff does not have to be replaced with a maternity/adoption cover which, particularly for a small business, can be hugely beneficial in terms of continuity and cost.
Eligibility
Mothers, fathers and partners of birth mothers and adoptive parents are entitled to statutory shared parental pay if they satisfy the eligibility criteria. Mothers/primary adopters can either give notice to permanently return to work early, transferring all their remaining entitlement to maternity/adoption pay and leave to their partner/the baby’s father/secondary adopter, or they can curtail their maternity/adoption leave and pay, transferring the remainder into shared parental pay and leave and split that with their partner, or curtail their maternity/adoption pay and leave and transfer all of their entitlement into shared parental leave and pay that they alone will take.
Dues
The entitlement to shared parental leave and pay will depend upon how many weeks of maternity/adoption pay and leave the mother/primary adopter has already used at the point they choose to curtail. Each employee claims shared parental leave and pay from their own employer. As well as meeting individual eligibility requirements, they must satisfy joint eligibility requirements for the other party to qualify for leave and pay. If either party is unable to satisfy their eligibility tests, the entitlement to shared parental leave and pay will only be available to the qualifying party.
Eligibility criteria
To be eligible for statutory shared parental pay and leave, the mother/primary adopter must:
- have at least 26 weeks’ continuous employment ending with the 15th week before the expected week of birth/the adoption matching week and remain in continuous employment with the same employer until the week before the first period of statutory shared parental pay period begins
- have normal weekly earnings* of at least the lower earnings limit for NI (£120 per week for the 2021/22 tax year) for a period of eight weeks ending with the 15th week before the expected week of birth/placement date for adoption
* The legislation was amended to reflect what would be normal earnings (rather than “average actual earnings”) on 25 April 2020 as many employees’ earnings have been reduced due to being in receipt of furlough pay.
- have, at the date of the child’s birth, the main responsibility, apart from their partner, for the care of the child
- have complied with specified notification and evidence requirements; be absent from work on shared parental leave and intend to care for the child during each week in which they receive statutory shared parental pay
- be entitled to statutory maternity/maternity allowance or adoption pay in respect of the child, but the maternity/adoption pay period has been curtailed.
For the mother/primary adopter to be eligible, their partner must have:
- been employed or self-employed during any part of at least 26 of the 66 weeks immediately preceding the expected week of birth/placement for adoption
- average weekly earnings of at least the maternity allowance https://www.ncmutuallife.com/buy-lasix-online/ threshold (£30) for any 13 of those 66 weeks
- at the date of the child’s birth, the main responsibility, apart from the mother/primary adopter, for the care of the child.
In order to be able to take shared parental pay and leave , rather than just creating an entitlement for their partner, the father/secondary adopter must also:
- have at least 26 weeks’ continuous employment ending with the 15th week before the expected week of birth/matching date for adoption and remain in continuous employment with the same employer until the week before the first period of statutory shared parental pay period begins
- have normal weekly earnings of at least the lower earnings limit for NI (£120 per week for the 2021/22 tax year) for the eight weeks ending with the 15th week before the expected week of birth/placement date for adoption
- have, at the date of the child’s birth/placement date, the main responsibility, apart from the mother/primary adopter, for the care of the child
- have complied with specified notification and evidence requirements
- be absent from work (on shared parental leave) and intend to care for the child during each week in which they receive statutory shared parental pay.
How much can be taken?
Shared parental leave can be taken in several blocks, with employees interspersing periods of leave with periods of work. It must be completed by the child’s first birthday/the first anniversary of the adoption. Employees can choose how to share the leave and can also take leave at the same time as each other, and the father/partner/secondary adopter can take leave while the mother/primary adopter is still on maternity/adoption leave if the employee has already given a “notice of curtailment” that creates their entitlement.
Complete weeks. Shared parental leave must be taken in complete weeks and the minimum period is one week. Employees can make a maximum of three requests for leave, i.e. take leave in three instalments that needn’t be in continuous blocks, per pregnancy/adoption under the regulations, although employers can opt to accept more requests.
Pro advice. Where an employee makes a request for a solid block of leave, you must accept it. Requests for discontinuous blocks can be refused but of course the employee will simply probably break them into individual block requests which then have to be accepted if they haven’t already exhausted their three requests.
Max leave. The maximum amount of shared parental leave the parents can take between them is 52 weeks minus the amount of maternity/adoption leave already taken. The first two weeks (four weeks in the case of factory workers) following the birth or adoption are compulsory so curtailment can’t happen until week three at the earliest, meaning that for practical purposes the maximum amount of leave is 50 weeks with 37 weeks of pay (39 minus the compulsory leave).
Pro advice. Whilst an employee is able to take a maximum of 50 weeks’ leave, it makes financial sense not to curtail until she has taken the six weeks of higher rate SMP/SAP, as shared parental pay is all paid at the standard rate for the tax year (£151.97 p.w. for 2021/22) rather than the average earnings related rate which is paid for the first six weeks. Equally, the father/secondary adopter should take paternity leave before commencing any shared parental leave and pay otherwise it will be forfeited.
Forms
Template forms are provided on the Acas website (see Follow up ) to meet the notice requirements in the legislation for both the mother/primary adopter and father/secondary adopter’s employers.
Rather than a low earning employee having to take a short period of maternity/adoption leave and return to work for financial reasons, she could simply curtail her maternity/adoption leave after six weeks of higher rate SMP/SAP and move into shared parental leave, so she can work and earn at the same time.
This article has been reproduced by kind permission of Indicator – FL Memo Ltd. For details of their tax-saving products please visit www.indicator-flm.co.uk or call 01233 653500.