How to Positively Manage Maternity Leave in a Small Business
3rd January 2017
When an employee announces their pregnancy, you’re all smiles on the surface. You congratulate them. You’re happy for them. Now, you’re faced with issues surrounding maternity leave.
Businesses are expected to take this experience in their stride.
But the truth is, things are never that simple. For small businesses, maternity leave is a particularly concerning challenge.
You risk losing a key employee for a significant amount of time. You can’t just replace them, because they’ll need to come back once they’ve comfortably settled into motherhood. You may need to pay them for not working for you, whilst paying someone else to do their job.
You might need to recruit someone new, invest in training and hope that they keep things on track. You need to keep everything running smoothly.
It’s important to make sure that you’re not breaking any employment laws.
Maternity leave is complicated. And, whilst there are so many news reports about maternity rights, little thought is given to the employers that have to make it work.
Here are our tips for taking one of the biggest workplace challenges, and turning it into a positive experience for everyone:
Maternity leave UK: the rules
Before you do anything else, make sure that you’re clued up on the rules.
What are women entitled to, once they announce their pregnancy? What should you do? What shouldn’t you do?
Statutory Maternity Leave
In broad strokes the rules around statutory maternity leave are women are entitled to up to 52 weeks of statutory maternity leave.
They don’t have to make use of it all.
But, new mums must use maternity leave for the first two weeks following the birth.
Every new parent is different. Some will find it extremely difficult to return after 52 weeks. Others will be desperate for time with adults and a bit of routine and normality. They may want to return when their baby is just one month old.
No one way is better than another. As an employer, it’s your job to support your employee’s decision.
Your employee must tell you about their pregnancy, at least 15 weeks before the baby’s due date. This entitles them to their 52 weeks of maternity leave. At this time, they should also tell you when the baby is due.
If you have any doubts about the pregnancy, it is important not to make accusations. You have a right to ask for a supporting medical document, as proof that an employee is pregnant.
Your employee also needs to tell you when they intend to start their maternity leave. At this stage, you should write to your employee and detail their return to work date. This has to be done within 28 days, and your employee will need to give eight weeks’ notice if they plan to return on a different date.\
If an employee has left work early, as a result of a pregnancy-related illness, then their maternity leave will start automatically four weeks before the baby’s due date. If the baby arrives early, it automatically starts on the day after the birth.
- It isn’t your job to question your employee’s decision about how much maternity leave they would like. Make sure that they understand their entitlement, but don’t make them feel bad if they only want a month or two off work. Or, if they want to be away for as long as possible!
- Respond quickly to your employee’s pregnancy announcement. Once they have told you the date that they intend to start maternity leave, you should provide a written response within 28 days.
- Be prepared for the fact that things don’t always go to plan. As soon as you know about your employee’s pregnancy, prepare for their sudden disappearance. Many women are unable to continue working until their baby is born, and many babies are born months before they were due, so don’t plan on your employee being around until their due date.
Employees are entitled to be paid during their maternity leave.
Statutory Maternity Pay
This is the most common form of payment. Payments are made for 39 weeks.
Women are entitled to this as long as they have been in employment for a full 25 weeks, leading up to the 15th week before their baby’s due date. In short, they should have been employed since the start of their pregnancy.
They must also have average weekly earnings that, at the very least, have had them making National Insurance contributions.
Statutory Maternity Pay is paid at 90% of a woman’s average weekly earnings, for the first six weeks of maternity leave. After this, it is paid at the SMP rate (currently £139.58) per week, if this is lower than the previous payment.
If an employee does not qualify for Statutory Maternity Pay, because they are not earning enough or haven’t been employed for long enough, then they should instead receive Maternity Allowance.
They must have been employed for 26 weeks out of the 66 leading up to their baby’s due date. They should have earned at least £30 a week, on average, for at least 13 of those 26 weeks.
Maternity Allowance payments can begin up to 11 weeks before the baby is due. They will continue for up to 39 weeks, depending on eligibility. Payments are for between £27 per week and £139.58 per week.
If your employee isn’t entitled to Statutory Maternity Pay, then you should direct them to Jobcentre Plus to claim their Maternity Allowance. They will need an MA1 form, which they can print and fill in.
Contractual Maternity Payments
Some employers go above and beyond, offering a higher level of maternity pay to their employees.
Others will offer payments for longer than 39 weeks.
If you are offering this, it should be mentioned in employment contracts and employee handbooks.
- Help your employee to check what they’re entitled to. If they won’t be entitled to Statutory Maternity Pay, support them in their application for Maternity Allowance.
- Maternity pay is relatively low. It causes a lot of stress for many new mums. If you are able to, you can make early motherhood much less difficult by offering more than you need to.
Other maternity rights
Pregnant employees are entitled to take time off for any relevant medical appointments. This time off should be paid.
Employees can have up to 10 KIT days, during their maternity leave. These Keeping In Touch days are intended to keep employees in the loop, and make it easier for them to settle back into working life.
Women have a right to return to work after their Maternity Leave. If their original job is no longer available, they should be offered a suitable alternative.
- As an employer, it is your responsibility to reconsider health and safety following a pregnancy announcement. Remember that tasks may be more risky for pregnant women, and that you may need to make accommodations. If you cannot make reasonable accommodations, then you should suspend your employee to protect her health and her baby’s wellbeing.
- If you need to make redundancies whilst an employee is on maternity leave, then you must be particularly careful. An employee on maternity leave is not protected from redundancy, but you will need to be able to defend your decision if it’s called into question. Redundancies must be genuine, and your employee must not be made redundant because of their pregnancy.
- Work hard to show employees that they have not been forgotten about, whilst they’re on maternity leave. Keep including them in company emails, and phone them with any important news. Consider inviting them to company events, nights out and celebrations.
- Always remember that maternity leave can be difficult for everyone. Employers can struggle, but so can employees who are adapting to their biggest life change whilst often being paid far less than they ever have before. By keeping lines of communication open, you can make this process as smooth as possible for everyone that is involved.
When Should I Hire my First Employee?
11th February 2014
So you’ve got your business up and running, it’s making money but you are running yourself ragged and it’s starting to feel like there’s enough of a workload to share with another person – aka, an employee!
You’re terrified and overflowing with questions:
- How much money do I need to hire my first employee?
- Should I save up a year’s worth of their salary before hiring them?
- Are there going to be expenses beyond their salary I need to consider?
- What are the legalities of hiring somebody, do I need to worry about contracts, heath and safety
So, one of the best pieces of advice I ever received was that the more emotional the question, the more you should try to ground the answer in fact. Hiring your first employee is a question of cash flow and comfort level. When you’re a one man band waiting a few days extra for cash to move from the customer, in to your business account and then in to your wallet isn’t a big deal. On the other hand, ask your employee(s) to wait a few days before getting paid and you’re likely to start something resembling a riot.
Having a year’s salary in the bank is a great place to be, but not necessary and potentially wasteful. The capital should instead be spent growing the business as opposed to sitting in your account as a stop gap against regular cash flow. That said, you also don’t want to end up in debt as a result of payroll. So you need to crack open your cashflow forecast spreadsheet…you do have one right? If not email us on firstname.lastname@example.org and we’ll send you our template. Anyway, fire up your forecast and put the money that you expect to generate in your income. It’s guess work so it doesn’t have to be 100% accurate. Then, on your expenses add the new hire and see what that looks like over the coming six months. Don’t forget to input any potential additional revenue the employee could generate for you.
There are of course additional expenses on top of your new employee’s salary. It varies from country to country, but typically the business is responsible for additional contributions beyond an employee’s tax deductions. In the UK, the company pays National Insurance contributions in addition to the contributions the employee makes. There’s also equipment, office space (if they’re not remote working), software licenses, stationery, etc. These additional costs should also be factored in.
If your cash flow suggests you have the money to afford bringing on the employee, with cash on hand to afford the incidental expenses necessary for him or her to do their job, and you have access to credit to cover any shortfalls in cash flow you’re good to go.
Congratulations on reaching this point in your business, it’s exciting to create jobs for people. Sending the employee their first payment after they deliver quality work for you is incredibly satisfying.