To be honest, this nightmare is not just about Statutory Maternity Pay (SMP)!

It is about all of the following:

  • Statutory Maternity Pay (SMP)
  • Maternity Allowance (MA)
  • Statutory Adoption Pay (SAP)
  • Statutory Paternity Pay (SPP)
  • Statutory Shared Parental Pay (ShPP) and
  • Statutory Parental Bereavement Pay (SPBP)

On 24 April 2020, the Department of Business, Energy and Industrial Strategy (BEIS) and the Department for Work and Pensions (DWP) issued a press release regarding the above family-related statutory payments (SMP, SAP etc).

The press release said individuals who receive reduced pay as a result of being furloughed should have the above statutory payments and entitlements calculated on the pay that they would normally have received rather than the average of what they did receive.


Rolling off of the tongue, the Maternity Allowance, Statutory Maternity Pay, Statutory Paternity Pay, Statutory Adoption Pay, Statutory Shared Parental Pay and Statutory Parental Bereavement Pay (Normal Weekly Earnings etc.) (Coronavirus) (Amendment) Regulations 2020 came into force on 25 April 2020.

Note that these apply in Great Britain only and amend Great British statutory payments legislation.

Northern Ireland?

The Statutory Paternity Pay, Statutory Adoption Pay and Statutory Shared Parental Pay (Normal Weekly Earnings etc.) (Coronavirus) (Amendment) Regulations (Northern Ireland) 2020 are due to be debated by the Committee for the Economy on 29 April 2020.

I assume that they will say the same thing and have the same effective date.  ‘Nidirect’ indicates that this will be the case, though why Maternity Allowance and Statutory Maternity Pay are missing from the title is odd.  I can understand why Statutory Parental Bereavement Pay (SPBP) is not there, as this only applies in Great Britain anyway.


For individuals, the legislation means that where earnings are lower as a result of being a furloughed employee opposed to being an employee, they will not suffer a reduction in the statutory payment that they may have been expecting to receive.

This is as long as the first payment for the statutory leave is on or after 25 April 2020.  The date is the Saturday 8 weeks after the Coronavirus Job Retention Scheme (CRJS) was effective (01 March 2020).

This is fair and I think that employers need to start with that fact in mind.


It is important to realise two important points for all of the above statutory payments, as this potentially affects both:

  1. Entitlement to the payment in the first place
  2. The rate at which it is payable

Further, there are some conditions relating to the individual that may or may not be entitled and the rate at which they may or may not be due payment:

  • The employee must be a furloughed employee (for all or part of the normal assessment period)
  • The employer must be making a claim under the CJRS and
  • The employee’s earnings are less than what would normally have been paid

Where the conditions are satisfied, the legislation requires us to look at the earnings that would have been paid had the employee not been on temporary (furloughed) absence.  The Explanatory Memorandum calls this Normal Weekly Earnings (NWE), as opposed to our usual calculation which is based on Average Weekly Earnings (AWE) or Average Weekly Amount (AWA) in Maternity Allowance cases.

Normal Weekly Earnings (NWE)

In these extraordinary times, I cannot see that NWE is referred to in the actual legislation.  However, for the payments that we make through the payroll, we are going to have to learn the difference between AWE and NWE:

  • AWE is where the employee has not been furloughed, has not had a furlough contractual reduction in pay and the employer is not making a claim for any part of the wages under the CJRS
  • NEW is a calculation that must be performed where the employee has been furloughed AND they have had a contractual reduction in pay AND the employer is not making a claim for any part of the wages under the CJRS
Calculating the NWE

There is some guidance on how to calculate the NWE.

Essentially, this involves a calculation to determine the higher of the pay (subject to Class 1 National Insurance) actually received from their employer versus the pay they would have received from their employer had they not been on furlough.  Cheekily, some of this appears under the heading that the guidance is to be used ‘if your payroll software’ does not calculate the NWE:

At the time of writing, I cannot see that there is guidance on Maternity Allowance or Statutory Shared Parental Pay.  I cannot see that Gov.UK’s calculator has been updated either.


Will software be able to handle a change to the calculation?

A civil servant from HMRC’s Statutory Payment Consultation Group first contacted the group on 27 April 2020.  This is far too late for software to be able to come up with a solution to help employers.

This is a fundamental change to software functionality and is not just a question of grossing up the furloughed pay and assuming that will be equal to normal pay.  There are occasions where furloughed pay will be higher than normal pay.  For example, employees that are paid variably and pay is calculated over a 12-month period (including some elements like contractual bonuses and overtime that may be excluded in the Average Weekly Earnings calculation).

Please do not expect software developers and products to have a solution ready to change a calculation that has been in place since the 1980s.  Although, it may be possible for software to assist the employer making the calculation by including a warnings such as ‘has this employee been furloughed and pay reduced as a result of the COVID-19 pandemic AND the employer is making a grant reclaim under the CJRS?’

Please contact your software developer / payroll support team.

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