What Is Statutory Maternity Pay? Rates, Eligibility, and How to Calculate It

The letter arrives — sometimes expected, sometimes not. An employee is pregnant. The due date is four months out. And now the question lands on someone's desk: what does the business owe, for how long, and how much of it can be got back?

Statutory Maternity Pay is one of those obligations that feels complicated until you understand the structure, at which point it becomes methodical. Not simple — there are calculations involved — but predictable. The same rules apply every time. The mistakes come from not knowing the rules or from not applying them in the right order.

SMP runs for up to 39 weeks. Weeks one to six: 90% of the employee's average weekly earnings. Weeks seven to thirty-nine: £194.32 per week from 6 April 2026, or 90% of average weekly earnings if that's lower. Then the employer reclaims most of it back from HMRC. The net cost to a small employer, after recovery, is typically between 0% and 8% of what they paid out.

Eligibility — the Questions in Order

Before calculating anything, establish whether SMP is owed. The test has two parts.

Continuous employment threshold: The employee must have been continuously employed by the same employer for at least 26 weeks by the end of the 15th week before the expected week of childbirth. This 15th week is called the Qualifying Week. The 26 weeks do not need to be the 26 immediately before the Qualifying Week — breaks in employment that don't break continuity (maternity leave itself, for example) can still count.

Average earnings threshold: In the eight weeks immediately before and including the Qualifying Week, the employee's average weekly earnings must be at least £129 — the Lower Earnings Limit for 2026/27. The average is calculated on actual earnings in those eight weeks, including bonuses, overtime, and commission paid in that period.

If the employee meets both tests, SMP is owed. If they fail either, SMP is not owed and the employer issues an SMP1 form.

The employee also needs to give the employer the right notice — at least 28 days before they want SMP to start, confirmed in writing, with a MAT B1 certificate from their midwife or doctor confirming the expected week of childbirth. Unreasonable failure to give proper notice can affect the SMP obligation, but employers should be careful here — withholding SMP on procedural grounds where the employee clearly intended to comply generates more risk than it removes.

The Average Weekly Earnings Calculation

Weeks one to six of SMP are paid at 90% of average weekly earnings. This is uncapped. If the employee earns £1,000 per week on average, weeks one to six cost £900 per week.

Average weekly earnings are calculated from the relevant eight weeks — the eight pay periods (or their equivalent) ending with the last pay day before or on the last day of the Qualifying Week. For a monthly-paid employee this is typically two months. For a weekly-paid employee it is eight weeks.

Include in the calculation: all earnings subject to Class 1 NI — basic pay, bonuses paid in the period, regular overtime, commission. Exclude: expenses, anything not subject to NI.

Divide total earnings in the eight-week period by eight (regardless of whether it's monthly or weekly pay) to get the average weekly earnings figure. Multiply by 90% for weeks one to six.

If the employee receives a pay rise during their maternity leave — or would have received one had they not been on leave — the average weekly earnings calculation must be revised upward to reflect the higher rate. This is frequently overlooked. Missing it means underpaying SMP.

What You Can Reclaim

Most employers reclaim 92% of SMP paid. The 8% they absorb is the employer's contribution to the scheme.

Small employers — those whose total Class 1 NI liability for the previous tax year was £45,000 or less — qualify for Small Employers' Relief and can reclaim 109% of SMP paid. The extra 9% is compensation for the administrative burden. It means a small employer recovers more than they paid out.

The reclaim is made through the payroll software via the Employer Payment Summary, reducing the monthly PAYE payment to HMRC. If the SMP reclaim exceeds the PAYE due, HMRC refunds the difference. The system is designed so that SMP never creates a net cash outflow for a small employer who processes the reclaim correctly.

If the reclaim isn't being processed — if the payroll software isn't submitting the EPS with the SMP recovery figures — the employer is overpaying HMRC every month and not getting the money back. This happens. It is fixable retrospectively for up to three years, but every month it sits unclaimed is a month the employer's cash flow has been unnecessarily strained.

What Goes Wrong

The pay rise trap. SMP is calculated at the time of the Qualifying Week. Then the employee gets a pay rise — scheduled, contractual, or as part of a company-wide uplift — while on maternity leave. HMRC's rules require the average earnings to be recalculated using the higher pay rate. Employers who don't know this rule underpay SMP. The employee is entitled to the difference.

Missing the SMP1. When an employee doesn't qualify — wrong tenure, below the earnings threshold — the employer issues an SMP1 form. If the form is not issued, the employee cannot claim Maternity Allowance from DWP because DWP needs evidence that SMP was refused. The employer's failure to issue the form has blocked the employee's alternative route to support.

Not reclaiming. Processing SMP without submitting the recovery figures on the EPS. Every month of unreclaimed SMP is money left with HMRC that belongs to the employer.

bookd. calculates SMP correctly — qualifying period checks, average earnings calculation including the pay rise recalculation requirement, weeks one to six at the right rate, weeks seven onwards at the lower of statutory rate or 90%, and the recovery submitted via EPS every month. If your current payroll hasn't confirmed Small Employers' Relief eligibility for your business, there is a straightforward calculation worth running.