SMP and Other Family Leave Payments for Furloughed EmployeesPublished on: 27 April 2020
Entitlement to, and the rate of, maternity allowance and statutory maternity, paternity, adoption, shared parental and parental bereavement pay depend on an employee's normal weekly earnings. Normal weekly earnings are calculated as a weekly average of the employee's total gross earnings from the employer and any associated employers during a reference period.
In the case of statutory maternity pay, for example, the reference period ends with the last normal pay day on or before the end of the Qualifying Week (which is the 15th week before the expected week of childbirth) and begins after the last normal pay day at 8 eight weeks earlier.
Some (but by no means all) employees have their pay reduced when they are furloughed and their employer is claiming payments under the Coronavirus Job Retention Scheme (which, in basic terms, covers 80% of payments to employees up to a total of £2,500 per month). Without more, such reductions in pay during the period over which normal weekly earnings are calculated for the above purposes would always affect the first 6 weeks’ entitlement to SMP (which is paid at 90% of normal earnings), and in certain circumstances it could affect entitlement to and/or the level of any of the above payments.
However, regulations came into force on 25 April 2020 which provide that where somebody is on furlough during part or all of the period over which normal weekly earnings are calculated and their pay is reduced as a result, the calculation will be based on the pay that they would have received if they were not furloughed.
The regulations apply where the first day of the period in which statutory pay is payable is on or after 25 April 2020.