Statutory Paternity Leave, Pay and Pension Contributions

Following our article on Statutory Adoption Pay and Leave, this article seeks to clarify the rights and responsibilities of employers relating to paternity leave, pay and pensions. As an employee it is also important to understand your entitlements and responsibilities in ensuring you receive the correct employee benefits.

Statutory Paternity Leave (SPL)

To qualify for Statutory Paternity Leave (SPL) an employee must be classed as an employee, give there employer the correct notice and have either been continuously employed for at least 26 weeks within the qualifying week (15^th week before the baby is due) or, been continuously employed for 26 weeks by the date they are matched with the child.

Further criteria stipulated to qualify for SPL states the employee must be one of the following:

Birth father.
Birth or Adoptive Mother’s Husband, Wife or Partner (same-sex relationships are included).
Adoptive father.
Intended father of a surrogacy arrangement.

As with other types of Parental leave, an employee’s employment rights are protected whilst on Paternity leave. This includes, but is not limited to, holiday accrual, returning to work and contractual pay reviews.

From 6^th April 2024 the law on SPL changed for babies due after 6^th April 2024, or placements on or after 6^th April 2024 in the case of adoption. The updated law means SPL no longer has to be taken in a block of 1 or 2 weeks but, if the employee chooses to take 2 weeks SPL, they may take them as a block or split the 2 weeks and take two full weeks at separate times.

In cases of birth (including surrogacy) SPL can start from the day the baby is born (not before) but must be taken within the following:

52 weeks of the birth.
52 weeks of the baby’s due date if the baby was born early.

In cases of adoption the following applies to SPL:

SPL can start from the date the child starts living with the employee.
Or, SPL can start from the date the child arrives in the UK if adopting from overseas.
The leave must be taken within 52 weeks of the child’s placement or arrival in the UK.

As SPL cannot start before birth, placement or arrival in the UK, employees do not have to give a precise date of when they wish to start SPL but can give a general timeframe.

If an employee wishes to change the start date of their SPL, either a block of SPL or 2 separate weeks of SPL, they must give the employer, 28 days’ notice.

Statutory Paternity Pay (SPP)

The current weekly rate of Statutory Paternity Pay (SPP) for the 2024-25 tax year is £184.03 per week, or 90% of the employees average weekly earnings, whichever is lower.

SPP can be reclaimed from HMRC at the following rates:

92%
103% (if you qualify for small employers’ relief)

Employer’s may choose to pay more than the statutory amount, but they cannot pay less. Any addition to SPP paid is not reclaimable from HMRC and comes at the cost of the employer alone.

Tax and NI liability is due on SPP in the same way it would be with the employees’ usual wages.

To qualify for SPP employees’ must:

have been continuously employed by their employer, for at least 26 weeks within the qualifying week or the date they were matched with the child.
have been still employed up to the date of birth or child placement.
give the correct notice.
provide an SC3 form (birth) or SC4 form (adoption and surrogacy).
ensure average weekly earnings within their relevant period are a minimum of £123 per week.

If an employee is not eligible for SPP you must issue them an SSP1 form and notify them within 28 days of their request.

An employee can still be eligible for SPL or SPP if their baby is stillborn from 24 weeks of pregnancy, or born alive at any point during the pregnancy. The leave already booked by the employee can go ahead as planned or, if the leave has not yet been booked, the employee can still choose to book and take the leave within 8 weeks of the baby’s death.

What happens to employees' pension contributions during SPL?

Non-Salary Sacrifice pension arrangement:

For an employee who qualifies for SPP, they are entitled to receive their full ‘normal’ employer pension contribution during the paid 1 or 2 weeks of leave. The employer pension contribution during this time must be based on the employees’ ‘usual pay’, as if they were working. The employee contribution will be calculated based on their usual % rate and their pensionable pay within that period (including the SPP paid).

For an employee who only qualifies for SPL, no pension contributions are required for this unpaid period. Employer contributions, as well as employee contributions, will be based on any pensionable pay within the period.

Salary Sacrifice pension arrangement:

During the 1 or 2 weeks of leave, paid or unpaid, the salary sacrifice agreement must be upheld. If the employee cannot fulfil their full ‘usual’ contribution, the employer must bear this cost for the employee, as the full ‘usual’, combined contributions of the employee and employer, must continue per the salary sacrifice agreement.

Statutory payments cannot be sacrificed. However, if the employee is in receipt of enhanced pay or enough wages to adequately cover their ‘usual’ salary sacrifice pension contribution (without putting them under their National Minimum Wage) their contribution may be deducted from this. If they do not have enough non-statutory pay to cover the full deduction, either the employer must cover the employee contribution in full, or in part if a partial deduction can be made from the employee.

We recommend checking your pension scheme rules and/or seek advice from a pension specialist, to ensure you treat pension contributions correctly for any employee who may take SPL or SPP. More guidance on how to ensure your pension contributions are calculated correctly during a period of statutory leave can be found in our statutory leave article.

We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.

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