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If you are a contractor working under an umbrella company, by law you are classed as an employee of that umbrella company and therefore entitled to either Statutory Maternity Pay (SMP) as long as you meet the essential criteria, or alternatively, you may be entitled to Maternity Allowance (MA).
An umbrella company that employs contractors should have policies and procedures in place to guide pregnant contractor clients through their entitlements. Eligibility and benefits can be quite complex but working under an umbrella as an employee will give you better benefits than going it alone as a contractor.
Statutory Maternity Pay - how much is it and can you claim it?Eligible employees can take up to 52 weeks maternity leave. This is broken into two sections, Ordinary Maternity Leave (first 26 weeks) and then Additional Maternity Leave (second 26 weeks).In order to qualify for Statutory Maternity Pay, you will need to have earned at least £111 a week, on average. You must also have worked at least 26 weeks continuously up to the 15th week before your baby is due. For the 6 weeks of SMP, you will receive 90% of your average weekly earnings.For the following 33 weeks, you will receive £145.18 or 90% of your average weekly earnings (whichever is lower). Both are subject to tax and National Insurance.
You can start claiming your maternity leave from 11 weeks before the baby is due, or if they are early, the day after childbirth.
An umbrella company will pay your maternity pay through their PAYE system and deduct tax and National Insurance as normal.
In order for your maternity to be accepted by your umbrella, you will need to provide a MATB1 form that will be given to you by your midwife. This will enable the umbrella to work out payment calculations correctly, once you know when you intend to stop work. If you’re not entitled to SMP, they will give you a SMP1 form which will explain why.
Maternity Leave - how much is it and can you claim it?If you are a sole-trader, self-employed, earn under £111 on average or have not been working for your umbrella company long enough, you will not be entitled to SMP. In this case, you may be entitled to MA if you were employed for at least 26 weeks out of the 66 weeks prior to the due date and have earned more than £30 per week.
Maternity Allowance can be claimed once you’ve been pregnant for 26 weeks and payments can start 11 weeks before your due date.
MA is paid every 2-4 weeks and you could get:• £145.18 a week or 90% of your average weekly earnings (whichever is less) for 39 weeks• £27 a week for 39 weeks• £27 a week for 14 weeksdepending on your eligibility.
Other benefits that you receive will be taken into consideration, so it is always worth seeking advice if you are unsure.
Employed under an umbrella companyYou should provide your umbrella company written confirmation (an email is sufficient) 28 days prior to when you would like your payments to commence. The umbrella will then confirm the payment dates and amount of payment you are entitled to during your maternity leave.
Where possible, you should try to give 8 weeks’ notice to your umbrella company when you decide to return to work, so they can advise you of any changes and ensure your return to work is a smooth transition.
As a contractor under an umbrella, you are entitled to paid time off to attend antenatal sessions.
Also, you should be entitled to 10 KIT (keeping in touch) days during your maternity pay period to assist your return to work. This can be managed as a few hours, or training days, or occasional work - as long as they do not exceed 10 days, as SMP cannot be paid for extra days worked.
You can be assured that if you are an NWM contractor when you fall pregnant, you will receive complete professional support and advice along the way. Looking for further contractor maternity advice? Feel free to get in touch.