How is maternity pay calculated and how much will you get?

Avoid any nasty financial surprises when you start your maternity leave by finding out how your maternity pay is calculated before you finish work.

A couple holding and smiling at their baby

If you're looking to go on maternity leave in the near future, you might be wondering how is maternity pay calculated.

Having a baby can be very expensive. Not only is there lots to buy (especially if it's your first) but many women take a lengthy break from full paid work. Knowing how much maternity pay you'll receive (opens in new tab) is crucial for planning your budget over the following year. It's also a good idea to know how maternity pay is calculated, and which allowances you may be entitled to.

Laura Suter, head of personal finance at AJ Bell, says: "It's crucial that you know how your maternity pay will be calculated, as otherwise, you're going into a potentially year-long period not knowing what your payments are going to be. At the moment everyone is feeling the crunch of higher prices, from energy bills to food shopping, so now more than ever it's important to know what will be in your pay packet each month that you're off.”

How is maternity pay calculated?

Your maternity pay will be calculated and paid by your employer (opens in new tab), but it’s a good idea to understand how those calculations work. This way you know what to expect and can spot any mistakes once payments start. For the first six weeks, statutory maternity pay (SMP) is paid at a rate of 90% of your average weekly earnings. And this is where it can get a bit fiddly. Your average weekly pay is based on the amount you have been paid over the eight weeks leading up to the end of your ‘qualifying week’. This is the 15th week before you are expected to give birth – so basically when you’re 25 weeks pregnant.

The calculation is reasonably straightforward if you’re paid weekly. You'll need to dig out your payslips. Add up your gross weekly earnings (before tax is deducted) in the eight weeks before the end of your qualifying week. Then divide the total by eight.

If, on the other hand, you’re paid monthly, the calculation is slightly different. You need to take your last two payslips and add your pre-tax earnings together. Then divide that figure by two. This will give you an average of your gross earnings. Multiply that figure by 12 to get your annual earnings. Then divide it by 52. This is your weekly gross earnings.

After the first six weeks, your rate of SMP drops to the lower of £155.66 or 90% of your average weekly earnings each week. This is paid for a further 33 weeks, after which point payments stop.

First 6 weeks90% of average weekly earnings
Next 33 weeksThe lesser of £155.66 or 90% of your weekly earnings

This means that a woman earning £250 a week before tax (£1,000 a month or £12,000 a year approximately) would get £225 a week for the first six weeks of her maternity leave. This comes to a total of £1,350. This would be followed by 33 weeks of £156.66 a week, for a total of £5,169.78.

If a woman earned £750 a week before tax (£3,000 a month or £36,000 a year) she’d get six weeks of £675, a total of £4,050. This would be followed by 33 weeks at £156.66, which would work out at £5,169.78.

However, as personal finance expert Laura Suter points out, not every woman will be eligible for SMP. “You need to earn at least £123 a week and have worked for your employer for six months at the point that you’re 25 weeks pregnant – so essentially have started working there before you got pregnant.”

Also, bear in mind that how much SMP you get is set by the government. But like other forms of statutory pay, it is generally increased each year to reflect the rising cost of living.

New rates come into force in April each year. If you happen to be receiving SMP at this time you will start getting the new rate straightaway

What if you aren't eligible for Statutory Maternity Pay?

If you aren’t eligible for SMP you may be able to claim Maternity Allowance. Your Maternity Allowance will be the lower of £151.97 a week or 90% of your average weekly earnings. It is paid for 39 weeks. To get Maternity Allowance you need to have worked for 26 weeks (the equivalent of around six months) during the 66 weeks running up to your due date. This is known as the ‘test period’. You also need to have earned at least £30 a week in 13 of those weeks.

The calculation is more complicated if you’re self-employed, with the rate you get depending on your National Insurance (opens in new tab) contributions (NICs). You’ll be eligible for the full £151.97 if you’ve paid 13 weeks of Class 2 NICs, if not you’ll only get £27 a week.

Enhanced maternity packages

If you’re lucky and get an enhanced maternity package from your employer, you’ll have to check with HR to find out how your maternity pay is calculated.

Sarah Coles (opens in new tab), senior personal finance analyst at Hargreaves Lansdown says: “Some employers offer more, so you’ll need to check your contract. In some cases, they have different rules for qualifying. So, you may be entitled to it even if you haven’t been there long enough to get statutory maternity pay.”

Maternity pay is based on your salary

Both SMP and any enhanced maternity pay you get from your employer will be based on your salary. Maternity Allowance is paid at a flat rate and is not linked to your salary.

If you’re only getting SMP, that will be paid as 90% of your average weekly earnings for the first six weeks, but drops to the lower of 90% of your weekly earnings or £156.66. If your employer offers an enhanced package, that will likely be calculated as a proportion of your salary. This may be, for example, full or half pay.

Your employer will pay your maternity pay during your period of maternity leave. You’ll receive it in the same way as you get your normal pay. However, your employer can reclaim statutory maternity pay from the government via HMRC. If it’s suffering from cash flow problems, it can apply for advance funding.

If you claim Maternity Allowance, that is paid by the government. Any employers that offer enhanced maternity pay will have to cover the cost themselves.

Why is maternity pay different each month?

There are multiple reasons your pay may differ each month. Differing rates throughout your maternity leave will lead to fluctuations. Even when you’re expecting the pay rate to be the same for a period of months, you may notice that there are some small variations between payslips. This might be because maternity pay is often calculated on a weekly basis and you are paid monthly.

Let’s say your maternity leave started on a Wednesday. You might find there are four Wednesdays in some months and five in others, which would make a small difference to the pay that you receive.

AJ Bell's Laura Suter warns: “If your employer offers different rates for different periods it can be tricky to work out what you’re going to get each month. If that’s the case you can ask HR to help you model what you’ll get month by month. Often you’ll get an enhanced period for a while, on higher pay. Then you’ll drop to statutory maternity pay and then you might fall to a period of no pay before you return to work.”

She adds: “It’s good to know if there are going to be any periods where you have no income, so you can budget for it.”

How much maternity pay will I get if I work part-time?

Whether or not you get maternity pay will usually come down to your earnings and how long you’ve been in the job. How many hours you work shouldn’t come into it.

Gary Wedderburn, an adviser at Acas, the Advisory, conciliation and arbitration service (opens in new tab), says: “As long as you have been continuously employed for 26 weeks up to the qualifying week and earn at least £123 a week on average for eight weeks before your qualifying week, you are entitled to Statutory Maternity Pay.”

If you get enhanced maternity pay, your employer might specify that you need to have been working for the company for a certain period of time. But again, whether you work full or part time hours shouldn’t affect your eligibility for maternity pay.

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Rachel Lacey is a freelance journalist with more than 20 years' experience writing about all areas of personal finance and retirement planning. After 17 years at Moneywise magazine as both writer and editor, Rachel now writes for a variety of websites and newspapers as well as corporate clients. She is passionate about financial education and simplifying money matters for all.