Understanding Shared Parental Leave
Whilst Shared Parental Leave (SPL) has been available to eligible employees since April 2015 in practice many businesses find it a complex topic to understand and administer. They therefore rely heavily on the expertise of their payroll provider to help them understand how it works and more importantly ensure they handle it correctly within their payroll processing.
In this article, Simon Palmer, Sales Director at Qtac Payroll, provides an overview of SPL and Statutory Shared Parental Pay (ShPP).
What is Shared Parental Leave?
The SPL legislation was created to provide greater choice and flexibility for parents on how they share the care of their child in the first year after their birth or adoption placement.
Eligible mothers, fathers, partners and adopters can share up to 50 weeks of leave and up to 37 weeks of pay, and within certain parameters, have the ability to choose how they split their time off during that all important first year.
Options include combining leave so that they both take time off together, and splitting leave into blocks with periods of work in between, in order to stagger their leave so that one of them can be off with their child for the maximum time possible.
Eligibility Criteria for Shared Parental Leave
For an employee to become eligible for SPL, whether the benefit will be used by one or both parents, they must:
- be entitled to:
- maternity/adoption leave and statutory maternity/adoption pay, or,
- maternity allowance (if not eligible for maternity/adoption leave)
- have stopped or given notice to reduce, their maternity/adoption leave, pay or allowance.
- have a partner who will be sharing the care of the child at the time of birth or placement for adoption.
In addition, the parent that intends to take SPL must be:
- an employee, and be able to satisfy the ‘continuity of employment’ test – have worked for the same employer for at least 26 weeks at the end of the 15th week before the child’s expected due date/matching and is still working for the employer at the start of each leave period.
- have a partner that meets the ‘employment and earnings’ test – worked for at least 26 weeks and earned an average of at least £30 a week in any 13 weeks, in the 66 weeks leading to the expected due date/matching date.
It is important to note that in some cases only one parent may be eligible. A self-employed parent will not be entitled to SPL themselves, but, if they pass the employment and earnings test and they have a partner who is employed, they may be able to qualify.
Statutory Shared Parental Pay
If the employee wishes, they can end their entitlement to maternity/adoption pay or maternity allowance prior to their full entitlement of 39 weeks. They are then able to claim ShPP for any remaining period (subject to specific eligibility criteria).
To qualify, the parent must:
- pass the ‘continuity of employment’ test
- have average weekly earnings at least equal to the LEL for NI for the 8 weeks’ prior to the 15th week before the expected due date or matching date.
In addition, the other parent in the family must also meet the ‘employment and earnings’ test.
The current rate of ShPP is the lower of £148.68 or 90% of an employee’s average weekly earnings. The rate will increase to £151.20 per week from the 20/21 tax year.*
Where an organisation offers enhanced maternity pay above statutory minimums, they can mirror these arrangements within any SPL policies, although there is no statutory requirement to do so.
Shared Parental Leave Staying in Touch Days
In addition, an employee who is entitled to SPL and ShPP also has an individual entitlement to 20 Shared Parental Leave Staying in Touch (SPLIT) days.
Under this entitlement they can work, and be paid for, up to 20 days without ending their SPL or pay. Any day that the employee attends work can be classed as a SPLIT day. The rate of pay for these days is usually as per their contract of employment but can be agreed at a different rate.
However, once the limit of 20 SPLIT days has been reached the employee is no longer able to receive any ShPP regardless of any remaining entitlement.
Further Information and Guidance
More information about shared parental leave and pay, including the eligibility criteria and requirements of both employees and employers can be located here.
Alternatively, referring your clients to a specialist payroll provider will ensure they get the correct information and advice from the start.
*2020/21 rates are still subject to parliamentary approval.