Can statutory maternity pay be paid in a lump sum at the start of maternity leave?
Statutory maternity pay (SMP) is usually calculated as a weekly amount and paid in the same way as the employer would normally pay the employee’s earnings, ie on a weekly or monthly basis. However, there is no legislation preventing the payment of SMP in a lump sum. Employers should be aware that payment as a lump sum could result in both the employer and the employee paying more national insurance contributions than if the employer were to pay on a weekly or monthly basis. There is a risk that a lump-sum payment could result in the employer overpaying the employee if her circumstances change, for example if she returns to work early. There is also a risk of underpayment if the lump sum does not account for a rise in the SMP rate during the employee’s maternity leave.
