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SPM172200 | Average Weekly Earnings (AWE) - SMP: backdated pay awards

From HM Revenue & Customs · Statutory Payments Manual

Following the European Court of Justice Decision in the case of Alabaster, the Statutory Maternity Pay (General) Regulations 1986 were amended from 6 April 2005.

As a result, the SMP AWE calculation must now take into account pay rises awarded, or which would have been awarded, to an employee had she not been on maternity leave. That is, if the pay rise falls between the start of the relevant period for calculating SMP and the end of her statutory maternity leave.

Asking an employer to recalculate SMP

A woman may ask her employer or ex-employer to recalculate her SMP for past periods, however there are time limits for making any claim depending upon whether or not she is still employed by them.

Still employed

  • six years from when the SMP payments were made. This applies to each week in the MPP so if the MPP started more than six years before the claim but ended within the time year, then the employee may claim enhancement of only those weeks within the time limit.

No longer employed

  • Six months from the last day she was employed her ex-employer

As employers are only obliged to keep SMP records for three years after the tax year to which they refer, a woman may be required to provide her employer with sufficient evidence to support her claim that her SMP should be recalculated.

Employer paid more than the SMP due

If the employer has paid the employee wages in addition to the SMP, they may be able to offset any additional amount of SMP due as a result of these provisions against those payments.

Effect of Maternity Allowance (MA)

If a woman, whose earnings were previously below the LEL becomes entitled to SMP only as a consequence of taking into account a back dated pay rise, the employer should assume that she received MA at the standard rate, which is the same as the standard rate of SMP, and either:

  • pay only arrears of SMP which exceed the standard rate of SMP for each week of SMP due, or

  • ask her to provide evidence of the rate of MA paid to her before calculating the arrears of SMP by deducting the MA paid from the amount of SMP which should have been paid.

If the woman has not received MA she can get a letter from the Jobcentre Plus stating that she has not received MA.