How Maternity Leave May Affect Your Small Business
How Maternity Leave May Affect You
Any pregnant woman is legally entitled to take maternity leave, but what are the implications for your small business?
If you are pregnant
As the owner of a small business, it can be very difficult to take maternity leave. For sole traders, an extended break could be financially unviable as they will be unable to earn during that period.
How this situation is managed is a matter of personal choice, but it serves to illustrate the importance of maintaining a healthy cash reserve in the event of needing to take an extended break.
If you don’t qualify for Statutory Maternity Pay, you may be entitled to Maternity Allowance. The amount you can get depends on your eligibility, but once approved, you can start claiming it once you are 26 weeks pregnant. Payments then start 11 weeks before your baby is due. You can read more about Maternity Allowance here.
If your employee is pregnant
All women are entitled to take up to 52 weeks maternity leave, 39 of which must be paid. This leaves your business facing two challenges – coping with workloads in the absence of a valued team member, and funding the maternity payments.
To help small businesses, HMRC offer a tax rebate on Statutory Maternity Pay (SMP). If your total annual National Insurance bill is less than £45,000, you can claim back the full cost of SMP plus 3%; the monies are then deducted from your annual tax bill. For women returning to work after maternity leave, you should take advantage of Keep In Touch (KIT) days. KIT allows you to ease working mothers back into the workplace by giving them 10 days of paid work (spread over any period), without affecting their SMP pay. In this way you can help them readjust and hit the ground running when they return to work.
