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Shared Parental Leave for Grandparents

Shared Parental Leave to Include Grandparents

There has been a recent announcement that the shared parental leave legislation is to be extended to include grandparents by 2018. The aim is to increase the flexibility and choice for working parents during the first year of a child’s life.

The Government believes nearly 2 million grandparents have had some sort of impact on their working lives in order to help families struggling with childcare costs. And around 7 million grandparents are involved in childcare for children under the age of sixteen.

George Osborne made the announcement on the 5th of October, and consultation on the details is planned for the first half of next year.

Shared Parental Leave and Pay

The Shared Parental Leave (SPL) and Statutory Shared Parental Pay (ShPP) rules are not straightforward. Employees can take up to three separate blocks of SPL, and SPL becomes available when they end their maternity or adoption leave or pay early.

Eligibility for SPL and ShPP can be calculated following the government guidelines and it is possible only one parent will be eligible. The current rate of ShPP is £139.58 per week, or 90% of an employee’s average weekly earnings, whichever is lower.

You may find a few further details about SPL and ShPP leave here, but we believe for now each employer has to approach each request on an individual basis, and uptake is likely to be low.

Statutory Payments to April 2016

Statutory Payments for the 2015/16 Tax Year

Statutory Sick Pay (SSP) 2015/2016
Minimum weekly earnings to qualify £112.00
Weekly rate of SSP £88.45
Statutory Maternity Pay (SMP)
Minimum weekly earnings £112.00
Higher weekly rate for first 6 weeks 90 % of average weekly earnings (in the qualifying period)
Lower weekly rate for 33 weeks is the lesser of £139.58 or 90% of average weekly earnings

SMP is now paid for up to 39 weeks within this period an employee may have 10 keep in touch days (KIT) which will not effect the payment of SMP

Ordinary Statutory Paternity Pay (OSPP)
Minimum weekly earnings £112.00
Weekly rate for up to 2 weeks is the lesser of £139.58 or 90% of average weekly earnings
Statutory Adoption Pay (SAP)
Minimum weekly earnings £112.00
Weekly rate for up to 39 weeks Is now in line with SMP

All employers are entitled to recover 92% of the SMP/OSPP/SAP they pay.

If you qualify for Small Employers Relief (annual liability for National Insurance less than £45,000) you are entitled to recover 100% of the SMP/SPP/SAP you pay plus 3% for payments made after 6th April 2014.

Statutory Redundany Pay

The statutory redundancy rate is £475.00 maximum per week

You can also visit the HMRC website for more details.

Directors National Insurance

National Insurance for Directors is classed differently from that of employees.   There are two methods which can be used for Directors National Insurance namely Cumulative (or Directors) and Table Method (or alternative).

Cumulative Directors National Insurance applies Annual Thresholds for calculating the amount due and as such no National Insurance is due until the earnings for the tax year exceed the Annual Earnings Threshold.  National Insurance is then paid on all earnings until the Annual Upper Earnings Threshold is reached at which point all remaining earnings until the end of the tax year have a rate of 2% Employee National Insurance applied.

The effect of Cumulative Directors National Insurance which is most often noticed is that the Employees National Insurance deducted can fluctuate considerably with each payroll even if the payment is the same.

Table Method Directors National Insurance applies the appropriate thresholds for the payroll frequency, ie if paid monthly the monthly Thresholds are used.  The amount of National Insurance deducted by Table Method Directors National Insurance is identical to that by standard Employee National Insurance, other than in the final payment of the tax year the total amount of National Insurance is recalculated for the complete tax year.

In total for a complete tax year the amount of Employees National Insurance deducted by either method of Cumulative or Table Method Directors is the same, the main difference is that with Cumulative Directors National Insurance the deduction fluctuate with each payroll whereas the Table Method are constant so long as the payment is the same.

If you wish to discuss outsourcing your payroll to Payroll Options, please contact us