Guidance

Statutory Adoption Pay: business changes that affect payment

What to do if an employer ceases, becomes insolvent, takes over an existing business or you make employees redundant whilst paying adoption pay.

• From: HM Revenue & Customs
• Published: 18 March 2014
• Last updated: 16 July 2020 — See all updates

You take over a business

If you take over a business or part of a business and the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE Regulations) apply, then continuity of employment is not broken.

These regulations apply when you take over an economic entity (a business, part of a business or a service provision) and take over the contracts of employment of the employees being transferred with the business. The ‘employee liability information’ which the transferor or employer must provide will give the identities of those employees being transferred with the business.

If you aren’t sure if the TUPE Regulations apply contact Acas or in Northern Ireland contact the LRA.

If the TUPE regulations don’t apply, continuity of employment may still be not broken when:

• a teacher in a school maintained by a local education authority moves to another school maintained by the same authority, including maintained schools where the governors of the school, rather than the local education authority, are the teacher’s employer
• one corporate body takes over from another as the employer by or under an Act of Parliament
• the employer dies and their personal representative or trustees keep the employee on
• there is a change in the partners, personal representatives or trustees
• the employee moves from 1 employer to another and at the time of the move the 2 employers are associated

If continuity of employment isn’t broken the employee can get SAP. This applies as long as they worked for you and the previous employer during the qualifying period.

If continuity of employment is broken and you take on the business:

• after the start of the Matching week (MW), the previous employer must pay SAP to the employee if they were employed by the previous employer in the MW
• before the start of the MW, the employee can’t get SAP

Where SAP isn’t payable, you must issue form SAP1 within 7 days of the decision being made. This must all be done within 28 days of the 7 day period that starts on the date on which the adopter is notified of having been matched with a child.

You cease to trade

If you cease to trade you remain liable to pay any outstanding SAP payments until either:

• your employee has received their full entitlement
• their entitlement ends for some other reason

You become insolvent

If you become insolvent during the SAP period, HMRC pay your employee’s SAP from the date of insolvency.

You should advise your employee to Contact HMRC. You, the administrator, liquidator or other similar must tell HMRC. Your employees are then paid as soon as possible.

Your employee is made redundant

If your employee has qualified for SAP from you, you are still liable to continue to pay SAP.

Published 18 March 2014
Last updated 16 July 2020 + show all updates

1. 16 July 2020

   The contact details for the Statutory Payment Dispute Team have been updated.

2. 18 March 2014

   First published.