Guidance

Statutory Maternity Pay: business changes that affect payment

What to do if an employer ceases, becomes insolvent, takes over an existing business or makes employees redundant whilst paying Statutory Maternity 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 isn’t broken.

These regulations apply when you take over 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
• 1 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 SMP.

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

• after the start of the Qualifying Week (QW), the previous employer must pay SMP to the employee if she was employed by the previous employer in the QW and your employee is still entitled to 52 weeks maternity leave
• before the start of the QW, the employee can’t get SMP but is still entitled to maternity leave

Where SMP isn’t due, you must issue form SMP1 within 7 days of the decision being made, which must be within 28 days from the date the employee gave notice of absence, or the date she gave birth if this was earlier.

You cease to trade

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

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

You become insolvent

If you become insolvent:

• after the start of the QW and before the start of your employee’s pay period, HM Revenue and Customs (HMRC) will pay your employee’s SMP
• during the SMP pay period, HMRC will pay your employee’s SMP from the week in which you became insolvent

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 SMP from you, you are still liable to continue to pay SMP to her where she leaves your employment for whatever reason, including redundancy. However, if after the baby is born your employee or ex-employee starts work for another employer who did not employ her in the QW, SMP should stop.

There are special rules about making a woman redundant during pregnancy or maternity leave. For more information contact Acas.

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.