Statutory Paternity Pay: how different employment types affect what you pay
Find out what employment types have different rules for entitlement to Statutory Paternity Pay.
Agency workers and casual (or short contract) employees
Agency workers
You can treat agency workers as employees for PAYE tax and Class 1 National Insurance contributions. If you have to deduct PAYE tax and Class 1 National Insurance contributions from the agency worker’s earnings, or would do if they were high enough, then you will have to pay them Statutory Paternity Pay (SPP) if they satisfy the qualifying conditions.
They can still get SPP if you:
- did not have work to offer them
- offer work but the employee was unavailable because of sickness, injury, maternity leave, paternity leave, adoption leave, parental leave or paid holiday
Agricultural workers
The Agricultural Wages Board in England was abolished on 1 October 2013.
From this date Agricultural workers in England who are not covered by the terms and conditions of the Agricultural Wages Board will be eligible for Statutory Payments if they meet the appropriate qualifying conditions.
Casual and short contract employees
A casual employee is usually someone who works for an employer, as and when they are required on a series of short contracts of employment with that person. If you have to deduct PAYE tax and Class 1 National Insurance contributions from the worker’s earnings, then you will have to pay them SPP if they satisfy all the qualifying conditions.
Supply teachers, seasonal workers or other sporadic employment
Generally the same rules apply as for agency workers, but if they are:
- sick throughout the Matching week (MW) (adoption) or Qualifying Week (QW) (birth)
- not required to work during those weeks
they can be treated as having worked in the MW (adoption) or QW (birth).
This applies even if they do not resume work before commencing paternity absence.
Mariners
Mariners can get SPP if you have a place of business in the UK and they are on a home-trade ship.
NHS employees
Some NHS employees, whose contracts are split between Strategic Health Authorities and NHS Trusts as a result of NHS reorganisation, can choose to have all their earnings added together for working out Average Weekly Earnings (AWE) for SPP purposes.
Employee works abroad
Where your employee works for you outside the UK:
- from the latest start date for employment with you
- up to and including the Sunday of the QW or MW
and continues to work for you until the baby is born or the child is placed for adoption they can get SPP if you are liable to pay Class 1 National Insurance contributions on their earnings throughout the period or you would have been liable to pay Class 1 National Insurance contributions had their earnings been high enough.
However, if you aren’t liable to pay Class 1 National Insurance contributions, your employee may still be able to get SPP where your employee works for you within the European Economic Area (EEA):
- from the latest start date for employment with you
- up to and including the Sunday of the QW or MW
and continues to work for you until the baby is born or the child is placed for adoption if they worked for you in the QW or MW and you were liable to pay Class 1 National Insurance contributions on their earnings for that week.
For SPP your employee must continue working for you until the end of the week before they want their SPP to start.
For the period after the QW or MW the employment can be in either the UK or EEA.
Directors
Companies incorporated after 1 October 2009
There are new regulations for companies incorporated after 1 October 2009. They provide new Articles of Association for these companies and will:
- apply by default if other Articles are not adopted
- allow its directors to determine a director’s remuneration
Directors can decide what and when to pay remuneration. There is no need for a resolution of the companies shareholders at its Annual General Meeting (AGM). In such cases payment of director’s fees will be regarded as earnings for the purpose of entitlement to SPP on the date payment was made.
Companies incorporated before 1 October 2009
The previous standard Articles, which apply in default, continue to apply. An ordinary resolution is required to determine director’s remuneration. The method of calculating director’s remuneration by an annual figure (after an ordinary resolution has been passed by shareholders) will apply to these companies. Any payments made in anticipation of the annual vote cannot be taken into account for calculating Average Weekly Earnings (AWE).
Paid contractually
If the director is contractually paid a regular salary - their AWE are calculated like any other employee.
Paid by a determination of the directors (not a formal vote)
Calculate the AWE by adding together the monies paid and any other payments of earnings, but use the date monies were paid instead of the date of the shareholders’ resolution at the AGM to determine the total earnings during the relevant period.
Paid both contractually and by formal vote
A director who is paid contractually may also be paid a bonus or fees by a formal vote. You must still calculate their AWE like any other employee, but you should only include the monies voted by formal vote if the date of the vote falls in the relevant period.
Paid only by a formal vote
If the director is paid only by a formal vote calculate their AWE in the usual way, substituting the dates of the formal votes in place of the normal paydays. A formal vote usually takes place at the company’s AGM and is agreed in the company minutes.
Monies drawn in anticipation of a formal vote
Some directors may regularly draw money from the business in anticipation of a formal vote. Do not include this money when working out the director’s AWE, even if National Insurance contributions were deducted at the time they were paid.
Your employee has more than one job with you
Your employee could have more than one job with you.
If you:
- add all the employee’s earnings together to work out Class 1 National Insurance contributions you would do the same to work out the employee’s AWE and the employee can only get one lot of SPP
- work out Class 1 National Insurance contributions separately on the employee’s earnings then you must work out their AWE separately and the employee can get more than one lot of SPP
If they can only get one payment of SPP from you they should take the same time off from each job otherwise they will lose some of their SPP because they are working for you. If they are entitled to more than one payment of SPP from you they can choose to take different time off from each job without losing their entitlement to SPP.
Employee has more than one employer
If your employee has more than one employer they can get SPP from each employer if they satisfy all the qualifying conditions. They can choose to take different time off from each employer.
Updates to this page
Last updated 13 May 2016 + show all updates
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Information about Agricultural workers has been added to this guide.
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Rates, allowances and duties have been updated for the tax year 2016 to 2017.
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First published.