Summary of Regulatory Impact Assessment Maternity Pay
205.The Act makes changes to Statutory Maternity Pay and Maternity Allowance. The rate of flat-rate weekly payment will increase to the lesser of £100 a week or 90% of the woman’s average weekly earnings, and the maximum payment period will increase from 18 weeks to 26 weeks. The notice that a woman must normally give her employer before taking maternity leave will increase from 21 to 28 days.
206.The aim of these measures is to make it easier for women to achieve a better balance between paid work and family life. It does this in combination with changes to maternity leave that are being introduced through secondary legislation(4). The changes will also help women to spend more time with a new- born child. As a result, more mothers may be able to return to employment after maternity leave, retaining skills in the labour market and reducing recruitment costs for employers.
207.There are direct benefits to mothers in the form of the payments made to them of £325 million per year. The benefits for an individual mother will depend on her personal circumstances. The benefit of £100 is above the earnings threshold for National Insurance Contribution. Recipients will therefore have to pay NI contributions. This benefits the National Insurance Fund by £5 million, whereby each individual mothers pays £1.35 per week.
208.The Government meets £305 million of the payments to mothers. The £20 million difference between this and the £325 million figure is made up of costs to larger employers who are only able to reclaim 92% of the payments to mothers. Some employers, especially larger ones, will have to change their payroll systems. The costs of this change are unlikely to be significant because many employers use standard software packages that are updated routinely in any case.