Set up parental pay and leave

You can add parental pay in UK Payroll, including Maternity, Paternity, Shared Parental Leave, and Statutory Adoption pay.

Before you begin

For guidance on eligibility and entitlement, see:

• HMRC's Maternity pay and leave
• HMRC's Paternity pay and leave
• HMRC's Shared Parental Leave and Pay
• HMRC's Statutory Adoption Pay and Leave: employer guide

Note: You can recover 92% of the total statutory parental leave payments from HMRC (103% for small employers). The standard pay item is automatically added to your Payroll summary for simple reporting.

How to set up parental leave

Note: If you have set up a sync from Bob, leave dates will automatically be entered into the employee's profile to determine eligibility. The due date and other settings must be configured in UK Payroll. To learn more, see How to place an employee on leave.

1. From the left side bar, navigate to Employees.
2. Select the relevant employee.
3. Select the Parental leave tab. If the employee is eligible for both maternity and paternity leave, select both options. 
4. Enter the Expected due date (this can be found on the MATB1/SC3 form), Leave start date, and the Leave end date.

5. The Average weekly earnings are automatically calculated. You can also enter the amount manually.

   Note: If you have transferred your payroll from another provider, you will need to calculate the average weekly earnings. To calculate the correct amount, see HMRC's Maternity, Adoption, and paternity calculator for employers.
    

6. If you have set up enhanced maternity/paternity pay, select the policy you would like to implement from the dropdown.
7. If your company will maintain pension contributions during maternity leave, enter the amount in Employer pension contribution and the Period to maintain contributions from the drop down menu.
8. If you wish to continue pension contributions on behalf of the employee, mark the box next to Maintain employee pension contributions. This is commonly required for employees on Salary Sacrifice pension schemes.
9. If pension contributions should be taken from parental leave payments, mark the box next to Include SMP/SPP in pension calculations.
10. Click Add maternity/paternity leave.

How to sync multiple parental leaves from Bob

If you have toggled on Maternity & paternity leave sync from Bob, you can also sync multiple parental leaves for the same employee. 

1. In Bob, return the employee from leave. To learn more, see How to return an employee from leave. Enter their Return to work date to ensure correct payment.
2. In Bob, ensure the Leave end date in the employee's Lifecycle table matches their Return to work date. To edit the Leave end date:
   • Click the pencil icon in the Lifecycle section of the employee's profile.
   • Navigate to the specific leave row.
   • Click the three dot menu > Edit.
   • Enter the Leave end date.
   • Click Save.
   • Click Done to save your changes in the Lifecycle section.
3. If the employee goes on another parental leave, update their lifecycle status in Bob accordingly. To learn more, see How to place an employee on leave.

How to set up enhanced maternity/paternity pay policies

1. From the left side bar, navigate to Settings > Company > Policies.
2. Click Create new policy.
3. Select Enhanced maternity pay or Enhanced paternity pay.
4. Enter the Policy name.
5. Define the stages of enhanced pay by entering the number of weeks and selecting the amount of pay (Full pay, Percent of pay, or Percent of pay + SMP/SPP) from the drop down menu. You can add as many stages as needed.
6. Click Create policy.

How to add Shared Parental Pay to an employee's payslip

Note: You will need to calculate the Shared Parental Pay manually. To learn more, see HMRC's Shared Parental Leave and Pay.

1. From the left side bar, navigate to Payrolls.
2. Select the relevant payroll draft.
3. Select the relevant employee.
4. Click Add pay item > + Gross addition.
5. Select Shared parental pay from the Type of addition drop down menu.
6. Fill in your partner's first and last names and their National Insurance number. Then, click Next.
7. Enter the Amount.
8. If you want the shared parental pay to be pensionable, toggle on Pensionable.
9. Click Add gross addition.

How to add Statutory Adoption Pay to an employee's payslip

The year-to-date value of Statutory Adoption Pay items paid are included in the FPS, EPS, Payroll Report, Variance Report, and P32.

1. From the left side bar, navigate to Payrolls.
2. Select the relevant payroll draft.
3. Select the relevant employee.
4. Click Add pay item > + Gross addition.
5. Select Statutory adoption pay from the Type of addition drop down menu.
6. Fill in the Amount of Statutory Adoption Pay due. If the pay isn't pensionable, toggle off Pensionable.
7. Click Add gross addition.

If there will be recurring adoption payments, you can also set up a recurring pay item. To learn more, see Add recurring pay items.

How to add Statutory Parental Bereavement Pay to an employee's payslip

The year-to-date value of Statutory Parental Bereavement Pay items paid are included in the FPS, EPS, Payroll Report, Variance Report, and P32.

1. From the left side bar, navigate to Payrolls.
2. Select the relevant payroll draft.
3. Select the relevant employee.
4. Click Add pay item > + Gross addition.
5. Select Statutory parental bereavement pay from the Type of addition drop down menu.
6. Fill in the Amount of Statutory Parental Bereavement Pay due. If the pay isn't pensionable, toggle off Pensionable.
7. Click Add gross addition.

FAQs

Why is enhanced pay showing on the payslip, but statutory pay isn't?
Ensure that you have populated the average weekly earnings.

Why is the average weekly earnings value for an employee £0?
This will occur when there is no payslip information for the relevant period. In this case, override the average weekly earning value by entering the correct value in the Average weekly earnings step. 

Why isn't the maternity/paternity enhanced or statutory pay showing on the payslip?
If an employee is ineligible for statutory or enhanced pay, it will not show on their payslip. An alert will be shown in the Parental leave tab.

How is enhanced pay calculated?
In pay periods where the enhanced pay covers the full month, UK Payroll automatically tops-up the statutory pay to the equivalent of the employee's usual monthly salary.

In pay periods where the enhanced pay is pro-rated, the pay is calculated based on the day rate method multiplied by the number of applicable days.

What happens to employee pension contributions during maternity leave?
The employee continues making their pension contributions as usual, but the amount they contribute is based on the actual pay received during maternity leave, not their regular salary. 

Sometimes, the employer may choose to pay the entire pension contribution. For example, if the employee was contributing 5% to the pension and the employer 3% before going on maternity leave, the employer could decide to pay the full 8% as if the employee was on full pay.

Why can net pay arrangement and relief at source pension contributions be deducted from statutory maternity pay?
Net pay arrangement and relief at source pension contributions are considered authorized deductions from pay, similar to taxes or National Insurance.

A salary sacrifice arrangement, whether for a pension, childcare vouchers, or something else, is not a deduction from pay. It involves changing the employment contract, so it cannot be taken from statutory payments.