Your finance director asks what a 13-week full-pay enhanced maternity policy would cost per case. A new offer letter is going out tomorrow, and the question is whether to list "enhanced maternity pay" as a benefit. Your Head of People wants to extend the UK policy to your three South African developers, and you need to tell her within the day whether that makes commercial sense.
Three practical UK HR director questions. This guide answers all three.
The piece covers:
- Statutory Maternity Pay in full (with correct 2025/26 figures)
- The four most common UK enhanced structures, with per-case £ cost including HMRC reclaim
- What each UK enhanced structure costs if you replicate it for South African staff (where there is no state reclaim)
- Policy design: eligibility, pension, holiday accrual, KIT days, and repayment clauses
- Payroll mechanics and HMRC reclaim
Three concepts, three decisions
Before any policy drafting, three concepts have to stay separate in your head. Collapsing them into one is the most common source of UK HR errors on this topic.
1. Maternity leave
The time away from work. In the UK, 52 weeks is a day-one right under the Employment Rights Act 1996 section 71. No service requirement, no earnings test. Every UK employee gets 52 weeks from her first day of employment.
2. Statutory Maternity Pay (SMP)
The state-set minimum pay during leave. SMP runs for up to 39 of the 52 weeks and has its own eligibility test (continuous service and earnings threshold). SMP is paid by the employer through payroll, with most of it reclaimed from HMRC.
3. Enhanced maternity pay
Any employer-funded uplift above SMP. Discretionary unless made contractual. The employer sets the terms.
Three different concepts, three different eligibility tests, three different funding routes. An employee can qualify for leave but not SMP (she takes the 52 weeks and claims Maternity Allowance from DWP instead). She can qualify for SMP but not for your enhanced top-up (if your enhancement has its own, stricter, service requirement). Keep them on separate lines of the case file.
Statutory Maternity Pay: the UK legal baseline
SMP sets the minimum pay during 39 of the 52 weeks of leave. For the remaining 13 weeks, statute requires no pay (though many employers top this up).
Who qualifies for SMP (2025/26)
Three tests must all be met:
- Continuous employment: 26 weeks' continuous employment by the end of the 15th week before the Expected Week of Childbirth
- Average Weekly Earnings: Average earnings at or above the Lower Earnings Limit: £125/week for 2025/26
- Employment status: Classed as an employee for tax purposes (contractors need a separate assessment)
Notice: the employee must give at least 28 days' notice of when she wants SMP to start, and provide a MATB1 maternity certificate from a doctor or midwife as evidence.
How SMP is paid (2025/26 figures)
The 2025/26 statutory structure:
| Period | Rate | Notes |
| Weeks 1 to 6 | 90% of Average Weekly Earnings | Uncapped |
| Weeks 7 to 39 | Lower of £187.18/week or 90% AWE | Statutory flat rate |
| Weeks 40 to 52 | Unpaid under statute | Many employers top up (see below) |
The 2026/27 statutory rate takes effect from 6 April 2026 and will be published by DWP in the preceding months. Verify against GOV.UK before running your first April 2026 payroll.
How employers recover SMP from HMRC
Two recovery routes depending on employer size:
- Standard employers reclaim 92% of SMP paid against the next PAYE submission
- Small employers (Class 1 NI liability under £45,000 in the previous tax year): reclaim 103% of SMP paid under Small Employers' Relief
The net cost of SMP to a standard employer across the full 39-week SMP period is 8% of what was paid. For a small employer, it's a 3% net gain. This surprises UK buyers who think SMP is a straightforward employer cost. Most of it flows back.
Critical point for anything that follows: the HMRC reclaim applies ONLY to the statutory portion. Any enhanced top-up you pay above SMP is a direct, unrecoverable employer cost.
If an employee doesn't qualify for SMP
Three possibilities for the employee:
- Maternity Allowance from DWP, if she doesn't qualify for SMP but meets the Maternity Allowance employment and earnings tests
- Your enhanced policy may still apply if it has its own, separate eligibility rules (which is why those rules should be written explicitly, not by reference to SMP)
- Unpaid 52-week leave only, if neither route applies
Give the employee a written decision stating which eligibility test wasn't met and signposting her to GOV.UK Maternity Allowance guidance. Don't assume SMP ineligibility means no state support is available.
Enhanced maternity pay: the four common UK structures
Enhanced maternity pay is any employer-funded uplift above SMP. It can extend duration, uplift the rate, broaden eligibility, or combine all three. Four structures cover roughly 80% of UK enhanced policies we've seen among our clients.
For comparison, these are the four structures costed for the same employee (£50,000 salary, 2025/26 figures, standard employer at 92% HMRC reclaim, no return-to-work clawback).
The comparison table
| Structure | What it adds above SMP | Gross cost | HMRC reclaim | Net employer cost |
| A: Statutory only | Nothing | £11,369 | -£10,460 | £909 |
| B: 13 weeks full pay + SMP to week 39 | 13 weeks topped up to full pay | £17,367 | -£10,460 | £6,907 |
| C: 26 weeks full pay + SMP to week 39 | 26 weeks topped up to full pay | £27,433 | -£10,460 | £16,973 |
| D: 52 weeks full pay | 52 weeks topped up to full pay (including weeks 40-52) | £50,000 | -£10,460 | £39,540 |
The jump from Structure A to Structure B costs an extra £5,998 per case. From B to C, an extra £10,066. From C to D, an extra £22,567. The marginal cost of each extra week of full pay rises sharply because every additional week is 100% employer-funded with no reclaim.
Which structure fits what business
Structure A (statutory only)
Appropriate for most small businesses under 10 staff, early-stage startups, and any business where cash preservation matters more than retention signal. Legal minimum. No reputational uplift.
Structure B (13 weeks full pay)
The most common structure for UK scale-ups between 20 and 100 staff. Signals a competitive employer without large per-case exposure. Usually the first upgrade when a business starts formalising its benefits package.
Structure C (26 weeks full pay)
Common at mid-market employers (100 to 500 staff) and in sectors where parental benefits are a visible competitive signal: tech, financial services, consulting. Material cost per case; usually paired with a return-to-work clawback clause.
Structure D (52 weeks full pay)
Rare, usually only at FTSE 100 employers or specific EDI-leading firms. Hard to defend commercially for most organisations without substantial retention and brand economics behind it.
Four worked examples at different salary levels
The comparison table above assumed £50,000. Enhanced-pay costs scale non-linearly with salary because the SMP flat rate caps the HMRC reclaim; a higher salary means a bigger un-recoverable top-up per case.
Here are four worked examples at salaries from £35,000 to £120,000, all using Structure B (13 weeks full pay then SMP), as the most common structure.
Example 1: £35,000 salary
Weekly salary: £673.08
- Weeks 1-6 SMP (90% AWE): 6 × £605.77 = £3,635 (recoverable)
- Weeks 1-6 top-up to full pay: 6 × £67.31 = £404 (not recoverable)
- Weeks 7-13 SMP: 7 × £187.18 = £1,310 (recoverable)
- Weeks 7-13 top-up to full pay: 7 × £485.90 = £3,401 (not recoverable)
- Weeks 14-39 SMP: 26 × £187.18 = £4,867 (recoverable)
- Weeks 40-52: £0
Gross employer paid: £13,617 SMP element (recoverable): £9,812 HMRC reclaim at 92%: -£9,027
Net employer cost: £4,590
Example 2: £50,000 salary
Net employer cost: £6,907 (as per the comparison table above)
Example 3: £80,000 salary
Weekly salary: £1,538.46
- Weeks 1-6 SMP (90% AWE): 6 × £1,384.62 = £8,308 (recoverable)
- Weeks 1-6 top-up to full pay: 6 × £153.85 = £923 (not recoverable)
- Weeks 7-13 SMP: 7 × £187.18 = £1,310 (recoverable)
- Weeks 7-13 top-up to full pay: 7 × £1,351.28 = £9,459 (not recoverable)
- Weeks 14-39 SMP: 26 × £187.18 = £4,867 (recoverable)
- Weeks 40-52: £0
Gross employer paid: £24,867 SMP element: £14,485 HMRC reclaim at 92%: -£13,326 Net employer cost: £11,541
Example 4: £120,000 salary
Weekly salary: £2,307.69
- Weeks 1-6 SMP (90% AWE): 6 × £2,076.92 = £12,462 (recoverable)
- Weeks 1-6 top-up to full pay: 6 × £230.77 = £1,385 (not recoverable)
- Weeks 7-13 SMP: 7 × £187.18 = £1,310 (recoverable)
- Weeks 7-13 top-up to full pay: 7 × £2,120.51 = £14,844 (not recoverable)
- Weeks 14-39 SMP: 26 × £187.18 = £4,867 (recoverable)
- Weeks 40-52: £0
Gross employer paid: £34,867 SMP element: £18,639 HMRC reclaim at 92%: -£17,148
Net employer cost: £17,720
The pattern
| Salary | Net cost per case (Structure B) | Cost per £1 of salary |
| £35,000 | £4,590 | £0.131 |
| £50,000 | £6,907 | £0.138 |
| £80,000 | £11,541 | £0.144 |
| £120,000 | £17,720 | £0.148 |
The cost scales almost linearly with salary once above the LEL. Finance leads modelling a Structure B policy for a whole workforce should run it against the actual salary distribution, not a single average. A business weighted heavily at senior salaries will see 2 to 3x higher per-case cost than one weighted at £35,000 to £45,000.
Policy design: the five decisions that matter
Beyond the headline structure (A/B/C/D), the policy document has to answer five questions. We've seen each cause disputes when it wasn't addressed explicitly.
1. Does enhanced pay include SMP or sit on top of it?
Two drafting conventions, two different totals.
- "Enhanced pay includes SMP."
The policy promises full pay. Payroll calculates SMP, then adds the employer-funded top-up to bring the total to full pay. This is the more common convention and easier to administer.
- "Enhanced pay is in addition to SMP."
The policy promises full pay plus SMP (so during the enhanced period, the employee receives more than her normal salary). Rare but valid. Must be stated explicitly, or payroll will undercalculate.
If the policy doesn't specify, assume the first convention and state it in writing. Tribunal cases turn on this ambiguity.
2. What's the service requirement for enhanced pay?
Enhanced pay typically carries a service requirement higher than SMP's (which is 26 weeks by qualifying week). Common structures:
- 6 months' service by start of leave
- 12 months' service by start of leave
- 2 years' service (becoming less common because it looks age-correlated and attracts Equality Act 2010 scrutiny)
An employee who meets SMP eligibility but not your enhancement eligibility gets SMP only. Communicate this explicitly in offer letters so new joiners don't assume they get the enhanced policy from day one.
3. Does enhanced pay have a return-to-work clawback?
Common at mid-market employers using Structure C or D. Typical structure:
- Employee returns and stays 12+ months: no repayment
- Employee returns and leaves between 6 and 12 months: 50% of enhanced top-up repayable
- Employee returns and leaves within 6 months: 100% of enhanced top-up repayable
- Employee doesn't return at all: 100% of enhanced top-up repayable
Important: the clawback can only apply to the enhanced top-up. SMP cannot be clawed back under any circumstances; it's a statutory entitlement, not an employer gift.
The clawback must be in writing, agreed in advance, and reasonable in scope. UK courts have struck down clawback clauses that were disproportionate (e.g., 100% repayment regardless of when the employee leaves) or ambiguous. Standard practice is a sliding scale by months served post-return, as above.
4. How are pension, holiday, and KIT days treated?
Three continuing-employment items that need explicit policy treatment:
- Pension: Employer contributions must continue at full-salary levels throughout the paid portion of maternity leave (SMP period plus any enhancement period). During the unpaid weeks 40-52, scheme rules determine the position; some schemes continue employer contributions, others pause. Employee contributions during paid weeks are typically calculated on actual pay received, not full salary
- Holiday: Full 5.6 weeks statutory holiday accrues throughout all 52 weeks of leave. Carry-over into the next leave year is standard practice; the policy should state the mechanism and any time limit on taking carried-over leave
- Keeping in Touch (KIT) days: Up to 10 days during the leave period; each day paid at the employee's agreed rate (negotiated case-by-case, usually a full day's pay)
5. What's the flexible working path on return?
Flexible working requests are a day-one right in the UK since April 2024. On return from maternity, this is typically the first request a UK employer receives. The policy should state the process, the response timeline (two months by statute), and who decides.
If you also have staff in South Africa
This is where UK enhanced policies have to be rewritten rather than extended. If you have UK and SA staff and want to run one global parental leave policy, applying the UK enhanced structure directly to SA produces three problems.
Problem 1: no state reclaim in SA
Where UK Structure B costs £6,907 per case at a £50k salary (after 92% HMRC reclaim), the SA equivalent is substantially higher per £ of salary because there's no state reclaim mechanism. SA's state fund (UIF Maternity Benefit) pays the employee directly at 38% to 60% of earnings for up to 121 days, but the employer gets nothing back.
For a UK buyer running a £38,000 SA developer with "2 months full pay enhancement, UIF-only remainder":
- Months 1-2 full salary top-up: £6,333 (not recoverable)
- Legends EOR fee over leave period: £2,000
- UIF, SDL, COIDA ongoing contributions: £285
- Net SA employer cost: £8,618
Comparable to the £6,907 UK figure above, but the SA employee got 4 months of leave vs the UK employee's 52 weeks. The cost per week of leave is roughly 2.5x higher in SA because of the missing reclaim.
Problem 2: duration doesn't translate
UK statutory leave is 52 weeks. SA statutory leave is 4 months (around 17.3 weeks). A UK policy of "26 weeks full pay then SMP" cannot be transferred to SA; there's no 26-week period and no SMP equivalent to fall back on.
The practical workaround is to run two parallel policies with the same commercial logic but different structural anchors.
- UK side: Structure B (13 weeks full pay then SMP).
- SA side: 2 months full pay then UIF only. Both signal roughly equivalent generosity relative to each market's statutory minimum, and the per-case net costs end up close.
Problem 3: enhanced eligibility doesn't translate
A UK enhanced policy with "12 months' service required" creates a problem for SA staff hired through an EOR, where the service clock may run differently (service with the EOR vs service with your business). Clarify in the SA employment contract whether UK service counts toward enhanced-pay eligibility.
The practical approach we see UK clients take
Statutory floor plus modest top-up in each market.
- UK: 13 weeks full pay then SMP (Structure B).
- SA: 2 months full pay then UIF only. Both deliver roughly comparable retention signal per market and per-case cost ends up close.
Payroll mechanics: running the UK side correctly
Four payroll steps for every SMP case:
- Calculate Average Weekly Earnings using the 8-week reference period ending with the last payday before the end of the 15th week before Expected Week of Childbirth
- Apply the SMP rate structure (90% AWE first 6 weeks; lower of £187.18 or 90% AWE weeks 7-39; unpaid weeks 40-52)
- Submit through RTI (Real Time Information) on each payroll run, with SMP shown as its own payment type
- Reclaim through the Employer Payment Summary (EPS) at 92% (or 103% if small employer)
Where enhanced pay applies, show the statutory and enhanced elements as separate lines on both the payslip and the payroll journal. This matters because:
- The employee sees exactly what she's receiving from SMP vs the employer top-up
- Finance sees the true employer cost (top-up with zero reclaim)
- Your audit trail is intact if the policy or HMRC rules change mid-case
For broader coverage of UK payroll reporting, see the GOV.UK employer reporting guide.
When enhanced maternity pay is commercially worth it
The retention economics vary by business. Here's the rough calculation we see work for most UK clients between 20 and 500 employees.
- Cost of replacing a mid-career professional: typically £15,000 to £35,000 (recruitment fee, lost productivity in notice period, ramp-up for replacement). CIPD research puts the average at around £30,000 for professional roles
- Baseline return-to-work rate after statutory-only maternity: around 70% to 75% in UK survey data
- Return-to-work rate after Structure B (13 weeks full pay): around 85% to 90% in our client base
- Return-to-work rate after Structure C (26 weeks full pay): around 90% to 95%
For a business with 4 maternity cases per year at mid-career salary (£50k):
- Structure B incremental cost over A: £5,998 per case × 4 = £23,992/year
- Structure B incremental retention: ~15 percentage points higher = 0.6 extra returns per year
- Expected saving per retained employee: £30,000
- Expected direct retention benefit: £18,000/year
The pure retention math is tight at 4 cases. It gets more favourable at 6+ cases per year and once you factor in indirect benefits:
- Talent brand effect (candidates referencing the policy during offer stage)
- Offer-acceptance uplift (enhanced parental packages lift close rates in competitive sectors)
- Signal to the broader workforce (visible benefit to women AND partners, not just maternity cases)
- EDI positioning (increasingly a bid-qualification factor in enterprise sales and public-sector tenders)
- Reduced management time on recruitment and onboarding of replacements
In practice, most UK scale-ups between 50 and 500 employees run Structure B even when the pure retention math is tight, because the indirect benefits typically tip the balance. Structure C requires either genuine scale (10+ cases per year) or a specific brand/EDI rationale. Structure D is rare and usually driven by competitive positioning in a specific talent market rather than return-on-investment calculus.