Shared parental leave ... it doesn’t have to be shared!

Not surprisingly given its name, most descriptions of the new shared parental leave arrangements describe it as leave that can be shared between the parents. 

In fact this isn’t quite right.  

Take the case of a couple where you employ one and their partner is self-employed.  The self-employed parent isn’t eligible for shared parental leave or pay.  But, if both satisfy certain conditions about work and earnings in the 66 weeks before the baby is due, your employee can have the full 37 weeks of shared parental leave and pay for himself/herself without sharing anything.   

(With one more condition, your employee must have at least 26 weeks of service with the same employer by the end of the 15th week before the baby is due.)

Why would anyone want to take shared parental leave even though their partner can’t share it? 

If the partner you employ is the man, it will give him much more paid-ish leave than paternity leave, which is currently just 2 weeks at the statutory rate of £139.58 a week.  If he takes shared parental leave, he can take 37 weeks of leave paid at the statutory rate of £138.18 a week. 

On the other hand if the partner you employ is the woman, the greater flexibility of shared parental leave will enable her to take leave in blocks of time and return to work in between, instead of having to take it in one continuous period as required under maternity leave.

Even if both parents are eligible for shared parental leave, but one takes none of it, the other parent can take the full amount.  Think of it simply as a block of time, 50 weeks, that either parent can take off work up to their child’s first birthday with 37 weeks of it paid at a set rate. 

As the employer you aren’t required to check anything about the partner you don’t employ. Leave it to your employees to work out their eligibility and options using the self-service function on the government’s website https://www.gov.uk/pay-leave-for-parents and come to you with solutions that will work for them as new parents and for your business.

Shared parental leave: cut through the labyrinthine regulations

No need to get bogged down in the tortuous regulations laid down to cover every combination and permutation of the new shared parental leave – or to fathom out its relationship to the already complex maternity leave rules.

Several recent surveys have shown that although most employers are aware of the change, a significant minority are unprepared for it.

It doesn’t matter!  Just-in-time is fine.  As the employer, you don’t need to take responsibility for advising employees how the rules work or whether someone is eligible.  Requests aren’t likely to be very frequent (estimates are between 2 and 8% of the workforce a year) and it would be a herculean task to master the ins and outs – in between running the business!

Refer anyone enquiring about it to the free online advice on the government’s website https://www.gov.uk/pay-leave-for-parents.   To check if they’re eligible, your employee should use the pay and leave calculator.  If they’re applying, they should download the forms, complete them and give them to you as “Notice of entitlement and intention to take SPL”. 

You are not responsible for checking anything about the leave being shared with your employee’s partner, the onus is entirely on the employee to declare the arrangements on the forms.

This written application for shared parental leave needs to be with you 8 weeks beforehand.  It may seem bureaucratic but stick to it consistently: it will give time to organise temporary cover for the employee's work, which may be needed for 50 weeks.  In practice pay – or lack of it - is still likely to discourage this much leave being taken: it stops at 37 weeks.

Your company will need a process for confirming arrangements to the employee and implementing the changes to pay.  You don’t have to create it: there is plenty of advice with standard letters in the guide for employers on the government’s website.  

Keep the forms completed by the employee showing they’re eligible for Shared Parental Pay, and records of the dates and amounts of Shared Parental Leave Pay.   You can then reclaim 92% of the payments via HMRC, or if your business qualifies for Small Employers’ Relief, you can reclaim 103%. Shared parental leave pay is £139.58 a week or 90% of an employee's average weekly earnings, whichever is lower, for 37 weeks.

Pensions automatic enrolment for SMEs: The things people say

Pensions automatic enrolment for SMEs: the things people say

My accountant will deal with it so I don't need to do anything.  Right?

WRONG!  The employer is personally responsible for complying with Pensions Auto Enrolment requirements and there are stiff fines for failing to do this. 

If your accountant runs your payroll they will be able to advise you about the payroll deduction process and they may have the software to produce the standard letters required. However most accountants are not licensed to deal the legal requirements about pensions enrolment and selecting a pension scheme.

We’re not interested in Pensions Auto Enrolment.  So my company is opting out.

WRONG!  Individual employees can opt out after they’re automatically enrolled, but companies can’t. 

The roll out is being phased in by size of business to be completed by 1st February 2018. The Pensions Regulator knows exactly who is employing how many people via their PAYE code.  Your company will receive a letter from the Pensions Regulator giving your staging date (the go-live day for auto-enrolment in your business). There’s a long list of difficult policy decisions and complex processes that employers must implement with deadlines.  

It’s a highly complex piece of legislation and already a number of larger employers have been fined for non-compliance. The legislation really does have teeth.

Presumably my company will be automatically enrolled - so we don’t need to do anything.

WRONG!  You are entirely responsible as the employer and nothing will happen automatically unless you make it happen.  As The Pensions Regulator advises employers on its website:

It is called automatic enrolment because it is automatic for your staff – they don't have to do anything to be enrolled into your pension scheme, but it is not automatic for you. You need to take steps to make sure your eligible staff are enrolled into a pension scheme. Even if you already pay contributions into a pension scheme for your staff, you still need to check if it is suitable for automatic enrolment.  

The Human Resource will be pleased to advise businesses on pensions auto-enrolment project planning, policy decisions, changing terms of employment contracts and internal communications. We can provide you with FAQs for your employees. 

More at http://www.thehr.co.uk/files/103140865.pdf

We can also support you as a one-stop-shop by referring you to our trusted partners in payroll, employee information systems and pensions.