Understanding Shared Parental Leave: A Guide for Payroll Management

Shared Parental Leave gives parents the flexibility to decide how they want to share care for their child in their first year.

In this article, we’ll walk you through what you need to know about Shared Parental Leave, its interaction with other leave policies, and how to navigate it effectively.

Guidance is also available for both employers and employees from the government and Acas, explaining how the Shared Parental Leave regime is intended to work.

What is Shared Parental Leave?

Shared Parental Leave (SPL) is a flexible leave policy designed to give parents more control over how they share the responsibility of caring for their child in the first year following birth or adoption. By offering the option for both parents to be involved in the early stages of their child’s life, SPL aims to create a more balanced and supportive approach to childcare.

For employers understanding how SPL works is crucial for ensuring that both the legal requirements and the needs of your staff are met. This policy allows both parents to take time off together or separately, giving them the freedom to adjust the leave based on their circumstances.

How Shared Parental Leave Interacts with Maternity and Paternity Leave

SPL provides a complementary option to traditional maternity and paternity leave, giving families the flexibility to divide parental responsibilities.

To access SPL, the birth parent or primary adopter must curtail their maternity or adoption leave. This means that the employee will end their entitlement to maternity or adoption leave early, allowing their partner to take over and use the remaining SPL.

It’s important to note that paternity leave is separate from SPL. An employee cannot take paternity leave after having already taken a period of shared parental leave. Paternity leave is typically a maximum of two weeks and must be taken within the first year following the birth or adoption. T

Additionally, both parents can take SPL concurrently, meaning they could be on leave at the same time.

Is Shared Parental Leave Paid or Unpaid?

The payment structure for Shared Parental Leave varies based on eligibility and is an important factor to consider when managing payroll. SPL can be either paid or unpaid, depending on the circumstances and the employee’s eligibility.

For employees who meet the required criteria, Statutory Shared Parental Pay (ShPP) is available. To qualify for ShPP, employees must meet specific requirements, including minimum earnings and length of employment. The current prescribed rate for ShPP is £156.66 per week, though this rate is subject to change.

Are Your Employees Eligible for Shared Parental Pay?

In order to qualify for Shared Parental Pay, employees must meet certain criteria, which generally align with the eligibility for Shared Parental Leave. Employees must meet the following basic conditions: they must have normal weekly earnings that are at least equal to the lower earnings threshold for National Insurance contributions.

Both parents must meet the same eligibility criteria to get Shared Parental Leave and Shared Parental Pay. They must have both been employed continuously by the same employer for at least 26 weeks by the end of the 15th week before the due date.

How Long Do You Need to Pay Shared Parental Pay For?

The duration of Shared Parental Pay entitlement can be complex, particularly when managing payroll for multiple employees. In practical terms, parents are entitled to a total of 37 weeks of ShPP, minus any weeks that the mother received Statutory Maternity Pay (SMP) or Maternity Allowance (MA) before curtailing her leave.

For example, if an employee has already received SMP for 10 weeks, their total ShPP entitlement would be reduced by those 10 weeks, leaving them with 27 weeks of ShPP. Both parents can divide this remaining entitlement between them, depending on how much time off they wish to take.

Clear documentation and communication between employees and employers are critical for ensuring accurate payroll processing during shared parental leave periods.

How Much Shared Parental Pay Do You Have to Pay?

The amount of Shared Parental Pay you will need to pay depends on the weekly ShPP rate, which is determined by two factors: the prescribed rate (currently £156.66 per week) and 90% of the claimant’s normal weekly earnings. The ShPP paid will be the lower of these two amounts.

Tips and Best Practices for Managing Shared Parental Leave

Managing Shared Parental Leave efficiently requires a well-organised approach, especially when it comes to payroll management.

• Plan Ahead: Encourage employees to submit their SPL requests as early as possible.
• Use Absence Management Tools: Use tools to track leave and payroll data, ensuring that all relevant information is documented.
• Clear Communication: Make sure both parents are fully aware of their entitlements, how to claim Shared Parental Pay, and their responsibilities in terms of notifying you of their leave plans. Effective communication will help ensure that there are no misunderstandings when it comes to leave and pay.

By following these best practices, you can navigate the complexities of Shared Parental Leave with confidence, ensuring that your employees are supported while also keeping your payroll processes running smoothly.