FOOL'S EYE VIEW
A Budget for Babies

By Jane Mack (TMFJane)
April 8, 2002

If there's one thing the Chancellor of the Exchequer is very good at, it's making budget announcements so far in advance that by the time the changes are implemented, you've forgotten about them. This enables him to mention the new changes the following year so that they sound like they're 'new and improved' even though they've been in the public domain for ages. They never miss a trick, these politicians!

We'll have to wait until the 17th of this month (next Wednesday) to see if we get a repetition of last year's announcements about changes to maternity rights, some of which quietly slipped into place as we entered the new tax year over the weekend.  The best bits won't be implemented until April 2003 but even so, it looks like anyone thinking of starting or adding to their family is in for a slightly more comfortable ride from now on.  Even fathers will see some benefits eventually. So let's look at the situation as it stands after 6th April 2002.

First of all, ALL female employees are currently entitled to 18 weeks statutory maternity leave regardless of how long they have worked for their employer. This entitlement is increased to 29 weeks - counting from the time the baby is born - for those who have worked for their employer for at least a year before maternity leave starts. This latter point may sound is a bit confusing and this is because the statutory 18 weeks can start anytime from 11 weeks before the birth of the baby, whereas the 29 extra weeks counts from the date of the baby's birth. All in all, qualifying employees are allowed a maximum of 40 weeks leave under the rules.

The good news is that statutory maternity leave will be extended in April 2003 from 18 weeks to 26 weeks - so mothers can expect a further 8 weeks of maternity pay. Needless to say, the entire system of maternity pay is complicated but it works something like this:

Currently, women have a statutory right to be paid during the first 18 weeks of maternity leave (it'll be 26 weeks from next April). Put simply, they will only get the relevant amounts if they got pregnant after starting their job: that is, if they've worked for at least 41 weeks before the birth. The full entitlement is split into two parts.

During the first 6 weeks of maternity leave women are entitled to Statutory Maternity Pay of 90% of their salary. For the next 12 weeks of maternity leave they are entitled to receive SMP of £75. From April 2003, this will rise to £100 a week which should make it slightly more affordable for mothers to stay at home with their babies for a longer period. Some employers (though not many) will pay the full salary throughout the entire 18-week period although it remains to be seen whether they will increase this benefit to the full 26 weeks next year.

All maternity leave subsequent to the 18 weeks are unpaid (unless you have a generous employer, of course).

Working fathers will be pleased to known that from April 2003, they will entitled to two weeks of paid paternity leave too, paid at the same flat rate as Statutory Maternity Pay ie: by that time, men can expect £100 a week.

New regulations also now allow BOTH parents to take 13 weeks leave each - for each child. However, this new "parental" leave can be taken at any time until the child reaches 5 years old so it doesn't strictly come under maternity rights. It just enables you to extend your time off work without losing your right to return to your job. And don't forget your paid holiday entitlement too. If you do some sums, and you qualify for the full Monty in the first place, you'll realise that mothers could take more than a year off without losing the right to return to work.

It is worth remembering that the laws regarding maternity rights were brought in to stop working women from being penalised for having a baby. This has effectively been achieved by assuming that the period of leave is part and parcel of the employment contract. As such, women are entitled during the statutory 18-week period (apart from the pay aspect) to all the rights and benefits they would be enjoying if they were still going to work every day. So they can keep their company car and mobile phone and know that their employer's occupational pension contributions will continue to be paid while they're away, that they'll get any pay rises or bonuses they're entitled to and that their holiday entitlement will continue to accrue.

In general, it is always best to liaise with your Personnel Department, if you have one, or with the Department of Social Services if you don't. In the case of the former, make sure you ask to see the Staff Handbook regarding the benefits your own employer offers - personnel staff have a lot of complicated legislation and company policies to deal with and they get it wrong sometimes, so it's worth checking things out yourself!

For women, the amount of money they are entitled to will vary if they've worked for their employer for less than six months or if they were already pregnant when they started work. It will also vary if they are a part-timer who isn't earning enough to pay National Insurance contributions or if they're self-employed or unemployed. In these circumstances, the DSS will pay a Statutory Maternity Allowance, which is similar to the £75 rate. For those who need extra financial help there is also a one-off lump sum payment of £500 called a Sure Start Maternity Grant which applies if you or your partner are getting Income Support, income-based Jobseeker's Allowance, Working Families' Tax Credit or Disabled Person's Tax Credit. (More on that in this Thursday's Fool's Eye View).

As an extra bonus, the new children's tax credit has now doubled to £20 a week for the first year of a child's life. This applies only to families earning less than £50,000 a year and it's a complicated subject, so we'll tackle it separately in a couple of weeks time.

I'd point you at the Department of Trade and Industry's website for further information but, unfortunately, they haven't seen fit to update it yet. And to think they've known about these changes for a whole year! No doubt they'll be reminded when the Chancellor 'announces' them again on 17th April.