Statutory Payroll Payments: What Employers Need to Know
Being an employer comes with quite a few responsibilities. Paying people correctly is the obvious one but then somebody is off sick, somebody else is having a baby. Another employee is adopting and someone's baby needs neonatal care. Suddenly payroll isn't simply hours worked × hourly rate = wages. There are statutory payments to consider, eligibility rules to check, evidence to obtain, dates that matter and in many cases, money that can be reclaimed from HMRC.
This is an area where we regularly see two opposite assumptions. “It's statutory, so HMRC must pay for it.” or “I'm going to have to fund all of this myself?!” Neither is quite right. Let's look at the main statutory payroll payments employers need to understand, what you're responsible for paying and importantly, what you may be able to recover.
A quick note on figures: the rates in this blog are the current 2026/27 rates. Statutory rates and thresholds can change each tax year, so always check the figures applicable to the period you're processing.
Statutory leave and statutory pay aren't the same thing
This is probably the most important distinction to understand before we go any further. An employee's entitlement to leave and their entitlement to pay during that leave are not necessarily the same. Someone might have a statutory right to take time away from work but not satisfy the separate conditions required to receive the corresponding statutory payment. This has become particularly relevant following changes from April 2026, when rights including Paternity Leave became available from the first day of employment. That doesn't automatically mean a brand-new employee qualifies for Statutory Paternity Pay, the pay has its own eligibility conditions.
As bookkeepers and payroll professionals, we're interested primarily in getting the payroll side right. Employment contracts, company policies and wider employment-law decisions may need input from an appropriately qualified HR or employment-law professional.
Now, with that distinction made, let's tackle the statutory payments.
Statutory Sick Pay
Let's start with probably the most familiar: Statutory Sick Pay (SSP). The SSP rules changed significantly from 6 April 2026, so if you're working from something you learnt several years ago, it's worth forgetting the old calculation and looking at the rules that apply now.
Under the current rules, eligible employees can receive SSP from the first full day of sickness absence, regardless of their earnings. For 2026/27, SSP is the lower of £123.25 per week or 80% of the employee's Average Weekly Earnings (AWE). It can normally be paid for up to 28 weeks.
SSP is paid through payroll just like normal wages, with PAYE and National Insurance dealt with in the normal way. The actual amount due depends on the employee's qualifying working days and the length of the absence.
A quick SSP example
Suppose Tom's Average Weekly Earnings are £185. 80% of £185 is £148. The statutory weekly maximum of £123.25 is lower, so Tom's SSP rate is £123.25 per week. If he normally works five qualifying days, that gives a daily rate of £24.65. If he's off sick for three qualifying days, SSP would therefore be £73.95. This mirrors HMRC's current calculation example.
Can employers reclaim SSP?
This is one of the biggest misconceptions surrounding statutory payments. Employers cannot currently recover SSP from HMRC. Don't assume that because a payment has the word statutory in front of it, HMRC will automatically give it back. As we're about to see, the position is very different for many of the family-related payments.
Statutory Maternity Pay
Statutory Maternity Pay (SMP) can be paid for up to 39 weeks to an eligible employee. For 2026/27, the rate is as follows:
First 6 weeks: 90% of Average Weekly Earnings.
Remaining 33 weeks: £194.32 per week or 90% of Average Weekly Earnings, whichever is lower.
There are qualifying conditions surrounding employment, earnings, notice and evidence. Average Weekly Earnings need to be calculated using the correct relevant period. This is why payroll needs to know about maternity leave before we're actually processing the pay run.
An employee will normally provide evidence of the expected week of childbirth, commonly their MATB1 certificate and dates need to be established so that eligibility, the qualifying week, Average Weekly Earnings and the maternity pay period can be calculated correctly.
It isn't simply a case of changing someone's normal salary to £194.32 a week from the day they leave.
“39 weeks of maternity pay could cost my small business thousands!” This is where employer recovery becomes really important. SMP is one of the statutory payments employers can usually recover from HMRC. For 2026/27, most employers can recover 92% of qualifying statutory family-related payments but businesses that qualify for Small Employers' Relief can recover 109%.
For the current rules, Small Employers' Relief generally applies where the relevant Class 1 National Insurance contributions were £45,000 or less in the appropriate previous tax year. Importantly, HMRC says that test is applied ignoring reductions such as Employment Allowance.
So imagine a qualifying small employer pays £5,000 of SMP. At a 109% recovery rate, the amount recoverable would be £5,000 × 109% = £5,450
That extra 9% is compensation available under Small Employers' Relief. That's rather different from assuming the employer simply has to absorb £5,000 of maternity pay as a business cost.
But what if the business can't afford to pay it first?
This is another really important point for small employers. Recovering statutory payments through PAYE is helpful, but cash flow can still be a concern. If a small business is faced with a significant statutory payment and doesn't have sufficient PAYE liabilities against which to recover it, the employer may be able to apply to HMRC for advance funding.
For SMP, SPP, SAP and Shared Parental Pay, HMRC currently allows employers to apply online for advance funding up to four weeks before the first payment is required. There are separate advance arrangements for Statutory Parental Bereavement Pay and Statutory Neonatal Care Pay.
The employer still needs to report the statutory payments correctly through payroll and submit the appropriate Employer Payment Summary (EPS). Receiving an advance doesn't remove those reporting obligations.
If you employ a small team and discover that somebody qualifies for months of statutory maternity or adoption pay, don't immediately panic about the bank balance. Find out what you're required to pay, what you're entitled to recover and whether advance funding is appropriate.
Statutory Adoption Pay
Adoption isn't a footnote to maternity. An eligible employee taking Statutory Adoption Leave can take up to 52 weeks of leave, while Statutory Adoption Pay (SAP) can be payable for up to 39 weeks. For 2026/27, SAP is as follows:
First 6 weeks: 90% of Average Weekly Earnings.
Following 33 weeks: £194.32 or 90% of Average Weekly Earnings, whichever is lower.
Eligibility for pay includes conditions relating to continuous employment, earnings, notice and evidence. For a UK adoption, for example, the employee generally needs to have been continuously employed for at least 26 weeks by the week they were matched and have average earnings of at least £129 per week over the relevant period. Different rules can apply to overseas adoptions and surrogacy arrangements.
Only one person in a couple can take Statutory Adoption Leave. The other partner may instead qualify for paternity arrangements. SAP is recoverable on the same basis we've discussed, 92%, or 109% for employers qualifying for Small Employers' Relief.
Statutory Paternity Pay
Paternity is another area where it's important not to confuse leave with pay. Paternity Leave is now a day-one employment right, but Statutory Paternity Pay (SPP) has its own qualifying conditions. An eligible employee can receive SPP for one or two weeks. For 2026/27, the weekly payment is £194.32 or 90% of Average Weekly Earnings, whichever is lower.
There are also notice requirements. For births, employees will normally need to tell their employer the due date at least 15 weeks before the baby is expected and give at least 28 days' notice of when they want the leave to start and how much they're taking.
Again, SPP is recoverable at the relevant 92% or 109% employer rate.
Shared Parental Pay
Shared Parental Leave and Pay can look intimidating because there are two parents, potentially two employers, various notices and quite a few dates involved. The principle, however, is that eligible parents can choose to bring maternity or adoption leave and pay to an end early and share some of the remaining entitlement.
Up to 50 weeks of leave and 37 weeks of pay can potentially be shared, depending on how much maternity or adoption leave and pay has already been used. For 2026/27, Statutory Shared Parental Pay is £194.32 per week or 90% of Average Weekly Earnings, whichever is lower. It's another payment employers can recover at 92% or where Small Employers' Relief applies, 109%.
The calculation and eligibility can get more involved here, so this is definitely one where getting the relevant paperwork to payroll promptly makes everyone's life easier.
Statutory Neonatal Care Pay
This is a relatively new statutory entitlement and one that employers need to be aware of. For babies born on or after 6 April 2025, eligible employees in England, Scotland and Wales may qualify for Neonatal Care Leave and Statutory Neonatal Care Pay where their baby enters neonatal care within 28 days of birth and spends at least seven consecutive days receiving neonatal care.
Eligible employees can receive up to 12 weeks of Neonatal Care Leave, with one week accruing for every seven consecutive full days the baby spends in neonatal care. The leave entitlement itself is available from the first day of employment, although separate conditions apply to Statutory Neonatal Care Pay.
For 2026/27, Statutory Neonatal Care Pay is £194.32 per week or 90% of Average Weekly Earnings, whichever is lower. Crucially, this is additional leave designed specifically for parents dealing with neonatal care. It isn't simply another name for maternity or paternity leave.
For an employer, this is an area where compassion and correct administration need to work together. Parents dealing with a baby in neonatal care have quite enough going on without having to repeatedly chase an employer to establish what paperwork payroll needs.
Statutory Parental Bereavement Pay
Another statutory entitlement employers should know about is Parental Bereavement Leave and Pay. In England, Scotland and Wales, eligible employees can take up to two weeks of Parental Bereavement Leave following the death of a child under 18 or a stillbirth after 24 weeks of pregnancy. Leave is a day-one employment right and can be taken as two weeks together or as two separate weeks, within the permitted 56-week period.
Eligibility for the pay is separate. For 2026/27, Statutory Parental Bereavement Pay is again £194.32 per week or 90% of Average Weekly Earnings, whichever is lower. This is also recoverable at the relevant statutory-payment recovery rate.
This is obviously an area where I'd encourage employers to remember that payroll rules establish the minimum statutory position. How you communicate with and support somebody experiencing bereavement is a much wider human and HR consideration.
A quick 2026/27 reference table
Statutory payment | Current 2026/27 payment |
SSP | £123.25 per week or 80% of AWE, whichever is lower |
SMP | First 6 weeks: 90% AWE. Next 33 weeks: £194.32 or 90% AWE, whichever is lower |
SAP | First 6 weeks: 90% AWE. Next 33 weeks: £194.32 or 90% AWE, whichever is lower |
SPP | £194.32 or 90% AWE, whichever is lower |
Shared Parental Pay | £194.32 or 90% AWE, whichever is lower |
Parental Bereavement Pay | £194.32 or 90% AWE, whichever is lower |
Neonatal Care Pay | £194.32 or 90% AWE, whichever is lower |
These are 2026/27 figures, not timeless numbers carved into the payroll stone tablets. If you're reading this in a later tax year, check the current rates before calculating anything.
What can the employer reclaim?
This is probably the table I'd want employers to remember:
Payment | Recoverable from HMRC? |
SSP | No |
SMP | Yes |
SPP | Yes |
SAP | Yes |
Shared Parental Pay | Yes |
Parental Bereavement Pay | Yes |
Neonatal Care Pay | Yes |
For the recoverable payments, the current 2026/27 recovery rate is normally 92%, increasing to 109% for employers qualifying for Small Employers' Relief. That's a distinction worth remembering: Statutory Sick Pay is an employer cost. Most of the statutory family-related payments can be substantially or for qualifying small employers, more than fully recovered.
What about enhanced company pay?
Some employers choose to offer more than the statutory minimum. You might have contractual sick pay, enhanced maternity pay, enhanced adoption pay or another company family-pay policy. That's absolutely possible, but it's important to separate the two elements.
If an employee receives £500 under an enhanced company scheme when their statutory entitlement is £194.32, you can't simply treat the whole £500 as statutory pay and reclaim 92% or 109% of it.
The statutory element needs to be identified and processed correctly; the additional contractual amount is a separate employer cost. HMRC confirms, for example, that even where an employer pays more than statutory adoption pay, recovery is based on the statutory amount rather than the whole enhanced payment.
This is where we'll politely stay in our lane. Payroll can calculate and process the statutory payment. If you're designing enhanced leave policies, changing contracts or deciding wider employment terms, that's a conversation to have with an appropriate HR or employment-law professional.
Please tell payroll
There are lots of rules in this blog. But from a practical bookkeeping and payroll perspective, one of the biggest things an employer can do is very simple: Tell whoever processes your payroll what's happening as soon as possible. Don't wait until payroll day to mention:
"Oh, by the way, Sarah went on maternity leave three weeks ago."
"I forgot to say, Dave has been off sick since last Tuesday."
Or my personal favourite type of payroll information:
"There's something different with James this month."
Wonderful. Let's play Guess the Statutory Payment. Depending on the situation, payroll may need dates of absence or leave, Average Weekly Earnings information, MATB1 details, adoption documentation, employee notices or other evidence. We may need to establish qualifying weeks, relevant earnings periods, statutory payment dates and employer recovery. The earlier we know, the easier it is to make sure everything is right.
What happens if the employee doesn't qualify?
This is another area employers shouldn't ignore. You can't simply decide an employee isn't eligible, pay nothing and consider the matter closed. Depending on the statutory payment involved, there may be a specific form or written explanation that the employer needs to provide. For example, where an employee doesn't qualify for Statutory Adoption Pay, the employer must provide form SAP1 explaining why. Similar procedures apply around other statutory payments and an employee who doesn't qualify through payroll may potentially be entitled to other government support. A failed eligibility test isn't necessarily the end of the process.
Statutory payroll payments don't have to be scary
Statutory payments can initially feel daunting to a small employer. There are acronyms everywhere:
SMP. SPP. SAP. SSP. ShPP. SPBP. SNCP. Payroll sometimes looks less like finance and more like somebody has tipped a box of Scrabble letters onto the desk but underneath all those abbreviations, the process is much more manageable if you break it down.
What has happened?
What leave is the employee taking?
Do they qualify for statutory pay?
What information and evidence are needed?
How much needs to be processed through payroll?
Can the employer reclaim it?
If cash flow is an issue can HMRC provide the statutory funding in advance?
When an employee comes to you with news that will affect their pay, don't panic and definitely don't wait until payroll day.
Get the dates.
Get the information.
Check the entitlement.
Speak to payroll.
There are some surprises we quite enjoy in payroll. A statutory payment mentioned at 4:45pm on payday isn't one of them.
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