Decoding statutory payments: how to manage Sick Pay, Maternity Pay and more

When you’re an employer, there may be times in your staff’s lives when they are not working but you’re legally obliged to pay them at least part of their wages.

Because this is something the government says you must do, it’s called “statutory pay”.

In all but one case of statutory pay, you can reclaim at least some of it back from the government, since they are enforcing the payments and you are not seeing the benefit of your staff’s time while they are not working.

Most kinds of statutory pay relate in some way to parenthood. Here’s a handy guide to the different kinds of statutory pay you might encounter.

Statutory Adoption Pay

When the employee adopts a child, or has a child through surrogacy. 

Statutory Maternity Pay

When the employee gives birth to a baby.

Statutory Neonatal Care Pay

When a child born to the employee or their partner needs special care.

Statutory Parental Bereavement Pay

When a child of the employee’s, or their partner’s, dies or is stillborn.

Statutory Paternity Pay

When the employee’s partner gives birth to a baby, adopts a child or has a child through surrogacy.

Statutory Sick Pay

When the employee is absent from work through illness.

Statutory Shared Parental Pay

When the employee and their partner opt to share what would otherwise be maternity or adoption pay.

What you can reclaim

It’s important to remember that the statutory pay levels are a minimum amount. You can, of course, pay your staff more if you wish. You would only be able to reclaim the statutory pay level, though, not any extra you pay.

In all the above cases except for Statutory Sick Pay (SSP), employers can reclaim from HMRC 92% of any statutory pay payments they make. The percentage rises, as of 6th April 2025, to 108.5% if the employer qualifies for Small Employer’s Relief, which would typically be if the employer pays less than £45,000 in employer’s National Insurance (NI) per year.

The process used to recover statutory payments is known as ‘statutory reclaim’.

SSP cannot be reclaimed. There have been times historically when it has been reclaimable, such as during the Covid-19 pandemic for payments to employees who had Covid-19 or were self-isolating.

How to reclaim statutory pay

When you make payments of statutory pay to your staff, record those in their payroll. FreeAgent has boxes where you can enter statutory pay on your staff’s payslips.

The statutory pay will then be reported to HMRC on an Employer Payment Summary (EPS) when you file your payroll reports through Real Time Information (RTI).

HMRC will make as much of the statutory reclaim good as possible by reducing the amount of income tax and NI you are paying them. For example, if you owe a total of £1,500 in Income Tax, employee’s NI and employer’s NI, and have a Statutory Maternity Pay reclaim of £1,200 due, you would pay HMRC £300.

If your statutory reclaim due is higher than the amount of income tax, employee’s NI and employer’s NI you are liable to pay, then you can write to HMRC after the end of the tax year to ask them to make the difference good.

If you do not have enough cash available to pay your employees’ statutory pay up front, in some cases you can ask HMRC to pay the reclaim to you in advance.