What employers need to know about shared parental leave

Shared Parental Leave, or SPL, was originally introduced in 2015, and provides flexibility in childcare arrangements for parents when a child is born or placed for adoption. Essentially, the legislation covers couples who are raising a child together – this includes same-sex couples and those who are co-habiting.

So how does the system work for Shared Parental Leave, and what do you need to know as an employer?

How does Shared Parental Leave work?

Shared Parental Leave can be taken during the first year following the birth or adoption of a child. Essentially, it allows one of the parents to remain at home during the entire first year, but the system’s flexibility means that other options are also available to fit in with their wishes and life circumstances.

For example:

• Both parents can take leave for six months to be with their child
• They can take three leave blocks throughout the year - as an employer you can sanction more than three if you wish
• Couples can share up to 50 weeks of leave

So what happens about pay during this time? A key element of Shared Parental Leave is that, although up to 50 weeks of leave can be shared between parents, only 37 weeks are paid under the Statutory Shared Parental Pay system, or ShPP.

What is Shared Parental Pay?

Shared Parental Pay can be claimed if an employee’s usual weekly earnings are at or above the lower earnings threshold for National Insurance. Entitlement to ShPP lasts up to 37 weeks, but if your employee has claimed Statutory Maternity Pay or Maternity Allowance, these weeks are deducted.

The rate for ShPP is currently the lower of £148.68 or 90% of your employee’s weekly wage. You could reclaim at least 92% of ShPP from the government, however, and if your business is struggling to pay you may be able to obtain an advance.

Who can apply for Shared Parental Leave?

Your employee may be eligible to take Shared Parental Leave if they:

• Are an employee of your business, and have been continuously employed there for at least 26 weeks before the end of the qualifying week – this is the 15th week prior to the expected week of birth
• Share parental responsibility
• They or their partner are entitled to claim Maternity Pay or maternity leave, Adoption Pay/leave, or Maternity Allowance
• Provide you with at least eight weeks’ notice of their wish to take SPL, and a declaration regarding their partner’s employment and income

What records do you need to keep as an employer?

You must keep certain records for HMRC if any of your employees take Shared Parental Leave, or are paid Statutory Shared Parental Pay. These records should be retained for at least three years from the tax year in question, and include:

• Documentation and evidence that supports your employee’s claim for SPL – this should have been provided when they first applied
• When ShPP started
• The ShPP payments you made as an employer, and the dates they were made
• Details of any ShPP you’ve reclaimed
• Details of any ShPP that wasn’t paid, and the reasons why

Shared Parental Leave is a complex subject, and one that requires close scrutiny of the rules. If you would like more information on SPL as an employer, it’s advisable to seek professional guidance.

Handpicked Accountants can put you in touch with a shortlist of qualified accountants in your area, who can explain the system and ensure you comply with the regulations. We have developed well-established professional working relationships with accountants around the country – please contact one of the team to find out more.