When a member of your team tells you they are expecting a baby, your first reaction is probably a warm one. Your second reaction, if you are honest, might be mild panic. What are you actually required to do? What do you pay them? For how long? And what happens to the rest of the team while they are away?
Parental leave is one of those areas where small employers often feel out of their depth. The rules are not as complicated as they look, but there are a few different types of leave to understand, and the terminology can be confusing. This guide walks you through everything you need to know, without the legal jargon.
The different types of parental leave
There are four main types of parental leave in the UK. Each works slightly differently.
Maternity leave
Maternity leave is available to employees who are pregnant. An employee can take up to 52 weeks of maternity leave in total - 26 weeks of ordinary maternity leave followed by 26 weeks of additional maternity leave. They do not have to take the full 52 weeks, but they must take at least two weeks off after the birth (four weeks if they work in a factory).
To qualify for Statutory Maternity Pay (SMP), an employee must have been employed by you for at least 26 weeks by the 15th week before their due date, and they must earn at least £123 per week on average (the 2024/25 lower earnings limit).
SMP is paid for up to 39 weeks. For the first six weeks, it is paid at 90% of their average weekly earnings. For the remaining 33 weeks, it drops to either the flat rate (currently £194.32 per week) or 90% of their average weekly earnings, whichever is lower.
If an employee does not qualify for SMP, they may be entitled to Maternity Allowance instead, which is paid directly by the government.
As an employer, you can reclaim 92% of the SMP you pay back from HMRC. If you are a small employer who qualifies for Small Employers' Relief (your Class 1 NI bill is £45,000 or less), you can reclaim 103%.
Paternity leave
Employees who are the partner of someone who has just given birth, or who are the secondary adopter, can take up to two weeks of paternity leave. Since April 2024, this can be taken at any point in the first year after the birth, and it does not have to be taken all at once.
To qualify for Statutory Paternity Pay (SPP), the employee must have been employed by you for at least 26 weeks by the 15th week before the due date and earn at least £123 per week. SPP is paid at the same flat rate as SMP (£194.32 per week, or 90% of average weekly earnings if that is lower).
The flexibility around timing is worth bearing in mind when planning cover - a father or partner could take their paternity leave months after the birth, so it is worth confirming their plans early.
Shared parental leave
Shared parental leave (SPL) allows eligible parents to split the leave period between them. Once the mother has taken the first two weeks of compulsory maternity leave, the remaining leave can be split and shared however the couple chooses - including taking some time off at the same time.
This gives families a lot more flexibility, but it does make administration more complex. Employees can book SPL in up to three separate blocks, and they must give you eight weeks' notice for each one.
The pay element - Shared Parental Pay (ShPP) - is paid at the same rate as SMP and SPP. The total pot of paid leave stays the same; it is just divided differently between the two parents.
Adoption leave
Adoption leave mirrors maternity leave very closely. An employee who is the primary adopter can take up to 52 weeks of adoption leave, with the same pay structure as SMP. The secondary adopter gets the equivalent of paternity leave. Both must have been employed by you for at least 26 weeks before being matched with a child.
What you need to do as an employer
Here is a practical checklist of what is expected of you.
When an employee tells you they are pregnant: Ask them to give you written notice by the 15th week before their due date (though earlier is better for everyone). You need to confirm the start and end dates of their maternity leave in writing within 28 days.
Keeping in touch: You are allowed to make reasonable contact during someone's leave. You can also offer up to ten Keeping in Touch (KIT) days, where the employee comes in to work without it counting against their leave entitlement. These must be agreed - you cannot require someone to come in.
Returning to work: An employee returning from up to 26 weeks of maternity leave has the right to return to exactly the same job. If they have taken more than 26 weeks, they have the right to return to the same job or, if that is not reasonably practicable, a suitable alternative on the same terms.
Redundancy during maternity leave: This is an area where small employers sometimes get into trouble. Employees on maternity leave have enhanced protection from redundancy. If you are making redundancies while someone is on leave, you need to take advice before proceeding.
Common questions from small employers
Do I have to keep their job open? Yes. An employee on maternity or paternity leave retains all their employment rights, including the right to return to their role (subject to the 26-week rule above).
What if I can not afford SMP? You can reclaim most or all of it from HMRC, so in practice you are not funding it yourself. If cash flow is an issue, you can apply to HMRC to receive advance funding before you pay the employee.
What if they do not come back? If an employee decides not to return, they generally do not have to repay their SMP - that is funded by HMRC, not you. If you offered enhanced contractual maternity pay on top of SMP, your contracts may allow you to reclaim that, but you should take HR advice before acting.
What about flexible working requests? Employees returning from parental leave often request flexible working. Since April 2024, all employees have the right to request flexible working from day one of employment. You can refuse a request, but you must have one of the eight statutory business reasons to do so and respond within two months.
How to manage parental leave in a small team
The practical challenge in a small business is cover. When you have five people and one goes on leave for six to twelve months, it can feel enormous.
A few things that help:
Plan handovers early. As soon as leave dates are confirmed, start planning what needs to be handed over and to whom. The earlier you start, the smoother the transition.
Be honest with the rest of the team. People generally accept increased workloads if they understand why and for how long. Surprises are much harder to manage than planned challenges.
Consider a fixed-term contract. Hiring a temporary replacement on a fixed-term basis is a perfectly legitimate approach. Make sure the contract clearly states the reason it is fixed term.
Keep records. Track the leave dates, pay calculations, and any KIT days taken. If you are using a leave management tool, make sure it can handle different leave types so you are not trying to reconcile parental leave manually against your normal absence records.
Parental leave does not need to be stressful. Once you understand the framework, it mostly comes down to good communication with your employee and some sensible planning. The financial side is largely covered by HMRC - your job is mostly to support your team member and manage the transition well.
If you found this useful, you might also want to read our posts on sick leave vs annual leave and how to handle holiday requests fairly.
Disclaimer: This post is intended as general guidance only and does not constitute legal or HR advice. Employment law is subject to change. For advice specific to your situation, consult an employment solicitor or HR professional.