Can an employer recover any statutory paternity pay that it pays out?

Yes. The amount of statutory paternity pay that an employer can recover depends on the total amount of employer and employee Class 1 national insurance contributions (NICs) that the employer paid in the last completed tax year before the employee's qualifying week (the 15th week before the baby is due). If the NICs were £45,000 or less, it can recover 103% of the total of all payments of statutory paternity pay made in the same tax month. If the NICs were more than £45,000, the employer can recover 92% of all payments of statutory paternity pay made in the same tax month.

The total amount of NICs paid for the tax year is found on the employer's copy of form P35: employer annual return. The 103% recovery for employers with lower annual liability for Class 1 NICs is to compensate small employers for the NICs paid on the statutory paternity pay itself.