Should allowances such as travel allowances and car allowances be used in the calculation of statutory maternity pay?
Yes, allowances should be included in the calculation of statutory maternity pay (SMP). The amount of SMP due to an employee during the first six weeks of their maternity leave (the higher rate) is based on 90% of their average weekly earnings during the period of eight weeks that immediately precede the 14th week before their expected week of childbirth. All earnings during this eight-week calculation period must be counted for the purpose of working out entitlement to higher-rate SMP, including payments such as travel allowances and car allowances. Furthermore, if a pay rise or payment of an allowance is implemented after the eight-week calculation period, and either backdated to a date during this period or implemented at any time between the end of this period and the end of the employee's maternity leave, it must be taken into account when calculating the higher rate of SMP.