When you’re employed in the UK, there are times you may be entitled to certain payments from your employer, even when you’re not working. These are called statutory payments, and they’re an essential part of the UK payroll system.

But what exactly are they, who qualifies, and how are they calculated? This guide will help you understand everything you need to know about statutory payments, your rights, and how employers handle them.

What Are Statutory Payments?

Statutory payments are legally required payments that employers must provide to eligible employees under UK employment law.

They ensure that workers still receive some level of income during major life events such as:

  • Illness

  • Maternity or paternity leave

  • Adoption

  • Parental responsibilities

  • Redundancy

These payments are not optional; employers must pay them if the employee meets certain eligibility criteria.

Types of Statutory Payments in the UK

There are several main types of statutory payments, each serving a specific purpose:

1. Statutory Sick Pay (SSP)

Paid to employees who are too ill to work.

  • Rate (2025/26): £116.75 per week.

  • Eligibility: Must earn at least £123 a week and be off sick for four or more consecutive days.

  • Paid for up to 28 weeks.

2. Statutory Maternity Pay (SMP)

Supports mothers taking time off after childbirth.

  • Paid for up to 39 weeks.

  • First 6 weeks: 90% of average weekly earnings.

  • Next 33 weeks: £184.03 per week or 90% of average weekly earnings (whichever is lower).

3. Statutory Paternity Pay (SPP)

Paid to eligible fathers or partners taking time off after the birth or adoption.

  • Up to 2 weeks at £184.03 per week or 90% of average weekly earnings (whichever is lower).

4. Statutory Shared Parental Pay (ShPP)

Allows parents to share up to 37 weeks of pay and 50 weeks of leave.

  • Pay rate: £184.03 per week or 90% of average weekly earnings (whichever is lower).

5. Statutory Adoption Pay (SAP)

Supports employees adopting a child or having a child through surrogacy.

  • Paid for 39 weeks at the same rate as SMP.

6. Statutory Redundancy Pay

Compensation for employees who lose their jobs due to redundancy.

  • Based on age, weekly pay (capped at £700 for 2025/26), and years of service.

  • Employers must provide this if the employee has worked continuously for 2 years or more.

How Statutory Payments Are Funded

Employers are responsible for making statutory payments to eligible employees, but they can usually reclaim most or all of the cost from HMRC through PAYE:

  • Standard employers: Can reclaim 92% of statutory payments.

  • Small employers: Can reclaim 103%, depending on total NI contributions.

This system ensures employees receive their entitlements without placing too much financial burden on small businesses.

How Employers Process Statutory Payments

Payroll teams must handle statutory payments carefully to stay compliant. The process includes:

  1. Verifying eligibility (earnings, service length, notice, etc.).

  2. Calculating payment rates according to HMRC guidelines.

  3. Recording payments accurately on payslips.

  4. Reporting to HMRC via Real-Time Information (RTI).

  5. Claiming reimbursement through the PAYE system.

Mistakes in these steps can lead to HMRC penalties or employee disputes.

Common Issues and Mistakes

  • Missing eligibility checks (e.g., not meeting earnings or notice criteria).

  • Incorrect pay rate applied (especially after annual updates).

  • Failure to reclaim statutory payments from HMRC.

  • Not communicating clearly with employees about entitlements.

Regular payroll reviews and using up-to-date software help reduce these risks.

Employee Rights and Employer Obligations

Employees are legally entitled to statutory payments if they meet HMRC’s criteria. Employers cannot:

  • Refuse payment without a valid reason.

  • Delay payment beyond the normal payday.

  • Penalise or dismiss employees for claiming statutory entitlements.

If disputes arise, employees can contact ACAS or HMRC for advice.

Final Thoughts

Statutory payments are a vital safety net in UK employment law, ensuring workers receive financial support during key life events. For employers, handling them correctly is both a legal duty and a sign of good business practice.

Whether it’s maternity pay, sick pay, or redundancy pay, accuracy and compliance are key to avoiding penalties and maintaining employee trust.

That’s why many companies rely on expert Payroll Services in London to manage statutory payments, ensuring smooth processing, accurate HMRC submissions, and compliance with the latest UK payroll regulations.