Statutory Maternity Pay: how different employment types affect what you pay

05 September 2017

The directors section of the ‘SMP: how different employment types affect what you pay’ guidance has been updated to advise companies to keep records of shareholder votes and resolutions.


Companies are required to keep records of shareholder votes and resolutions. Evidence of these will be requested to determine entitlement and recovery of SMP.

Companies incorporated before 1 October 2009

The previous standard articles, which apply in default, continue to apply. An ordinary resolution is required to determine director’s remuneration. The method of calculating director’s remuneration by an annual figure (after an ordinary resolution has been passed by shareholders) will apply to these companies. Any payments made in anticipation of the annual vote can’t be taken into account for calculating AWE.

Companies incorporated after 1 October 2009

There are new regulations for companies incorporated after 1 October 2009. They provide new Articles of Association for these companies and will:

  • Default if other articles aren’t adopted
  • Allow its directors to determine a director’s remuneration

Directors can decide what remuneration to pay and when. There’s no need for a resolution of the companies shareholders at its Annual General Meeting (AGM). In such cases payment of director’s fees will be regarded as earnings for the purpose of entitlement to SMP on the date payment was made and the SMP calculator used in the normal way.

Paid contractually

If the director is contractually paid a regular salary, their AWE are calculated like any other employee.

Paid by a determination of the directors (not a formal vote)

Calculate the AWE by adding together the monies paid and any other payments of earnings, but use the date monies were paid instead of the date of the shareholders’ resolution at the AGM to determine the total earnings during the relevant period.

Paid both contractually and by formal vote

A director who is paid contractually may also be paid a bonus or fees by a formal vote. You must still calculate their AWE like any other employee, but you should only include the monies voted by formal vote if the date of the vote falls in the relevant period.

Paid only by a formal vote

If the director is paid only by a formal vote calculate their AWE in the usual way, substituting the dates of the formal votes in place of the normal paydays.

A formal vote usually takes place at the company’s AGM and is agreed in the company minutes.

Monies drawn in anticipation of a formal vote

Some directors may regularly draw money from the business in anticipation of a formal vote. Don’t include this money when working out the director’s AWE, even if NICs were deducted at the time they were paid.

The full guidance can be accessed below:

Statutory Maternity Pay: how different employment types affect what you pay