Are Directors Entitled to Maternity Pay?

Are Directors Entitled to Maternity Pay?

Nick Robinson

Nick Robinson

Mar 21, 2013 | Payroll

DIRECTORS AND MATERNITY PAY

There are new rules in effect for directors of companies in the United Kingdom regarding maternity pay and more. The new regulations are for companies that were incorporated on or after 1 October 2009, and provide new Articles of Association for these companies by, among other things, allowing the directors to determine the director remuneration for maternity leave and more. These rules want into effect to provide for small business owners and directors more leeway and latitude in determining and enacting maternity pay for themselves and their acting directors.

Directors are now able to decide what and when to pay their own remuneration regarding maternity pay, and there is no longer any need for a resolution of such from the company’s shareholders at its Annual General meeting. For these purposes, too, the director’s salary and payments of fees will be regarded as earnings for tax and entitlement purposes, relative to the date the payment(s) was made.

Now, for companies that were formed before 1 October 2009, the old articles still apply, and directors are still required to draft a resolution for shareholders to determine a director’s remuneration. All payments are subject to approval by shareholders at the Annual General Meeting, and often reflect certain calculation methods based on the director’s annual earnings.

Occasionally for these companies, directors may be paid by a formal vote of the shareholders, or have their salary money drawn in anticipation of a formal vote that will ratify the articles for maternity pay. For directors who are paid contractually, you can calculate their maternity leave earnings like you would any other employee though, making it simple and easy to calculate maternity pay and leave.

For all directors in the UK, though, there is remuneration for maternity leave, and maternity pay is taken into account at every level. Companies in the United Kingdom are legally required to allow their employees paid maternity leave during and immediately after the pregnancy, or during and immediately after an adoption process, in order to care for and bring the child to health before returning to work.

Additionally, even male directors are subject to these laws in the cases where they qualify for paternity pay and leave relative to their spouse or partner’s pregnancy, or their initiation and commitment to adoption proceedings. Male directors are afforded the same guidelines and benefits as are female directors.

The HMRC is here to help in instances like this, as maternity pay questions for directors can be complicated and quite technical. If you have any questions about maternity pay, contact the HMRC at their helpline: 0845 9000 444. This will clear up any major misconceptions or questions about the issue of maternity pay for you, or for the director of your company, and ensure that your company maintains their standing within legal and ethical boundaries.

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