Maternity Pay: policy briefing
More and more women are choosing to work for themselves. Of the 4.8 million total self-employed, there are now over 1.5 million self-employed women in the UK, up by a third since 2011. Self-employment provides flexibility, independence and a better work-life balance, particularly for families. One in seven of all freelancers are working mothers, and between 2008 and 2015 the number of mothers working as freelancers increased by 70 per cent.
It is a central goal of Government to support women and make it easier for them to get into work, especially after having children. The Prime Minister has set out her vision for an economy that works for everyone, not just the privileged few. IPSE sponsors the APPG for Women and Work to develop progressive policies to hold Government to account and support the growing numbers of self-employed women and mothers. You can see there Annual Report 2016 here.
- There is currently a disparity in the amount of money employees receive when they are pregnant as compared to the self-employed. We believe this is unfair and entitlement should be the same regardless of employment status
- If you are an employee you are eligible for “Statutory Maternity Pay”. This is set at 90% of average weekly earnings for six weeks, and then drops to £138.18 for 33 weeks
- If you are self-employed, you may be eligible for “Maternity Allowance”, not “Statutory Maternity Pay”. In this case you will receive £138.18. for 39 weeks
- This means there is a six week period in which the self-employed will receive much less than an employee, as unlike employees they do not receive 90% of their earnings for this period
- This is unfair. The self-employed should also receive 90% of their average earnings for six weeks
- With growing numbers of self-employed, it makes no sense to punish those who choose to work in this way. Simplifying the system would bring clarity to self-employed mothers
- The state already indirectly pays this benefit to employees (employers pay SMP and claim this back from the Government), why not to the self-employed?
- The Government should also radically re-examine how the self-employed are treated for paternity benefits
- By doing so the government could benefit from simplifying the system, exceeding the EU requirements regarding labour law and ensuring the economy maintains the innovative influence of the self-employed
- The Government commissioned a independent review into self-employment, conducted by Julie Deane OBE, founder of the Cambridge Satchel Company, which was published in 2016. The review adopted IPSE's recommendation that the Maternity Allowance for the self-employed should be brought in line with Maternity Pay
IPSE’s maternity pay policy
- Implement a form of Self-Employed Maternity Pay
- This would match the rate of employees’ Statutory Maternity Pay which is 90% of average weekly earnings for six weeks
- This should be calculated based upon the earnings over the prior 2 years and averaged in weeks to ensure a representative amount is paid
- It should also be dependent upon sufficient National Insurance contributions having been made in the past 2 years
- It should be paid directly to a self-employed mother for the first six weeks
- Then they would receive the normal £131.18 a week for the remaining 33 weeks, in the same way maternity allowance is currently paid
- The Government should also clarify and improve paternity rights for self-employed fathers
- How will it help?
- With growing numbers of the self-employed, it makes no sense to punish those who choose to work in this way
- Simplifying the system would bring clarity and fairness to self-employed mothers
- Further measures
- Government should do more to support self-employed mothers and families by opening up tax-freechildcare (TFC), which provides a 20 per cent top-up towards working families’ childcare costs, up to £2,000 per year for each child, to self-employed parents first, instead of those with the youngest children who already have access to childcare vouchers
How will the Government benefit?
- Greater simplicity
- Our proposals would be simple to implement as they rely on the existing benefits framework and would only require minimal legislative change
- The complexities of Statutory Maternity Pay, which requires employers to claim money back from the Government via HMRC, are avoided
- Instead Maternity Allowance for the self-employed would be revamped and replaced
- Global leadership in rights for self-employed
- Our proposals also ensure that the UK will meet and exceed the requirements of the EU Directive on self-employed workers and assisting spouses (2010/41/EU)
- This means that the UK will become a world leader in providing labour rights for self-employed women
- Maintain innovative economy
- Support will ensure that the self-employed can continue to deliver their benefits to the UK economy
- Those that work flexibly are essential innovation-driven economy like the UK – without sacrificing protections for vulnerable workers
How will IPSE achieve success?
- IPSE will work with Government to finalise a system that works for self-employed parents
- IPSE urge Government to commit to the recommendations set out in the Deane review into self-employment, including bringing the self-employed maternity allowance in line with maternity pay
- IPSE urge Government to commit to the recommendations set out in the the APPG for Women and Work, including opening up TFC to self-employed parents first
- IPSE will continue to monitor the number of self-employed mothers, highlighting any hardships they face and bring these to the attention of the Government
- IPSE will monitor the implementation of any changes to the maternity and paternity benefits system to ensure that it serves its purpose