Occupational maternity pay: Why you should go above and beyond for new mums

Ahh, the newborn baby bubble. Milky breath. Freshly washed baby clothes. Midnight snacks. Daily walks with the pram, stopping for coffee and cake, maybe to pick up some fresh flowers or even a spot of lunch. Total bliss… until the money runs out. And that day, if you’re on statutory maternity pay (SMP), comes around pretty quick.

For six weeks glorious weeks, you’re lucky enough to only be docked 10% of your pay for the luxury of sleepless nights, delirium, ten loads of washing a day and a new boss whose ‘communication style’ (ie screaming) is less than ideal. But then things go downhill pretty quickly. To the tune of £184.03 a week, or 90% of your average weekly earnings, whichever is lower. This pay cut comes even sooner (day one) for those unlucky enough to only get statutory maternity allowance (SMA).

Table of Contents

• Statutory maternity in the UK
• Introducing occupational maternity pay
• Benefits of OMP
• Implementation
• Post-mat leave
• Key takeaways

Statutory maternity in the UK

The average wage in the UK is about £689 per week. So SMP/SMA is a pay cut of around 70% (!!) for the average new mum, at just 47% of the National Living Wage. For what many would consider to be the hardest and most important job in the world.

According to Maternity Action, “UK mothers have some of the lowest rates of maternity pay in the OECD… the basic rate of benefits remains close to destitution, according to the poverty think tank Joseph Rowntree Foundation.

Brutal.

Something doesn’t add up here. It’s less than you’d receive on unemployment benefits, yet you’d be hard pushed to find a parent who described looking after a baby as anything less than a full-time job. Really, it’s more like two. Compare the plight of UK mums to, for example, those in Sweden, where you get 80% of your wage (capped at £576.17 a week, and open to both parents), and you can start to feel pretty hard done by.

How long could you get by doing those kinds of hours on less than a third of your wage? Even pre-cost of living crisis, probably not long. It’s no wonder that many mums need to get back to work (or at least a full-time salary) as soon as they can– but at what cost to their physical and mental health?

Introducing occupational maternity pay

Fortunately, many employers recognise that SMP is not conducive to new mums taking the time they need to bond and care for their new baby. They see that it’s far better to have a mother return to work because they want to and are ready, than because they have to. So in place of SMP, they offer occupational maternity pay (OMP).

OMP, also known as ‘contractual maternity pay’, is an optional (rather than mandatory, required by law) benefit that can be offered by employers to give financial support to expectant/new mothers.

While SMP is a legal requirement and all employers must offer it, at a rate and for a period set by the government, OMP is at the discretion of the employer. You can pay as much as you want, and for however long you wish – potentially the entire period of mat leave. By contrast, SMP covers a max of 39 weeks.

As it’s a contractual rather than regulatory thing, you can also add conditions on to OMP. For example:

• A minimum term of employment before you become eligible – for SMP it’s 26 weeks, but with OMP you could extend this to a year.
• You could also offer the reverse – no minimum term – and give OMP to staff who don’t qualify for SMP. For example, new staff who haven’t yet worked 26 weeks.
• A requirement to repay OMP if the person doesn’t return to work after having a baby. SMP does not have to be repaid.

Benefits of OMP

In offering more through OMP, you can ask for more in return. This creates a mutual exchange of value. You commit to providing greater financial support that will allow for a more relaxing and enjoyable post-partum period, and the employee commits to continuing their professional journey with your company. They are much more likely to want to do this for a boss who puts their money where their mouth is in terms of living the family values they claim to have.

OMP helps to create a more equitable workplace by promoting gender equality. It does this by making it easier to stay in a professional career post-kids, which is more of a challenge for women than men.

According to Maternity Action, “Women’s earnings drop when they start families, while the opposite tends to be true for fathers.”

OMP helps to close this gap by reducing the financial hit that many women take when they become mothers. It also makes it more likely that they can and will return to full- or part-time work post childbirth.

In a country where state support arguably falls short even of the bare minimum, OMP is a huge draw when it comes to attracting top talent, and positions your company as a champion of gender equality. The commitment to your staff that such a policy shows will invite greater loyalty, reducing turnover and helping you to hold onto people for the long term, with all the benefits that brings.

Implementation

A great example of a big employer offering OMP in the UK is the NHS. They currently give 8 weeks full pay and 18 weeks half pay as standard for anyone who has worked in the NHS for 12 months. In many ways this is unsurprising, as healthcare more than any other sector should see the physical and mental toll that childbirth and child-rearing bring.

But it shows that even in budget-constrained sectors, investing in your staff’s health and wellbeing is still seen to be good value and to make financial sense.

If the NHS, with all its funding concerns and targets, can offer OMP, then so can SMEs. It’s about contextualising the investment and taking a long-term view. You will know the demographic of your workforce, and you can plan for these costs in the same way you plan for your corporation tax or VAT bills, accountancy fees and marketing budget.

It requires a mental shift where policies and schemes that protect – and ideally enhance – staff’s health and wellbeing are not seen as optional or discretionary expenses, but core operating costs. And when it comes to balancing the books, it is likely to be a net neutral or positive stance when you see the reduced costs of hiring and training new staff.

Post-mat leave

SMP only covers 39 weeks (if you can afford to take that long), but motherhood, once entered, is for life. While you’re hopefully not having to take days off to mop the brow of your ‘poorly’ thirty-year-old, it’s a safe bet that parents will have to balance work with a fairly major caring role for a good while. That means that a great maternity/paternity pay package alone is not going to cut it if you want to be a truly family-friendly employer.

The return to work is when the real pressure begins – a return to normal earnings is not a return to ‘normality’, and the need for support doesn’t disappear.

Survey data from 2023 shows that 98% of women want to return to work after mat leave. Amazing! Hold your horses. Of those, only 13% say it’s logistically and/or financially viable for them to go back. Not so great. Pretty shocking, actually. And it’s backed up by further surveys and research saying the same, terrible thing: mums in the UK want to stay in work, but find it very hard, sometimes impossible, to do so.

While employers can’t do much about the cost of childcare, the big barrier for many would-be-returning-to-work mothers, you can do something about the logistical barriers. Combining OMP with flexible working policies is a great way to be inclusive and create a parent-friendly workplace.

A phased return to work would likely be hugely welcomed by a new mum adjusting to leaving the baby she’s been (literally) physically attached to for the past however many months, especially if she is breastfeeding. Flexible hours and remote working will also go a long way towards making the transition easier for everyone involved.

If you’re thinking about having an OMP scheme, it’s important to see this as one – very important – part of an overall package of family-friendly policies and benefits. If you do, you reap rewards from the inclusive culture that this will create. Among other benefits, you can expect greater morale, loyalty, productivity and engagement.

Key takeaways

In offering OMP, especially a generous scheme, you empower mothers to focus on their families at a key time without being financially punished for doing so. Women are fantastic employees – they are loyal, hard working and conscientious. You do not want to lose them. The relatively short-term investment of fair maternity pay is tiny when you compare it to the lifetime value that a committed and loyal member of staff will contribute to your organisation.

If you want to ensure your employees understand and appreciate the benefits of OMP over SMP, you need to be communicating these effectively. You’re doing a great thing in going above and beyond statutory, and you should shout about it. Not only will this increase morale and loyalty among your staff, but it will also be a big draw for prospective employees and make you a shining beacon of best practice in your sector.