What counts as 'average weekly earnings' - umbrella

**ladymuck** · 16 August 2022, 07:50

It's based on gross earnings.

There's lots of rules about eligibility so you need to make sure you're 'employed' at the right time in order to be able to claim it.

EDIT: this is in the wrong forum but hopefully people will play nicely as it's not possible to move posts (still)

**eek** · 16 August 2022, 07:51

Originally posted by JessMatt View Post

Hi all,

I've tried to find the answer to this online but it doesn't seem very clear, so hoping someone smarter or wiser can advise.

I'm considering taking a contract via an Umbrella company. I'm also considering having another baby next year.

With that in mind I wanted to understand the maternity pay via an umbrella. I know I'm entitled to it and I should get 90% of my average weekly earnings for the first 6 weeks, but what does that include? According to the internet, it is whatever is gross and subject to Class 1 National Insurance contributions... but I can't figure out what that actually is.

If my day rate was £500, for example, is the gross just £500 x 5 = £2,500 weekly and it's based on this? Or is it after deductions? Or is only part of this subject to C1 NI..?

I know this might sound obvious but my last mat leave was based on by director salary (and not very much as a result).

Thanks!

Annoyingly this is in the wrong forum - although I can see why it is here given how hidden the Umbrella forum is for new posters...

So you average weekly earnings are legally defined as the average earnings you receive including bonuses - I mention that because umbrellas may try to palm you off with their minimum wage...

As for what that wage is - it's worth doing a break down of what happens to an assignment fee

£2500 - weekly payment
less £25 or so margin
less 12.07% holiday pay
less 13.05% Employer NI
less 0.5% apprenticeship levy

Gives you a gross pay of £1934.04 which would be your basis for maternity leave.

Don't forget you will also be entitled to 3.24 days holiday pay from the 6 weeks and that needs to be paid at the full rate not the 90% rate.

**northernladuk** · 16 August 2022, 09:35

Originally posted by eek View Post

Annoyingly this is in the wrong forum - although I can see why it is here given how hidden the Umbrella forum is for new posters...

Still no excuse for putting it in General. A casual glance should tell them it's definitely not where they want to be posting.

OP. The section you need is linked below. Lots of useful stuff in there.
https://forums.contractoruk.com/umbrella-companies/

Also there is a search function using google to find similar questions. It's explained here.
https://forums.contractoruk.com/welc...uk-forums.html

**eek** · 16 August 2022, 09:59

Was working out whether I should post this but it needs to be said.

It's not going to be easy to meet the maternity rules that ladymuck pointed out following the Harpur Trust v Barzel case as that means umbrellas are changing how they work and getting a lot more explicit as to when your employment finishes (contract end date 1st April, things will be designed so that you leave the umbrella's employment on 1st April)...

If you are worried about maternity pay that much you really do need to get a permanent job - contingency working just isn't appropriate in these circumstances.

And many employees will offer Maternity deals that are way way beyond the statutory legal minimums

**vetran** · 16 August 2022, 11:52

If you are a contractor some clients might drop you like a stone if they find out you are pregnant. They don't really need a reason, good luck proving its discrimination.

Enhanced Maternity pay in this situation comes from your earnings as a contractor. If you have none then no maternity pay.

Now if you contract outside IR35 to build up a warchest then get a permie job before trying for a baby you may be able to burn down the warchest in a tax efficient way while your employer gives you a decent maternity deal.

I wouldn't get pregnant as a contractor by choice its just easier to let the employer pay.

**eek** · 16 August 2022, 12:28

Originally posted by vetran View Post

Enhanced Maternity pay in this situation comes from your earnings as a contractor. If you have none then no maternity pay.

No it doesn't - it would have to come from the margins of the umbrella - it's one of the risks and responsibilities an umbrella has to accept for their margin....

Originally posted by vetran View Post

If you are a contractor some clients might drop you like a stone if they find out you are pregnant. They don't really need a reason, good luck proving its discrimination.

I wouldn't get pregnant as a contractor by choice its just easier to let the employer pay.

But the above is correct - it's likely the client will drop you or fail to renew and no-one has any incentive in a contingent labour relationship to keep a cost on.

The best advice to the OP is to go permanent.

**vetran** · 16 August 2022, 12:52

Originally posted by eek View Post

No it doesn't - it would have to come from the margins of the umbrella - it's one of the risks and responsibilities an umbrella has to accept for their margin....

But the above is correct - it's likely the client will drop you or fail to renew and no-one has any incentive in a contingent labour relationship to keep a cost on.

The best advice to the OP is to go permanent.

So if you have no contract or fall pregnant under contract the Umbrella is going to pay you more than the statutory minimum? As I said enhanced maternity pay.The had to be forced to pay holiday & sick pay.

**eek** · 16 August 2022, 12:58

Originally posted by vetran View Post

So if you have no contract or fall pregnant under contract the Umbrella is going to pay you more than the statutory minimum? As I said enhanced maternity pay.The had to be forced to pay holiday & sick pay.

You really are completely and utterly clueless - do some basic research - Maternity pay and leave: Pay - GOV.UK (www.gov.uk)

The statutory minimum is 90% of your average weekly wage including bonuses for the first 6 weeks and yes the umbrella will have to pay it - it's both the responsibility of the umbrella to pay it and one of the factors that will determine the margin an umbrella sets...

And we are talking about the first 6 weeks that is 90% of average weekly pay - not the subsequent 33 weeks which are at £156.66 a week (although again holiday pay will accrue over those weeks at 0.54 days of your average daily pay for those 33 weeks).

**JessMatt** · 16 August 2022, 13:42

Thanks all!

Firstly - apologies for posting in the wrong forum, I did look but another one didn't jump out...

I appreciate your replies. Sounds like I would be able to claim a lot more than I did first time round as a company director (and, as some of you suggested, I did have a big war chest then so it was all fine).

In terms of being employed v. having a contract and umbrella role: I do have a perm role now, but the day rate I'm being offered would mean I could save the same as what I'd be giving up in enhanced maternity pay in about 3 months, hence why it's an option I'm considering. I had assumed I'd only get maternity allowance and be unemployed when I was off, so any additional would be a bonus. The contract is about 12 months though, so a good point about no longer being employed when this is up (even if I'm on mat leave already).

Food for thought!

What counts as 'average weekly earnings' - umbrella