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Processing SMP When an Employee Becomes a Leaver

Bright Support
  • Updated
When an employee on maternity leave leaves employment (for example, if the company is closing down, redundancy or the employee choses to leave the employment), it’s important to process their final pay correctly. This ensures they receive all outstanding entitlements, including any remaining Statutory Maternity Pay (SMP), holiday pay, and overtime. If the company is ceasing trading, the final payroll run should reflect their leaver status and include all statutory payments and deductions.
If the employer is continuing to operate, then the employee can either be paid the outstanding SMP in their final payslip or it can continue for the remainder of the 39 weeks entitlement.
 
Note: Statutory Maternity Pay (SMP) does not have to be paid in a lump sum in the final payslip. It can continue to be paid in regular instalments (weekly, fortnightly, monthly) for the remainder of the 39-week statutory period, even after an employee has been processed as a leaver.
 
 
Option 1 - Continue to pay the leaver employee on a regular basis, until the 39 weeks are complete.
 
Points of note:
  • An employer remains legally responsible for paying the full 39 weeks of SMP and an employee who resigns or is dismissed, is not disqualified from their full SMP entitlement.
  • If the leave date has been entered into BrightPay, any subsequent SMP instalments will be taxed using a 0T non-cumulative (week 1/month 1) tax code.
As the maternity leave is on the calendar, BrightPay will automatically create a Payment after leaving payslip for the employee for each period until the 39 weeks are complete (using 0T w1/m1 tax code).
Continue to process the payment after leaving payslips & pay the employee along with any remaining employees until the full 39 weeks have been paid. The amount paid will appear on the FPS for submission to HMRC. The employer should reclaim the applicable recoverable amounts of SMP via the monthly EPS. Once the 39 weeks are finished, the employee will no longer appear in the list of employees within the Payroll utility.
 
Note: BrightPay will not allow a P45 to be issued until all statutory payments have been processed.
 
 
 
Option 2 - Process the outstanding SMP as a lump sum in their final payslip.
 
Step-by-Step instructions to process lump sum SMP on BrightPay:
 
a) Set up and process SMP for the employee as you normally would.
 
b) Enter the employee's leave date
  • Go to Employees
  • Select the relevant employee from the list.
  • Go to the Starter/Leaver tab.
  • Enter the employee’s leave date and save changes.
 
c) Pay all outstanding SMP due
  • Go to the employee’s payslip for their final pay period.
  • Click the spanner icon next to the SMP entry.
  • In the black box that appears, select Override amount.
  • Enter the total SMP amount still owed to the employee.
  • You can calculate this manually or refer to the SMP schedule in BrightPay: Go to Employees > More > Statutory Pay Calculation & Schedule and select the employee to review the schedule of SMP.
  • In order to be able to produce a P45 for the employee, reduce the number of weeks of maternity leave in the employee's calendar to coincide with the leave date.
 
d) Include all other final payments. 
  • Add any outstanding holiday pay, overtime, or other entitlements to the final payslip.
 
e) Check the leave date for the final payslip.
  • Make sure the leave date falls within the period of the final payslip you are processing.
  • This ensures the correct information is sent to HMRC on the Full Payment Submission (FPS).
 
f) Finalise the payslip and submit to HMRC.
  • Finalise the payslip as usual.
  • Submit the FPS to HMRC, which will include the leaver information and all final payments.
Note: If you are choosing to pay the employee the SMP in a lump sum - it is important to reduce the amount of weeks of maternity leave on the employee's calendar or BrightPay will not produce a P45 and will also create payment after leaving payslips for SMP payment based on the calendar information. BrightPay will not automatically reduce the number of weeks if paying the employee in a lump sum payment, the payroll processor is required to do this.
 
If you notice a "payment after leaving" payslip for an employee who has left and was on maternity leave, this is likely because statutory leave is still entered in their calendar.
 
If you’ve already paid all SMP and other entitlements to the employee and want to remove this extra payslip, here’s what to do:
  • Go to the Employees section and select the relevant employee.
  • Click on Calendar and choose a date where statutory leave is shown (these dates will appear in green).
  • Click Edit next to the Maternity Leave section.
  • Adjust the length of leave so it matches the last pay period when the employee was made a leaver.
This will help ensure no additional payments are processed after the employee has left.
 
 

Common Issues

  • SMP Not Fully Paid:  If you don’t override the SMP amount, the employee may not receive all SMP owed in their final payslip.
  • Incorrect Leave Date: If the leave date doesn’t fall within date of the final payslip, HMRC will not receive the correct leaver information.
  • Missed Entitlements: Double-check that all outstanding holiday pay, overtime, and other payments are included.
 

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