Enhanced maternity pay: an employer's guide
Statutory Maternity Pay sets a floor of £194.32 a week for the 2026-27 tax year, paid for up to 33 weeks after an initial 6 weeks at 90% of average weekly earnings [1]. Enhanced maternity pay sits on top of that floor: it is a voluntary, contractual payment an employer chooses to make above the statutory minimum [2]. The catch for employers is that only the statutory part can be recovered from HMRC.
Enhanced maternity pay, sometimes called occupational or contractual maternity pay, has become a common retention tool. It can mean topping the statutory rate up to full salary for a period, or extending pay beyond the statutory 39 weeks [3]. The detail matters because the enhanced element changes the employer's cost, the payroll mechanics and the rules on repayment.
This guide explains what enhanced maternity pay is, how it is commonly structured, what an employer can and cannot recover, how tax and National Insurance apply, and how clawback conditions work when an employee does not return.
Key takeaways
- Enhanced maternity pay is voluntary and contractual, paid above the £194.32 statutory rate.
- Only the statutory element is recoverable from HMRC, at 92% or 109% under Small Employers' Relief. The top-up is an employer cost.
- Enhanced pay is taxed and subject to National Insurance through PAYE in the same way as the statutory part.
- Clawback of the enhanced element is only enforceable if it is written into the contract or a signed agreement.
- Statutory Maternity Pay can never be reclaimed from an employee, whatever the circumstances of their return.
What enhanced maternity pay is
Enhanced maternity pay is any maternity pay an employer provides above the statutory minimum [2]. Unlike Statutory Maternity Pay, which every qualifying employer must pay, enhanced pay is entirely optional and is set out in the employment contract or a maternity policy [3]. It is effectively a top-up: the employer pays the statutory amount it would have paid anyway, plus an extra contractual amount [4].
The statutory baseline does not change because an enhanced scheme exists. An eligible employee still needs 26 weeks of continuous service by the qualifying week and average weekly earnings at or above the £129 Lower Earnings Limit to receive Statutory Maternity Pay [5]. An enhanced scheme can set its own, more generous eligibility terms, but it cannot remove the statutory entitlement an employee already has [2].
Common enhanced pay structures
Enhanced schemes vary widely, from a small uplift on the statutory rate to several months of full pay [3]. The most common approach is a tapered structure: a block of full or near-full pay, followed by the statutory rate, followed by the unpaid final weeks [2].
| Scheme element | Statutory minimum | Typical enhanced example |
|---|---|---|
| Weeks 1 to 6 | 90% of average weekly earnings | Full pay |
| Weeks 7 to 39 | £194.32 or 90% of earnings, whichever is lower | Full pay for a set period, then the statutory rate |
| Weeks 40 to 52 | Unpaid | Often unpaid, sometimes part-paid |
The statutory figures are fixed by HMRC for the 2026-27 tax year [1]. The enhanced column is illustrative only, because each employer sets its own terms [3]. Whatever the structure, the payroll system needs to know where the statutory part ends and the contractual top-up begins, which is why most employers run enhanced schemes through dedicated SME payroll software rather than a spreadsheet [4].
How enhanced pay interacts with recovery
The recovery rules are where enhanced schemes catch employers out. An employer can reclaim a proportion of Statutory Maternity Pay from HMRC, but the enhanced top-up is not recoverable at all [6]. The top-up is an additional cost the employer carries in full [3].
What the employer can recover
Recovery of the statutory element depends on the employer's National Insurance bill in the previous tax year [1].
| Previous-year Class 1 National Insurance | Statutory pay recovered |
|---|---|
| More than £45,000 | 92% |
| £45,000 or less (Small Employers' Relief) | 109% |
These rates apply to the statutory portion only, and are claimed through the Employer Payment Summary as part of Real Time Information [6]. A business offering full pay for the first 6 months should budget for the gap between what it pays the employee and the 92% or 109% it recovers on the statutory slice [1]. Accountants modelling this across several clients usually do so inside a multi-client payroll dashboard that separates the statutory and enhanced figures automatically [6].
Tax, National Insurance and pensions
Enhanced maternity pay is treated as earnings, so income tax and National Insurance are deducted from the whole amount through PAYE, statutory and enhanced parts alike [4]. There is no special tax treatment for the top-up: it is taxed exactly like salary [2]. The way tax and National Insurance fall on maternity pay is covered in more detail in a separate guide on maternity pay and tax.
Pension contributions follow the statutory rule regardless of the enhancement. During paid maternity leave, including any enhanced period, the employer continues its own pension contributions based on the employee's normal salary, while the employee contributes on the pay they actually receive [7]. The contract of employment continues throughout, so holiday accrues and the role is protected [5].
Repayment and clawback conditions
Many employers attach a condition that an employee must return to work for a minimum period to keep the enhanced element, with repayment required if they do not [3]. This is only enforceable if the condition is clearly set out in the contract or a separate agreement signed before leave begins [3].
What can and cannot be reclaimed
The line is firm. Statutory Maternity Pay can never be reclaimed from an employee, even when they do not return [4]. Only the enhanced amount above the statutory rate can be subject to clawback [3]. Clawback terms commonly use a sliding scale, so the amount repayable reduces the longer the employee stays after returning [3]. Employers should treat the wording as a matter for their own legal review, because an unclear clause is hard to enforce [2].
Setting up and running a scheme
An enhanced scheme needs to be documented before it is offered, so that eligibility, the pay structure and any clawback terms are all in writing [3]. On the payroll side, the statutory and enhanced elements must be recorded separately so the correct statutory figure flows into the Employer Payment Summary for recovery [6]. The wider duties on notice, the MATB1 certificate and confirming leave dates apply whether or not pay is enhanced, and are set out in the guide to employer maternity pay obligations [5]. For an occasional payment that falls outside the normal cycle, such as a keeping in touch day, an instant payslip gives a compliant record [4].
Conclusion
Enhanced maternity pay is a retention decision with a payroll consequence. The employer chooses the generosity, but HMRC only refunds the statutory slice, so the top-up lands entirely on the employer's own budget. Clean record-keeping that separates statutory from contractual pay is what keeps the recovery claim correct and the clawback enforceable.
The policy backdrop is shifting. The government opened a full review of parental leave and pay in mid-2025, examining how statutory family payments are structured and how employer top-ups fit around them. Employers refreshing an enhanced scheme would do well to design it so it can adapt when that review reports.
Frequently asked questions
Is enhanced maternity pay a legal requirement?
No. Only Statutory Maternity Pay is a legal requirement for qualifying employees [2]. Enhanced or contractual maternity pay is entirely voluntary and is whatever the employer sets out in the contract or maternity policy [3]. Once offered contractually, however, it becomes a binding term the employer must honour [4].
Can an employer recover enhanced maternity pay from HMRC?
Only the statutory part is recoverable. An employer reclaims 92% of Statutory Maternity Pay, or 109% under Small Employers' Relief, through the Employer Payment Summary [1]. The enhanced top-up above the statutory rate cannot be recovered and is carried in full by the employer [6].
Does an employee pay tax on enhanced maternity pay?
Yes. Enhanced maternity pay counts as earnings, so income tax and National Insurance are deducted through PAYE on the whole amount, both the statutory and the enhanced parts [4]. There is no separate tax relief for the contractual top-up [2].
Does an employee have to repay enhanced maternity pay if they do not return?
They might, but only the enhanced element and only if a repayment condition was agreed in writing before leave started [3]. Statutory Maternity Pay can never be reclaimed [4]. Clawback clauses often taper, so less is owed the longer the employee stays after returning [3].
