Employer NI on Statutory Pay and Redundancy (2026/27)
Employers pay NI at 15% on statutory maternity, paternity, adoption and sick pay, as these are earnings. Statutory redundancy pay and other termination payments up to £30,000 carry no NI. Some statutory pay can be recovered from HMRC. This page shows what is charged, what can be recovered and how termination payments are treated, with worked examples.
In this guide16 sections
Statutory pay is subject to NI
Statutory payments are treated as earnings. So employer NI at 15% applies when the employee’s total pay for the period is above the threshold.
| Payment | Employer NI? |
|---|---|
| Statutory Maternity Pay | Yes |
| Statutory Paternity Pay | Yes |
| Statutory Adoption Pay | Yes |
| Statutory Sick Pay | Yes |
| Statutory Redundancy Pay | No, up to £30,000 |
The standard weekly rate for Statutory Maternity Pay in 2026/27 is £194.32. It is paid after the first six weeks at 90% of average weekly earnings.
Example: Statutory Maternity Pay
An employee is paid £194.32 for a week at the standard rate. The weekly threshold is £96. Employer NI is (£194.32 − £96) × 15% = £14.75.
In the first six weeks she gets 90% of average pay. If average weekly pay was £500, she receives £450 a week. Employer NI is then (£450 − £96) × 15% = £53.10 a week.
| Period | Weekly pay | Weekly employer NI |
|---|---|---|
| First six weeks | £450 | £53.10 |
| Standard rate weeks | £194.32 | £14.75 |
Recovering statutory pay
You can reclaim most of the statutory pay you give out.
| Employer type | Recovery |
|---|---|
| Most employers | 92% of the statutory pay |
| Small employers who qualify for relief | 108.5% |
The small employers’ relief applies if your total Class 1 NI bill for the previous tax year was £45,000 or less. The higher percentage also covers the employer NI paid on the pay. You deduct the recovered amount from your PAYE payment to HMRC.
Check your position on GOV.UK each year, as the rules and rates can change.
Case study: a small employer and Statutory Maternity Pay
A small employer pays an employee Statutory Maternity Pay. The first six weeks are at 90% of her average weekly earnings of £500, which is £450 a week. The next 33 weeks are at £194.32.
| Part | Weeks | Weekly rate | Total |
|---|---|---|---|
| First period | 6 | £450 | £2,700 |
| Standard rate | 33 | £194.32 | £6,412.56 |
| Total SMP | 39 | n/a | £9,112.56 |
| Recovery | Amount |
|---|---|
| At 92% | £8,383.56 |
| At 108.5% (qualifying small employer) | £9,887.13 |
Confirm the current percentages on GOV.UK before you rely on these figures.
Redundancy and termination pay
Statutory redundancy pay up to £30,000 is free of NI and income tax. For other termination payments, the first £30,000 is free of income tax. Employer Class 1A NI at 15% applies on the part above £30,000 in most cases.
| Payment | Treatment |
|---|---|
| Statutory redundancy £8,000 | No NI |
| Non-contractual redundancy £28,000 | No NI, under £30,000 |
| Termination award £45,000 | Employer Class 1A NI on £15,000 above £30,000 = £2,250 |
| Pay in lieu of notice that is contractual | Treated as earnings, with Class 1 NI |
Notice pay and holiday pay
Pay in lieu of notice, if it is in the contract, is earnings and gets full NI. Accrued holiday pay paid on leaving is also earnings. Be careful with payments that look like “compensation”. Their treatment depends on the contract and the facts.
Redundancy planning
A company makes an employee redundant with a £12,000 statutory payment and £5,000 of contractual notice pay. The £12,000 is free of NI. The £5,000 is earnings and attracts employer NI of £750. See employer NI on bonuses for how one-off pay is charged.
| Payment | Amount | Employer NI |
|---|---|---|
| Statutory redundancy | £12,000 | £0 |
| Contractual notice pay | £5,000 | £750 |
| Total | £17,000 | £750 |
Sick pay in a normal month
An employee on £2,500 a month is off sick for half the month and receives half pay plus Statutory Sick Pay. Total pay for the month is still tested against the monthly threshold of £417. Employer NI is 15% of the pay above it. If total pay is £2,000, employer NI is £237.45.
Mistakes to avoid
- Forgetting to claim back statutory pay.
- Treating pay in lieu of notice as redundancy pay.
- Missing the £30,000 test, which counts all termination payments together.
- Not checking small employers’ relief each year.
- Forgetting that statutory pay is earnings for NI.
More on statutory pay
For the basics of how NI is worked out on normal pay, see the calculation guide. For the rates and thresholds used, see the thresholds page. For a view of how it fits into the monthly bill, see how to pay employer NI.
A checklist when an employee goes on leave
- Confirm eligibility for statutory pay and the dates.
- Work out average weekly earnings for the qualifying period.
- Set the pay in payroll, with the correct NI treatment.
- Check the employee’s NI category letter has not changed.
- Claim back what you can through your PAYE payment.
- Keep the paperwork for at least three years.
Statutory Paternity and Adoption Pay
Statutory Paternity Pay and Statutory Adoption Pay are also treated as earnings, so employer NI applies in the same way. The standard weekly rates are set each tax year. Check GOV.UK for the 2026/27 rate before you pay, because the figure can differ from Maternity Pay.
How leave affects the monthly NI bill
| Month | Employee’s pay | Employer NI |
|---|---|---|
| Normal month on £2,500 | £2,500 | £312.45 |
| Month on SMP at 90% of £2,500 | £2,250 | £274.95 |
| Month on SMP at the standard rate (about 4.33 weeks) | £842 | £63.75 |
Employer NI falls as pay falls. The recoverable part of statutory pay reduces your PAYE payment, so the net cash cost can be small for qualifying small employers.
Frequently asked questions
Do I pay employer NI on maternity pay?
Yes. Statutory maternity pay is earnings, so employer NI applies above the threshold.
Can I get it back?
You can recover 92% of the statutory pay, or 108.5% if you qualify for small employers’ relief.
Is redundancy pay free of NI?
Statutory redundancy pay up to £30,000 is free. Employer Class 1A may apply above that on termination payments.
Is Statutory Sick Pay subject to NI?
Yes. It is earnings, and both employer and employee NI apply.
What is the 2026/27 Statutory Maternity Pay rate?
£194.32 a week for the standard rate.
Where do I deduct recovered pay?
From the next PAYE payment to HMRC, through your payroll software.
How do I claim back statutory pay?
Deduct it from your next PAYE payment to HMRC. Your payroll software normally does this for you.
Does Statutory Sick Pay count towards the NI threshold?
Yes. It is earnings, so it adds to the pay for the period.
Is there a threshold for Statutory Maternity Pay NI?
The normal Secondary Threshold applies. NI is due on pay above it for the period.
Is there employer NI on pay during a period of unpaid leave?
No. If no pay is made, there is no NI for that period.
Related guides
- Employer NI on Bonuses (2026/27)
- Class 1A National Insurance 2026/27: Rate and Deadlines
- How Employer National Insurance Is Calculated
- Is Employer NI on a Payslip? What Employees See
- Employer NI Thresholds 2026/27: Weekly, Monthly, Yearly
Official sources
- National Insurance rates and categories
- HMRC guidance on statutory payments
This page is independent information, not tax advice, and has no link with HMRC. Figures were checked on 20 October 2026 for the 2026/27 tax year. Always confirm the final figures with HMRC or your payroll provider.
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