Maternity Benefit Basics – For Employers

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In a previous article, we explained some of the basic about maternity leave. Today’s article focuses on how maternity benefit interacts with payroll. 

 All female employees in Ireland are entitled to maternity leave and, depending on their PRSI contributions, many also qualify for Maternity Benefit.  

 Maternity Leave and Maternity Benefit are separate concepts so it is important to know which is which:   

  • Maternity Leave is a statutory entitlement to time off work, before and after giving birth. It applies to all employees regardless of how long they have worked for you or how many hours they work.  
  • Maternity Benefit is a weekly payment from the Department of Employment Affairs and Social Protection that an employee on maternity leave may qualify for if they have sufficient PRSI contributions in the relevant period.  

 
How Maternity Benefit Works 

 Your employee will need to apply for maternity benefit either online through MyWelfare.ie, or by post to the Department of Employment Affairs and Social Protection (DEASP). They must apply at least 6 weeks before the intended start date of maternity leave. At the time of writing, the benefit is usually €245.00 per week but may be increased or reduced in certain circumstances. The amount of maternity benefit is assessed by DEASP.  

 As employer, you must complete an MB2 form which your employee should supply. Alternatively, this form can be downloaded from Gov.ie.  

 
Payroll considerations 

 
Payroll for employees on maternity leave can work in several different ways. The first thing to consider is the contract of employment as this will determine your payroll obligations. 

 If your employee is not entitled to any maternity pay through their employment contract, then subject to meeting the qualifying requirements, they will receive maternity benefit directly from DEASP. In this situation, you don’t need to run a regular payroll for them 

 If your employee is entitled to maternity pay under their contract, there are two ways this can be paid:   

  • You can pay your employee a ‘top-up’ amount. This is where your employee receives their maternity benefit directly from the DEASP, and you pay a separate amount on top of this. The ‘top-up’ is run through payroll as usual.  
  • You can continue to pay your employee their full wage. In this scenario, the benefit from DEASP is usually paid directly to you, the employer. You pay your employee their normal gross salary however the ‘Benefit’ portion of the payment must not have USC, PRSI, or PAYE tax applied. The rest of the payment should be taxed as usual based on the most up to date Revenue Payroll Notification (RPN).  

 You also need to keep in mind your employee’s rights in respect of public holidays and decide whether to pay for public holidays, or accrue the relevant days as extra annual leave when your employee returns to work. 

How GroForth can help 

 Our payroll specialists have a lot of experience handling maternity leave and maternity benefit administration for employers. To find out more about our services and how we can help your business, get in touch. 

Nikki Johns, Payroll Manager

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