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Explanatory Memorandum to Employment (Northern Ireland) Order 2002

Article 5: Statutory paternity pay

Article 5 establishes a new statutory right to SPP for fathers following the birth of a child or the placement of a child for adoption.  It provides for SPP to be paid for a period of two weeks or, if regulations permit, a period of one week or two non-consecutive periods of one week.  Regulations will provide for the father to choose to be paid for a single period of one week or two weeks.  SPP will generally be payable for paternity leave taken within 56 days of the date on which the child is born or placed for adoption.

The rate of SPP will be set in regulations.  In 2003 it will be the lesser of £100 per week or 90% of the employee’s average weekly earnings.

SPP will be available to an employee who has met the service qualification (continuous service with the same employer for at least 26 weeks by the fifteenth week before the child is expected to be born or by the week in which an approved match is made with the child), has a relationship (to be specified in regulations) with the child and the mother or adoptive parent, has given appropriate notification and whose average weekly earnings are equal to or above the Lower Earnings Limit (LEL) applying to National Insurance Contributions (NICs) (£75 per week from April 2002).  For practical reasons there will be slight differences in how paternity pay operates between those adopting within the UK and those adopting outside the UK.  Provision for adoptions outside the UK will be made in regulations.

SPP will be administered by employers in the same way as SMP. Employers will be able to recover a percentage of the amount of SPP they pay out, (limited in most cases to 92%).  Small employers who are entitled to Small Employers’ Relief (in 2002/3, those with NICs due in a year of £40,000 or less) will be able to claim 100% and an added payment (in 2002/3 of 4.5% for SMP) to compensate for employers’ share of NICs payable in respect of SPP.  Article 8 provides for a power to make regulations to enable employers to ask for funding, if necessary in advance, from the Inland Revenue where the amount of SPP they have to pay their employees exceeds the tax and NICs that they are due to pay to the Inland Revenue.  In certain circumstances where an employer fails to pay SPP, the Inland Revenue will become responsible for the payment.  Liability will also fall on the Inland Revenue from the first week in which an employer becomes insolvent.

The framework for SPP is similar to that already in place for SMP and Working Families’ Tax Credit.  The distribution of rights and obligations as between primary and secondary legislation follows the model of the Social Security Contributions and Benefits (NI) Act 1992 and Tax Credits Act 1999.  As under those Acts, administrative and enforcement powers are conferred on the Inland Revenue.

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