Salary sacrifice and maternity leave — what you need to know.
Two quiet ways salary sacrifice interacts with maternity leave: it reduces your statutory maternity pay reference earnings, and it pauses automatically when your pay drops below minimum wage.
- ▸Statutory Maternity Pay is calculated on average earnings in weeks 17–25 of pregnancy — based on your post-sacrifice salary, not your nominal pay.
- ▸Employers cannot take salary sacrifice contributions that would reduce your pay below the National Minimum Wage, so sacrifice effectively pauses when you are receiving low or statutory pay.
- ▸Some employers continue pension contributions during maternity leave under the contract; some don't — check your scheme rules before you go.
- ▸Consider temporarily reducing sacrifice during the SMP reference period if maximising statutory pay matters for your household finances.
What happens to salary sacrifice during maternity leave
Salary sacrifice is a contractual reduction to your gross salary. During maternity leave, that contract continues — but two things change the practical picture.
First, your pay drops. For the first six weeks of statutory maternity leave you receive 90% of average weekly earnings as Statutory Maternity Pay (SMP). For the following 33 weeks you receive the lower of 90% of average weekly earnings or the weekly flat rate (£187.18 in 2025/26). After week 39, there is no statutory pay.
Second, there is a legal floor. Employers are prohibited from using salary sacrifice to reduce an employee's pay below the National Minimum Wage. When you are on statutory pay, that pay is below the NMW — so sacrifice cannot apply. In practice, the salary sacrifice arrangement pauses during periods when the remaining pay would fall below the NMW floor. Contributions from your employer may continue separately depending on your contract; the sacrifice element does not.
This means that during most of maternity leave, you are not building further sacrifice contributions in the way you were during full employment. Whether your pension contributions continue at all depends on the specific terms your employer operates.
The SMP reference period — where the real issue lies
The larger practical concern for many workers is not what happens during leave itself, but what happened in the months before.
SMP is calculated using your average weekly earnings in the eight weeks ending with the last pay day before the end of the 15th week before the baby's due date — broadly, weeks 17 to 25 of pregnancy. This is the "qualifying week" reference period.
Those average earnings are calculated on the salary that actually appears on your payslip — your post-sacrifice salary. If you sacrifice £500 per month, your reference pay is £500/month lower than your nominal salary. For the first six weeks of SMP (90% of average weekly earnings), that reduction flows directly through to what you receive.
A worked example: an employee earning £40,000 nominal who sacrifices £4,800 per year (£400/month) has a post-sacrifice gross of £35,200. Her average weekly earnings in the reference period are based on £35,200. Her first six weeks of SMP at 90% = £609.23 per week instead of the £692.31 per week she would receive based on nominal salary. Over six weeks that is around £499 less. That is real money, not a rounding error.
For someone sacrificing more aggressively — say, 15% of a £50,000 salary — the reference pay is £42,500 and the gap over the first six weeks of SMP is over £1,000.
The contractual enhancement picture is different: if your employer provides enhanced maternity pay above the statutory minimum, it may be calculated on nominal salary or post-sacrifice salary depending on the policy wording. Check your employment contract or maternity policy document explicitly.
Keeping contributions going during leave
Whether pension contributions continue during maternity leave depends on two things: the contract and the type of contribution.
Employer contributions — including any that were formerly routed as salary sacrifice — typically continue throughout maternity leave at the same rate as if you were working normally. This is the standard under auto-enrolment: your employer must continue contributing based on your qualifying earnings during ordinary maternity pay. Some employers base their contributions on full (nominal) salary throughout; others on the reduced pay you are actually receiving.
Employee contributions via sacrifice pause when your pay drops below the NMW floor (as above). However, you may be able to make direct employee contributions outside of the sacrifice arrangement during leave. These would attract relief at source rather than the NI saving you get via sacrifice — but they keep the contributions flowing into the pot.
If maintaining contributions during leave matters to you — for example, if you are close to filling a qualifying year on your NI record or want to keep compounding — it is worth discussing with HR before you go, not after. The interaction between sacrifice, NMW floors, and employer contribution policies is often unclear to employees until they are already on leave.
Returning to work: changing your sacrifice level
When you return from maternity leave, your salary sacrifice arrangement resumes as it was — unless you actively change it. This is worth noting: if your financial situation has changed (childcare costs, reduced hours, a different income), you are not locked into the pre-leave sacrifice rate.
Most employers allow sacrifice changes at specific windows — some at any time, others annually. The return from maternity leave often represents a natural trigger point for reviewing the arrangement. You can model the impact of different contribution levels using the salary sacrifice calculator before deciding.
One specific consideration for shared parental leave (SPL): the same SMP reference period mechanics apply to Statutory Shared Parental Pay. The sacrifice effect on reference earnings is the same. If you and a partner are planning to split leave, both should check their respective post-sacrifice reference pay calculations.
- ▸Statutory Maternity Pay for the first six weeks is 90% of average weekly earnings. Average weekly earnings are calculated on the eight weeks before the end of the 15th week prior to the due date. [gov.uk]
- ▸The National Living Wage (for workers aged 21+) is £12.21 per hour for 2025/26. Salary sacrifice cannot reduce earnings below this floor. [gov.uk]
- ▸Under auto-enrolment legislation, employer pension contributions must continue during ordinary maternity leave (first 26 weeks) as if the employee were working normally. [The Pensions Regulator]
- ▸The flat rate of Statutory Maternity Pay is £187.18 per week (or 90% of average weekly earnings if lower) for weeks 7–39 in 2025/26. [gov.uk]
- •SMP reference earnings are set during pregnancy, not during leave — if you want to increase them, any change to sacrifice rate must happen before the reference period begins.
- •Enhanced maternity pay policies vary by employer. Check whether your employer calculates enhancements on nominal or post-sacrifice salary.
- •This article covers England and Wales. Scottish and Northern Irish employment law is substantially similar but devolved pay provisions may differ.
- •Shared parental pay and adoption pay follow similar mechanics to SMP for salary sacrifice purposes.
This is factual information, not financial advice. If you're unsure what's right for your situation, speak to an FCA-regulated financial adviser.