Company director responsibilities when a business partner goes on maternity leave
If your pregnant business partner goes on maternity leave, you must continue to maintain company operations, generate income and submit relevant company records to HMRC. There are no universal set rules, however, you may choose to renegotiate director responsibilities and wages with your co-director.
What it means for my company when my business partner is having a baby
So, your business partner has just announced she is having a baby. This is undoubtedly a cause for celebration, and on a personal level you will no doubt be able to share in the happy news. But when the congratulations have died down, you may be left wondering where this leaves you and your business. Running a business isn’t easy and part of being a company owner means dealing with challenging situations.
It’s always advisable to draw up a legal agreement before embarking on a partnership, which sets out how certain situations, such as pregnancy, will be dealt with. Yet hindsight is a wonderful thing, and often this is not at the forefront of your mind when working with friends you know and trust.
Someone going off on maternity leave for up to a year can have an enormous effect on a small business, both financially and logistically. Therefore a frank discussion and a clear plan of action are vital. Luckily with pregnancy, rather than a bout of illness or a severe injury, you have several months in which to formulate a plan of how you are going to manage the situation. Hopefully you are on the same train of thought as each other and can devise a plan which works not only for you and your partner, but also for the business as a whole.
The most important thing to remember is that, regardless of your feelings on the situation, your partner is protected by law, and if you make things difficult for her you could open yourself up to discrimination claims.
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You probably have many questions regarding how the financial side of things will work – does her salary continue while she is on maternity leave? Is this covered by you or the government? Should your salary increase if you are taking on additional work? While some of your questions will be answered by existing legal framework, the way you resolve others will be more about reaching a compromise which works for both of you.
It’s important to note that a self-employed partner, who is registered with HMRC and pays Class 2 National Insurance, will be entitled to claim Maternity Allowance. This is paid by the Department of Work and Pensions. The amount received, and the length of time this is given for depends on various factors including how long your partner has been self-employed, and how much she earns. Whether your business partner receives more than the statutory amount is something for you both to come to an arrangement about between yourselves. Likewise, if you feel you are going to be taking on additional work during your partner’s absence and want to be financially compensated for this, there is no hard and fast rule, rather it is something for you to discuss and reach a compromise over.
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Logistically you may have to make some changes in the day to day running of the business. If there isn’t anyone already on the team who could step up to help, you may need to arrange for some external help. Alternatively, you may decide to go it alone and put in more hours to cover your partner’s period of absence.
Whichever option you choose, you should bear in mind that by setting the precedent now, if you have an event in your life further down the line which requires you to take a period of leave, you could expect to receive the same treatment from your partner. With 100+ offices across the UK, you’re never far away from expert and confidential advice.
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