Can you claw back enhanced maternity/adoption pay?
If you agree to pay more than the statutory minimum during maternity/adoption leave, can you ask an employee to sign an agreement under which they agree to pay back the enhancement in certain circumstances?
Most small employers pay statutory maternity pay (SMP) or statutory adoption pay (SAP) only during maternity/adoption leave. However, you can agree to pay more than this. If you do offer enhanced maternity/adoption pay, you can require the employee to repay some or all of the enhanced amount, i.e. anything more than SMP/SAP, if they do not return to work either at all or for a minimum period of time after their leave ends.
To do this, you must either include suitable repayment wording in their employment contract (if enhanced pay is a contractual right) or ask them to sign a clawback agreement governing the repayment terms in advance of their leave starting (if enhanced pay is discretionary). Your wording may state, e.g. that the enhanced pay element is repayable should the employee either not return to work at all after their leave or not return for a minimum period, e.g. six months. To be reasonable, you could limit repayment to apply only where the employee resigns, and provide for pro rata repayment based on the length of return to work. SMP/SAP cannot be clawed back under any circumstances. You should also provide in the contract/agreement for the owed amount to be deducted from the employee’s outstanding wages (if there are any), with any outstanding balance remaining then to be repayable by them within, say, one month of employment termination.
Related Topics
-
Should you use simplified expenses?
The flat rate expense you can claim for business journeys if you’re self-employed has increased to 55p per mile. Can you use simplified expenses for motoring costs and is it more tax efficient to do so?
-
Topping up your spouse’s pension
Company pension contributions are highly tax efficient. As you’ve maxed out your contributions you want to begin adding to your spouse’s pension pot. Can your company make the contributions or do you need to pay out of your own pocket?
-
Electronic VAT return and payment due