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
-
Special payroll deadline for Christmas
If you pay staff early in December because of Christmas it’s important that you enter the information on your payroll submission correctly. What do you need to know to get this right?
-
Paying VAT when cash is tight
Your business has suffered a major cash-flow problem caused by an unexpected bad debt. Your VAT return is due for payment and you do not have enough funds to pay on time. What can you do?
-
How to improve your state pension
If you ask the Department for Work and Pensions (DWP) it will tell you that once you’ve paid 35 full years of NI contributions you can’t increase your state pension by paying more. That’s wrong. When can paying NI beyond the 35-year limit benefit you?
This website uses both its own and third-party cookies to analyze our services and navigation on our website in order to improve its contents (analytical purposes: measure visits and sources of web traffic). The legal basis is the consent of the user, except in the case of basic cookies, which are essential to navigate this website.