Redundancy during Maternity Leave, Tax and Holiday Questions

megadrive2

1). I'm Currently on my 4th week of Maternity leave and have just been made redundant, i wish to know if my future 35 weeks Maternity pay will be subject to Tax and NI deductions?


2). I have today received my confirmation of redundancy letter from my employer, inside it states I am to be deducted 10 days overtaken holiday from my final wage.
I was advised before taking Maternity leave to take all the years worth of holiday, (20 days) by the HR department, as it cannot be carried over into the following year and therefore i would loose it. I am aware that in normal redundancy circumstaces they are allowed to do this, but as i am on maternity leave can they really get away with it?

Thanks

Googlewhacker

Can't see why not, maybe talk to ACAS for their view on it.

mariefab

Is there a clause in your contract of employment (or similar document) stating that overtaken holiday will be deducted on termination?

If so, they may be allowed to make the deduction. It depends on the wording of the clause.

If not, no they cannot. It would be an unlawful for them to do so.

SarEl

mariefab wrote: »

Is there a clause in your contract of employment (or similar document) stating that overtaken holiday will be deducted on termination?

If so, they may be allowed to make the deduction. It depends on the wording of the clause.

If not, no they cannot. It would be an unlawful for them to do so.

Yes they can take overtaken holidays back - it is payment which you are not entitled to. At the time of advising the employee to take her holidays or loose them, the employer could not have known she would be made redundant. It is no different to any employee having taken their whole entitlement and then leaving before the end of the year.

I am more interested in the actual redundancy - has the employer closed for business or what? Because it is very hard to make a woman on maternity leave redundant - she has a guaranteed right to return to her job and it really is hard to get around this legally.

mariefab

(In finest pantomime voice) 'Oh! No they can't! lol
Not unless there's already an agreement in place entitling them to deduct overtaken holiday on termination.

See WTR 14(4)
http://www.opsi.gov.uk/si/si1998/19981833.htm#14

Googlewhacker

mariefab wrote: »

(In finest pantomime voice) 'Oh! No they can't! lol
Not unless there's already an agreement in place entitling them to deduct overtaken holiday on termination.

See WTR 14(4)
http://www.opsi.gov.uk/si/si1998/19981833.htm#14

It is a fairly standard clause in contracts.

mariefab

Agreed.
But it's not in mine and it may not be in the OPs.

Googlewhacker

mariefab wrote: »

Agreed.
But it's not in mine and it may not be in the OPs.

I'm amazed, you sure it's not in your handbook?

mariefab

Yes, the handbook just contains health & safety and disciplinary procedures.

ladybirdintheuk

I just typed a lengthly response to this, then the website ate it

What a think to go through 4 weeks into your leave. Is baby here, or are you still waiting?

Re question number 1, SMP is taxable and niable. This will still be the case if you are being made redundant. On top of that, because of the way that tax and ni are calculated you will probably find you are taxed more in this situation. You will be able to get it back from the revenue though, but probably not until the end of the tax year. (might be worth speaking to them directly, but I'm not sure they can do anything about it until then).

Your actual redundancy pay will be tax and ni free (up to £30k). And you continue to accrue any benefits you were getting as a normal employee, including holiday.

Also, you might find the section on redundancy here useful. And this factsheet. Just to make sure they aren't unlawfully making you redundant. (rather than giving you the sack, and using redundancy as the excuse when it isn't really the case).

ladybirdintheuk

Re question 1, yes, SMP will be taxable and niable still. You may find that you pay more tax than you "should" when you are paid it to start with, but you will be able to claim the overpayment back from the revenue.

Your redundancy payment (up to 30K at least... but I'm assuming you don't fit into the bracket to get more than that!) will be tax and ni free.

Just one other thing you should be checking if you've not done so already - you will be entitled to any other benefits for the duration of your maternity period (I have heard of companies having to hire a car for employess on maternity pay because they are entitled to a company car until the end of their maternity leave, even though the company has gone under and other employees have had their cars taken back).

This includes holiday, which you continue to accrue to the end of your maternity leave, so I'm not sure it is correct for them to be able to deduct any holiday from you (unless the holiday year extends to beyond the end of your maternity leave? I'm not sure that would be possible if you've only been off for 4 weeks?)

It may be worth taking some advice from citizens advice or ACAs on Monday about this part.

What a think to have to go through 4 weeks into your leave though Is baby here now, or are you still waiting?