SMP and Salary Sacrifice

[Louisejoy]

I am currently on Mat leave and receiving SMP and my employer is deducting my salary sacrifice for childcare vouchers from my SMP - does anyone know if they are allowed to do this as I thought that I had read something saying you could not make deductions from SMP other than PAYE. Any information would be much appreciated.
Thanks! L

[prh47bridge]

No they are not. The official HMRC guidance is here. Note that on page 5 it says, "No contractual agreements can exclude, limit or otherwise modify SMP payments due. Therefore any SMP payable must be paid in full and in cash, for up to 39 weeks, regardless of any contrary contractual arrangements. In particular, the SMP payable cannot be further reduced by the terms of a salary sacrifice arrangement."

[ButICantaloupe]

No, they cant do this.

SMP cannot be reduced by any salary sacrifice arrangement. During the period of paid SMP your employer should pay the salary sacrifice amount and their normal contribution.

[IrisWildthyme]

It's hardly needed for me to repeat this as previous posters have already said it, but no - they are not allowed to do this, SMP is the absolute minimum you should receive with no deductions, and any benefits you have been receiving pre-mat-leave e.g. pensions contribution and childcare vouchers must be continued throughout mat leave at your employers expense with no deduction.

[YouAreMyRain]

I didn't realise this and reduced my childcare vouchers down from £243 per month to £10 per month when I started maternity leave. I am still on mat leave for five months, can I reclaim those vouchers or put my vouchers back up to £243?

[ButICantaloupe]

It depends on your companies rules, YouAre. Some do not allow amends to salary sacrifice agreements within 'x' number of months. It may be in their sal sac rules that they can refuse requests.

You could call and ask HR but be mindful of how it will come across when you say that you are increasing your salary sacrifice because they have to pay it when you do.

[YouAreMyRain]

Thanks I will probably just ring and say I need to use the childcare. When I adjust the amount of vouchers, I do it on the voucher company website so not through HR

[ButICantaloupe]

Not a problem.

If you pay your pension contributions via salary sacrifice its the same deal.

[IrisWildthyme]

YouAre I am certain that no employer would let you do this retrospectively, or allow you to increase your vouchers during mat leave. The law only requires them to keep giving you the same benefits as you were getting immediately before you went on leave. There is no reason why they would agree to give you extra money now.

[FatimaLovesBread]

So what happens with pensions?
If I contribute say 5% of my salary and the company 10%. Is the 5% still deducted from my smp along with tax and NI?

[ButICantaloupe]

No, Fatima your employer would need cover both their 10% contribution and your 5% salary sacrifice. This doesn't apply if the pension payments are made via the net pay method.

[FatimaLovesBread]

What's the net pay method?
Going to dig out my payslips and have a look

[Louisejoy]

Thank you all for the information, it is what I thought I'd head but I work for a large employer so surprised this has been dealt with incorrectly. One other thing - I am taking my full year's mat leave so will my employer have to continue paying for my childcare vouchers once I am on no pay?

[ButICantaloupe]

Fatima, the net pay method is where your pension contribution is deducted from your net salary and then the pension provider adds tax relief @20%, therefore, there is no NI saving. High rate tax payers have to reclaim their additional tax relief through their tax return.

SMP can be reduced by pension contributions made via the net pay method as it isn't treated as an employer contribution or a contractual arrangement which salary sacrifice is.

[baffledmum]

Page 6 of the HMRC guidance explains that employers may deduct from SMP if consent is given e.g to cover employee pension contributions, Trade Union subs.

Employers cannot reduce SMP to cover anything provided through a salary exchange scheme. This can have a wide remit e.g. PMI cover for dependants, mobile telephones. You need to have a clear understanding of what you have exchanged salary for.

Once on mat leave you CAN request changes to your benefits during the next available flex window and you cannot be precluded from taking part simply because you are on mat leave. To do so would be discriminatory.

If you do KIT days your employer can deduct some or all of that to cover or partially cover the cost of the salary exchange benefits.