Pregnant and made redundant - trying to sort out Mat Pay - Advice?

[schmizaj]

Being made redundant, agreed to pay maternity pay but think that they will try to pay me through payroll rather than just lump sum payoff.

Want to know do company claim SMP back from government? Why else would they want to pay me through payroll and not just pay upfront? This is much less advantageous for me I just don't get what's in it for company except putting off final redundancy payment and torturing me further!!

Any knowledge or experience really appreciated.

AFAIK it costs them more in NI and/or tax to pay mat pay in a lump sum. It could be to do with that.

Re repayment, yes, your employer claims back 92% of SMP (unless v small employer, in which case more). Any enhanced pay is not reclaimable, obviously.

There are some technical issues about making a woman redundant whilst on maternity leave, one of which is that the legislation does not seem to actually allow for a lump sum payment of SMP. Usually if the employer rings the Revenue helpline they will confirm that they view a lump sum is ok. However, if your employer has been on the receiving end of the opposite view, they may refuse this structure.

Secondly, there is a highly technical argument that a woman made redundant on maternity leave can still exercise her right of return. Don't think it holds water, but if you have experienced HR and no compromise agreement, they may be thinking of this.

Finally, as you seem to be aware, any lump sum redundancy payment must be made after the end of employment in order to take advantage of the tax exemption for payments up to the £30k level. Therefore, if your employer is continuing with your employment for the 9 month SMP period, they will be advised not to pay any tax free lump sums until after this.

Wow that is really useful thank you!!

I'm actually pregnant not on mat leave yet - end of my contract notice period and EDD is the same date! And from what I understand redundant whilst preg is a little less clear cut...

I've had to really kick up a stink to get mat pay included in redundancy at all but didn't predict them doing it like this.

But they've done it all so badly and i've basically told them they're lucky i'm not pursuing unfair dismissal in exhange for being generous and making this easy for me so i'm going to push back and keep fighting to get mat leave paid as a compensatory sum and not for them to just dick around and change my leaving dates. Now that I know more about them claiming this back i'll challenge it, as just emotionally and fincially I want out - tax free! Presuming this would cause a problem for me getting another job before mat pay period up. It is such a small amount really as only part time worker so saving themselves about £4k by doing through payroll I'm guessing.

So complicated doing my head in, thanks for advice xx

There are some things to bear in mind...

If your end of employment is within 15 weeks of your EDD, you are entitled to your SMP if your employment terminates. They are not doing any favours by giving you this, they have to!(see here.

SMP cannot be paid out tax free unfortunately, no matter when or how it is paid. This is because it is remuneration, so must go through payroll and be taxed. Only compensation (i.e. things that they do not have to pay you but choose to) and damages for breach of contract can use the £30k exemption.

In terms of payment dates, yes, I would get them to ring the Revenue and confirm that a lump sum is ok. Then you should be able to terminate your employment, have your SMP through payroll(taxed) and your redundancy (statutory redundancy, any enhanced) tax free. The treatment of your notice pay depends whether you work your notice period and also the wording of your contract (sometimes it can be tax free, sometimes not).

You are also right about the issue of getting another job and SMP. However, bear in mind that that technically applies however it is paid out. If you start a new job, you are no longer on maternity leave, so are not entitled to maternity pay from that point onwards. In theory, they could claim it back from you even if they go for a lump sum. I would make sure that they agree that the lump sum SMP is yours whatever happens (i.e. if you get another job during the nine months, you will tell them so that they won't unlawfully claim it back from HM Revenue, but they won't reclaim the money from you).

In terms of being pregnant and not on maternity leave, you are right that the special rights for protection against dismissal do not apply (those on maternity leave get first dibs on remaining vacancies). However, if you think you have been selected because of your pregnancy (or indeed your part time status), then that is a different matter. Come back to us if you're worried about that.

You're amazing this is really making it easier.

I thought they had to pay me mat pay and kept telling them that they did but wasn't 100% sure so relieved on that one! At least if I keep kicking up fuss they can't go back on paying me it....

Your fourth paragraph is most important, it sounds like they can't pay me compensation money in lieu of mat pay even if I demand it(this includes company & stat pay), so I will tell them to make the call to inland revenue to get the permission to give me the redunancy tax free and upfront. This is my major concern, I don't want to have to wait 12 months to get it, I just want out and frankly don't trust them to honour anything. Even if mat pay is taxed this fine, I just want something up front. My notice is 3 months and will be sort of working it so if that is taxed then fine will still at least be paid.

Ahh would love to drag them through tribunals to make them see error of their ways but with new baby on way and the stress it is causing me I need to just get what I can and cut losses. Told manager he was lucky I was pregnant and too tired to persue otherwise I would sue for unfair dismissal as my case is so strong. Truth is it is total personality issue, inherited team and getting rid of us so can bring in own gang. Others worked there for decades so getting good compensation and pleased to get out but my options limited. But do think he's a prejudiced prat who sees part time workers as just a whim and waste of headcount. They did discuss reinstating me after causing so much noise but really would dread going back after baby as would be worse than before I'm sure.

Alas just need to make sure i'm not shafted on money and get best deal possible and don't have to wait for it. Good point about future employment, I need to get that clarified in writing, also need to get my pro-rated bonus for this year in writing.

Thanks again x

In terms of tax, the only bit you need to worry about is payments you are entitled to. SMP is quite unusual in that you are entitled to it if you are dismissed from 15 weeks before your due date. You probably are not entitled to enhanced company maternity pay, as this is simply governed by the rules the company chooses to put on the payments, and they normally include staying in employment. If you negotiate with your employer that they pay you compensation for losing out on the enhanced maternity pay, then this bit could be paid tax free, provided they wait until your termination date.

What I would suggest you do is:

1. Tell employer that you know you are entitled to SMP and direct them to the directgov website if they don't believe you;

1. Say that you think you have a strong case for unfair dismissal and would drag them through the courts if you needed to (don't let on you won't);

1. Tell them you will compromise if they pay out your SMP as a lump sum (get them to ring HM Revenue helpline if they don't believe that they can do this) plus your enhanced maternity pay (provided that this is generous enough that you think it's a fair amount). Tell them that, since you have no right to the enhanced pay under the scheme rules if you're not staying, you believe it is compensation which can be tax free. Make sure that you get any statutory redundancy pay you're owed on top.

Good luck!

Ok think I get it. Our policy is 18 weeks full pay 21 stat which is an extra couple of grand for me, so I will defo demand this company pay tax free. They've quoted full amount to me already so should be fine.

I just need to sort out this notice period thing. I will have 3 months notice from 20 July, but with others whose consultation period already over, they are still paying them through the payroll for this time. But if you say this is a contractual oblig not a statatory one I'll try to ask for it to be included in tax free sum. May negotiate end date of 20 Aug to give time to keep my computer and tie up loose ends. Then I expect on that date, I should get all my due? This being 2 months notice, redundancy, company mat pay tax free (is still all under £30k), and lump sum SMP less tax. Am I on the right track?

Right on Monday will take off gloves and will go in armed with knowlege and a clear schedule of demands!! They clearly don't know what they are doing but are a bit scared of me now so sure they will agree as all this is legal and reasonable.

Gratitudes!

You need to be careful here. If you are negotiating mat pay as a lump sum (and it is perfectly permissible to pay like this) that they don't deduct it from your redundancy payment.

So, it may be worth your while to negotiate the redundancy payment separately and then bring up the matter of the maternity pay. Otherwise, they may have a figure in mind, and then deduct mat pay to take it into account

Hmm that is a good point, I will make sure that all amounts are defined seperately then as a total to make sure not deducted!

Am actually wrong about notice period I think now, don't think that can be changed so if that is all payrolled taxed and means can't get redundancy till end notice period so be it. This final redunancy and mat payment is what is important to have set in stone!

Could you find out what others in the same position are being offered redundancy wise? Would hate for them to cynically offer you less and then 'make it up' by mat pay.

Oh yes we're telling each other everything but they are much more senior than me and been there ages. We all get month pay for each year. I'm getting 5 months for 5 years and we're all claiming pro-rated bonus and untaken holidays. And me because preg going for stat and company pay, so should be obvious if they try to count this in my company redundancy but need to get breakdown of figures and review carefully!!

Oh good! The method is transparent.

You do realize though that pay in lieu of notice (pilon) is taxable as it's deemed salary. Severance pay however is not taxable. So, perhaps you may wish to take this into consideration when discussing your notice period?

Just to add, your notice pay won't necessarily be tax-free even if you don't work your notice and get it paid up front in lieu of notice instead. You need to check your contract and see whether there is anything in there about paying in lieu of notice. If it says you can be paid in lieu of notice, then that is money you are entitled to, and will therefore be taxed.

If your contract doesn't say your employer can pay you in lieu of notice, but they do, then that would probably be tax-free as pay in lieu of notice isn't something you are contractually entitled to.

That's interesting contract doesn't say can be paid in lieu of notice actually just says that they can make me work but they are not obliged to give me work.

They are not paying anyone else out just paying through payroll in case they start a new job in those 3 months I suppose as some are likely to do - except me!

Hmm will see what they say.

Thanks

Agghhh as expected saying they need to keep me on payroll till end of mat leave to get this and payout which would mean waiting whole year to get everything. Told them wrong and we can do this upfront but will be an ongoing battle I suspect....

Schmizaj - What exactly are they saying. Are they saying that you need to stay employed until the end of maternity leave to get company enhanced maternity pay, or in order to get SMP?

If they are talking about enhanced maternity pay, it's their own scheme so they can make whatever rules they like. If they're talking about SMP, direct them to the link I put in my first post. It's a government website, so hopefully fairly convincing! Point out this paragraph:

"If you have the right to receive SMP, you will get it even if you decide to leave your job (or are made redundant) before you start receiving SMP. Also once you start getting it, your employer must continue to pay SMP to you even if you leave your job or are made redundant. You don't have to repay it if you decide not to go back to work or leave your job while getting SMP."

That makes it very clear that you do not have to remain employed (which is slightly different technically to still being in the payroll system) to continue to receive SMP. You can have a termination date, receive your lump sum and keep getting the SMP. The debate is around whether that SMP can be a lump sum and, also, the attitude some cautious employers take to the right to return.

Ahh finally sorted. Yes it is a company policy issue, agreed that I could get this lump sum but they choose not to, if I did this would loose company pay which would suck. So staying on payroll - employed as long as company mat pay lasts then will pay out the last 5 months SMP in a lump. Have to wait for redundancy but get enhanced pro rate bonus at least as will be an employee for longer. So so relieved it is all over....