UKC

Hi,

Had this message forwarded to me today, and am trying to help a friend out in the following situation:

I am looking for advice on the following situation.

I am in a work based pension scheme where my employer contributes an equal amount.

I have been on maternity leave and only received statutory pay.

I have not contributed to the pension scheme whilst on maternity leave.

I was not asked/informed about opting out of the scheme whilst on maternity.


Today I have been told by my employer that I need to repay the contributions that my employer paid during my maternity leave, as they paid this by error, which you can imagine is a large sum of money over the 40wks I have been on maternity.
Can anyone help and advise me if this is legal, and if they can request the funds back, can they request it directly from myself?, as I obviously haven't received the money in the first place, its in the pension scheme.


Many thanks in advance.

Allan

In reply to vincentvega:

I don't have clue one about the legality of them chasing you for the money but if it's in your pension then it should be locked down till you retire so if I had to pay it back that would be the offer I made.

In reply to vincentvega:

Going from research h from the past, which was not this specific issue so I could be wrong, giving mat pay and pension contribution is the responsibility if your employer for the time you're employed with them. Which includes mat leave. So I'd say they're out of order and a phone call to HR should sort it, or if not the pressure of legal action would.

However I'm far from a pro so this is more a bump than an answer.

In reply to vincentvega:

Hi again I'm not an expert but I believe the overriding concept here is that an employee should not be disadvantaged by an employers mistake. For example if they overpaid you and asked for the money back that would be fine. In this case however you haven't received a benefit yet so you would be disadvantaged.

I would suggest that the equitable way forward would be to allow them to not make the pension payments going forward until the situation is corrected. My only caveat is that as their systems don't seem too hot I'd make sure I asked for a statement of the position every month

In reply to Grey area:

Thanks for the replies.

The employee has now left the company after her maternity leave, so for the employer to now not make pension payments until corrected can not happen.
The employer has taken the funds out of the holidays/bank holidays owed to the employee which was accumulated whilst on maternity leave.

Like said in the replies, I also feel the company can not request the funds back from the employee.
I have suggested citizens advice and also the pension advisory service.

Thanks

Allan

In reply to vincentvega:

If that's the case then I'd suggest spending £75-100 for half an hours legal advice with an employment specialist and a letter from a solicitor that will probably sort it out. The threat of legal action is usually enough to sort it and I'm fairly sure that disadvantaging someone on maternity has an unlimited fine.

In reply to vincentvega:

What's the mistake that the employer says they have made?

https://www.gov.uk/workplace-pensions/changing-jobs-and-taking-leave

"Maternity and other parental leave
You and your employer will continue to make pensions contributions if you are getting paid during maternity leave. If you are not getting paid, your employer doesn’t have to make pensions contributions unless your contract says otherwise. Check your employer’s maternity policy."

In reply to vincentvega:

http://www.pensionsadvisoryservice.org.uk/about-pensions/when-things-change...

"If you decide take parental leave (maternity leave, paternity leave or adoption leave), you should remain a member of your workplace pension scheme, and you and/or your employer will continue to make contributions, unless you decide to stop contributing. If you do stop contributing, your employer will also stop their contributions and you will be treated as a having left the scheme."

So it looks like they're right in that they shouldn't have paid into the scheme if you stopped paying in.

In terms of recovering it if it's their error? I don't know.

In reply to hokkyokusei:

The mistake the employer says they have made is paying into the pension when they didn't need to.

In reply to climbwhenready:

Thanks for the reply.

I firstly need to establish if it is up to the employer to still take the employee's contribution out of the wage whilst receiving statutory pay, like it is in every day employment.
I have heard that whatever percentage of the wage the employee contributes to the pension, then the same percentage should be taken from the statutory pay by the employer. I need to find out the details on this.
If it is, then that's a second error on the employers part.
Recovering it, as you say will be difficult, but I personally don't think its correct to pursue the employee directly as the employee cant touch the funds until retirement. Explaining the error to the pension company and enquiring about refunding the payments would be more reasonable.

Thanks

Allan

In reply to vincentvega:


I would say then that, since your friend wasn't paying in, that the employer did make a mistake. I would agree with your later post that it seems unreasonable to pursue the employee for repayment since they don't hold the money - the pension company does.

In reply to hokkyokusei:

Firstly, you need to determine whether the employee was entitled to stat pay from the employer or claimed direct from DWP (the employer would have given her a form to use to make the claim). There are a few things that could have affected this (mainly rate of pay), but the employee will know if they had to claim direct from DWP.

If the employee was claiming from DWP then there should have been close to nil on any payslips, so there would have been nothing from which to deduct an employee's contribution, and it would be quite a weird error the employer to contribute.

If the employee was receiving SMP from the employer (much more likely on a moderately or well paid job), and was not receiving any additional occupational/contractual maternity pay, then there will have been no pay made from which NI is deductible, and hence there should have been no employee pension contribution under normal rules. It would, however, have been the employer's job to figure this out and pay any money and contributions accordingly. It sounds like they did this bit right as no employee contributions were made according to the OP? In this situation it might have been easier for the employer to make an error and pay their own contribution, though only by having an amateurish payroll setup.

In this case, the benefit to the employee is remote, so I would dispute the right of the employer to take back the payments directly, since the employee is not in a position to draw down money to replace the lost pay - these benefits are not equivalent. In fact, the employer should be pursuing their cash either from the pension scheme (which will probably have a procedure for dealing with this), or from their payroll provider (who has screwed up). In any case, they have not overpaid the employee so should not be withholding pay to make this up.'

Good luck.

In reply to hamsforlegs:

Overpayments of wages can be reclaimed under http://www.legislation.gov.uk/ukpga/1996/18/section/14

Section 14 raises the question of whether pension contributions are wages. The plain reading is that they are not paid to the employee, so therefore they are not.

This employment tribunal agreed - pension contributions are not wages

http://www.pannone.com/media-centre/articles/employment-articles/unlawful-d...

Since pension contributions are not considered to be wages for the purposes of bringing a claim about an unlawful deduction of wages, they similarly cannot be considered to be wages for the purposes of deducting them in the first place. Therefore they would need a specific clause in the contract to allow them to reclaim it from the employee by deducting it from salary.

In the absence of such a clause, their behaviour to date seems to constitute unlawful deduction of wages under s14 of the Employment Rights Act 1996.

Caveat - I am not a lawyer (but I am an employer with a legal mind ).

Moreover, this stinks on two counts.

a) They can reclaim it from the pensions provider: http://www.hmrc.gov.uk/manuals/rpsmmanual/RPSM12101051.htm

b) Pension contributions made by an employer are exempt from employers national insurance contributions. Pay in lieu of holiday is not. So by deducting the overpaid pension contribution from the employee's gross pay (I really hope it was the gross pay) they effectively reduce their employers NI and thereby leave themselves in a better position at the employee's expense.

In reply to vincentvega:

Forgot to add the definition of "wages".

http://www.legislation.gov.uk/ukpga/1996/18/section/27

In reply to Nutkey:

Good references/knowledge. I found it hard to believe that there wasn't an agreed process by which this should be resolved...

In reply to vincentvega:

Thanks Nutkey & Hamsforlegs.

Some great information you have provided. UKC strikes again!
As I understand it, the employee has been paid by her employer during maternity leave, and the employer then recovers this from the government. The employee didn't sign or receive any form to get the statutory pay directly from the government. The amount being paid was only statutory pay.
I spoke with Acas who agreed pension contributions are not considered wages, so they cant then be deducted from an employee's wage. That is what I feel is best to go with, the person in question is fine with returning the funds, but from the pension scheme, not from her wage packet!

It seems a very difficult process as you say, it all seems quite a grey area, and when I am trying to put a letter together to send to the employer, its difficult to actually get any facts on there.
I think I will suggest a polite letter asking them to reconsider where they are drawing the funds from as I don't consider this fair, and state that if they are not willing to reconsider I will be seeking legal advice.

It does stink, the company in question have a history of being very gung ho and not doing there homework. I know they have been taken to tribunals numerous times and lost, so there actions are not surprising!

Thanks to all

Allan

In reply to vincentvega:
Personally I would be dotting my i's and crossing my t's and planning to win. ACAS say that you should take it up with your manager or payroll first. That's what you're currently doing. Then you should go to formal internal procedures (i.e. raise a grievance). They may well tell you to take a hike, given you (or rather your friend) no longer works there.

I would not worry too much about being polite. I would state exactly what I considered to be my grievance (you have unilaterally taken my wages and paid them into my pension), and what I expected them to do about it (give me the wages, call up the pension manager and find out how to get the money back and sort all the paperwork out yourselves). I wouldn't get into points of law - that's what tribunals are for. For one thing, I note that you said

"The employer has taken the funds out of the holidays/bank holidays owed to the employee which was accumulated whilst on maternity leave."

There is a difference (I have just discovered) between payment in lieu for statutory holiday and payment in lieu for additional contractual holiday. What that means is if the pay packet they received covered all of their statutory holiday, then there could be no claim for an unlawful deduction of wages. Instead it would be a claim for breach of contract. See http://www.adviceguide.org.uk/scotland/work_s/work_problems_at_work_s/et_em...

(and I've just noticed that document is for Scotland, but it sounds plausible for England too. Who knows. I just try and do the right thing in the first place!).

At some point, before waving legal points around, someone who knows about this stuff needs to sit down and look at their contract and the details.

Note that there is a 3 month time limit on tribunal complaints for deductions from wages. The clock runs from the date of the payment which included the unauthorised deduction.