Maternity Benefit: Should company deduct Social Welfare Gross or Net?

D

dad

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Hi,

Wife is back to work, her company have said they are going to deduct maternity benefit received over the 18 weeks in her December Salary. She was paid 70% of her salary during the 18 weeks. Our questions are

Should her company deduct soc welfare from Gross or Net pay, we feel Gross. They (HR) dont know.

Her social welfare for the 18 weeks is more than the 30% deduction of her salary over the same period. So for her xmas pay, she is looking at a deduction of €4,482 (€249 *18) and back pay of approx €3,100. Should social welfare not have paid us the €3,100 divided by 18 which is €172. Is the onus on us to request this. Dec pay is reduced by 1,382.

I assume the intention is that the employee does not lose out (maybe I am too naive). I have tried searching the net for some calculations but have found nothing. We are waiting the policy from her company to check its rules.
Hope somebody can help.
Thks
 
Re: Maternity benefit and back to work

Dad,
Firstly Maternity benefit is not taxable so any deduction should be made from gross pay. Are you saying that the company paid 70 % salary while on leave and are now paying the remaining 30 % on her return to work and deducting the mat benefit ? If so If so they are in effect paying 100% salary and seeking repayment of the mat benefit therefore should def be deducted from gross pay. In effect you are not entitled to anything else from soc welfare as your wife has rec'd 100% salary.
 
Re: Maternity benefit and back to work

Thks Angie for the reply.

That is correct,they paid her 70% while on leave and the remaining 30% is to be paid in Dec as a catch up.The co. are going to insist this comes off net rather than gross as this is what happened with previous employee.

She will have been paid 100% of her salary from her company. I agree that as Maternity benefit is paid gross,it should be deducted from Gross.It does not make sense that the individual should suffer a hit to net pay.

What difference does it make to the company. If money is paid Gross or net ? I see the entry in the books of the company as
Dr Bank
Cr salaries or a maternity benefit account (I wonder is this taxable from a company perspective)

Irrelevant from company perspective, but definitively not from the individual. Am I missing something ?

I rang the Maternity benefit office and they said it has nothing to do with them and upto the individual concerned and their company. Still waiting to see their policy on this.
 
Re: Maternity benefit and back to work

On the revenue websites it clearly states that mat benefit is disregardsed for tax purposes. In effect by deducting the amount from net pay the company are taxing the benefit. This is incorrect. Your wifes gross pay should be reduced by the amount of mat benefit. It is to the employers advantage to deduct the amount from the gross pay. They will save employers PRSI if they do so. An employer cannot make any deductions from salary without prior authority so your wife should check what is stated in her terms and conditions / contract. Try the revenue website under the BIK FAQ I think there are some questions about this. As far as I remember it gives some examples of calculations and quite clearly states that the ben is not taxable whether the employer recovers it or not. Good Luck
 
Re: Maternity benefit and back to work

This happened to me also, Effectively my employer taxed my maternity benefit and were adamant they were correct. I contacted the tax office after the new year and received a tax refund close to €1000 when i forwarded them my p60.
 
Re: Maternity benefit and back to work

Taken off Gross Pay in the end

Found this on revenue website leaflet IT 22, revenue publication.

Treatment of Maternity Benefit

Maternity Benefit is not regarded as income for the purposes of the Income Tax Acts and should be disregarded for all tax purposes.
Whether the payment must be taken into account by the payroll office will depend on the particular circumstances or arrangements between employers and employees while employees are on maternity leave and in receipt of Maternity Benefit from the Department of Social & Family Affairs.

The treatment in specific situations is outlined below:

1. Employers who pay wages, salary, etc., to employees while out on maternity leave and recover the Maternity Benefit from the employees or directly from the Department of Social & Family Affairs
In such circumstances, only the difference between the wages, salary, etc. paid and the Maternity Benefit recovered is subject to tax and PRSI in the pay period.

2. Employers who pay wages, salary etc., to employees while out on maternity leave (top-up etc.) and the employees retain the Maternity Benefit
Where an employer pays an employee full or partial wages or salary while out on maternity leave and the employee retains the Maternity Benefit, tax and PRSI should be charged only on the full amount of wages or salary actually paid.

3. Employers who do not pay wages, salary etc., to employees while out on maternity leave and the employee retains the Maternity Benefit
If owing to the absence from work through maternity leave, the employee is entitled to receive no emoluments on the usual pay day, the employer shall, on application being made in person by the employee or his or her authorised representative, make such repayment of tax to the employee as may be appropriate, having regard to his or her cumulative emoluments at the date of the pay day in question and the corresponding cumulative tax.
Alternatively, on the employee's return to work after a period of maternity leave, any refund of tax, which may be due to the employee, can be calculated having regard to his or her cumulative emoluments at the date of the pay day in question and the corresponding cumulative tax. In this situation the employer should contact the employee's Regional Revenue Office to confirm that it is in order to make such a refund.

Of course an employer should not make a refund unless he/she is in possession of a current year cumulative certificate of Tax Credits and Standard Rate Cut-off Point in respect of the employee in question.
 
Re: Maternity benefit and back to work

Loaded1973 said:
This happened to me also, Effectively my employer taxed my maternity benefit and were adamant they were correct. I contacted the tax office after the new year and received a tax refund close to €1000 when i forwarded them my p60.
Click to expand...

Loaded1973, how did you convince the tax office to give you the refund? Is sending the p60 enough?
 
Re: Maternity benefit and back to work

Same thing happen to me except it was my employer that outlines to me that he overcharges me. We did contact the tax office who ask a confirmation letter from my employer that he overcharge me on tax during my maternity leave + they request P60 and details of payment received by the Maternity benefit section and 6 weeks later the refund was there
 
Re: Maternity benefit and back to work

"I agree that as Maternity benefit is paid gross,it should be deducted from Gross."

The nett result of this approach is that you would actually be better off on maternity than while working. If an employer wants to do this, they are perfectly free to agree to do so, but it seems to me more logical that an employer might want to simply pay a sum of wages so as to ensure that the employee is in the same nett position while on maternity leave as while at work (i.e. at no loss). There doesn't seem to be any great consistency of practice in this area.
 
Re: Maternity benefit and back to work

Shaz,
I just had to put it in writing and include my p60. I can only assume the tax office contacted my employer or checked who cashed the cheques.
 
MOB is right - if your employer pays you your full salary for the duration of your maternity leave less the maternity benefit - then you are better off for those 18 weeks, by the amount of tax you would have paid on the amount of maternity benefit you received.

That is the last time you will be better off (financially) due to having kids.
 
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