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Thread: Employee resignation while on paid maternity leave

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    Employee resignation while on paid maternity leave

    Hi There

    A senior employee was on maternity leave from September to December 2013 and received half her salary per month as maternity benefits on the condition that she would pay it all back should she choose to resign during maternity leave or within 6 months of her return to work in January 2014.

    She resigned in the last week of December 2013 and has asked us not to pay her during her resignation month (Jan 2014) and indicated that she will pay back the balance of the funds in Feb 2014. My question is - do I go ahead and terminate and zero out her payslip for this month? Do I then enter into a contract with her outside of payroll to recover the funds owed? It seems like the logical thing to do but I'd prefer someone with more experience to provide guidance, please!

    Thank you!
    Sasha

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    Platinum Member sterne.law@gmail.com's Avatar
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    As I understand it she took 4 months leave and is working a full month in January, without getting paid. In so doing she has repaid 2 mths of the leave pay and owes, more or less, one months salary
    Your way is fairly clean and simple and sensible.

    Strictly speaking your employment contract probably requires any changes to be in writing and we don't know what it says under loans, nor does it allow for cession or transfer of rights etc, etc. money owed etc. Nor do we know if the paid maternity leave is per contract or an arrangement between the company and the individual.

    Irrespective, of the final manner, the employee remains indebted, albeit seen as an employment contract or civil. If it is viewed as employment then the labour structures become the forum for any dispute that may arise (certain contractual issues may still fall under civil courts.) If it is civil then the civil courts are your playground. I'm inclined, without the full detail, to conclude a seperate contract (AOD possibly) which allows for provisional sentence and execution, if the employee fails to pay, etc.

    Carefully drafted it can even become executable with minimum fuss.

    I'm also surmising that it is not a small salary.
    The possible easy solution may lie in the answer to the following question - is the employee owed (accrued) any annual leave? If so, it will almost zero the books, making the balance less and possibly the employee can pay the balance, alternatively your exposure to risk is greatly reduced.
    Anthony Sterne

    www.acumenholdings.co.za
    DISCLAIMER The above is merely a comment in discussion form and an open public arena. It does not constitute a legal opinion or professional advice in any manner or form.

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    Sasha (22-Jan-14)

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    Site Caretaker Dave A's Avatar
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    The interesting part of this is what was originally paid over as a salary (which attracts the various payroll taxes) is now being converted to a repayable loan.

    So do you reverse all those "it's salary income" entries and recapture what was paid over as loan advances?

    And if not, just how do you calculate and capture what is owed?
    The trouble with opportunity is it normally comes dressed up as work.

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    Sasha (22-Jan-14)

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    Platinum Member sterne.law@gmail.com's Avatar
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    I think the most correct is to treat as separate transactions, merely shifting money from one pocket to the other.
    Make the salary payment entries, deduct the tax, uif, etc.
    Create the employee loan, and then zero the salary account with a 'payment' into the loan.
    Anthony Sterne

    www.acumenholdings.co.za
    DISCLAIMER The above is merely a comment in discussion form and an open public arena. It does not constitute a legal opinion or professional advice in any manner or form.

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    I've pretty much gone about it as you've mentioned above - made the salary entries, deducted taxes etc, created a loan and zeroed out with a payment to the loan. She had enough annual leave to cover half the amount due and has signed an agreement stating she will pay the balance by end Feb 2014.

    Thanks so much for the advice!

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