Deduction of tax and leave purchase scheme

[General Welldone]

Hello All
I purchased a week's annual leave from my employer around a year ago. They deducted tax and national insurance from my gross pay and then the cost of the week's leave from my net pay. I've been back and forth with HR and their position is that it is not a salary sacrifice scheme so I have essentially just purchased a benefit. Putting aside that the benefit has cost me far more than had I just taken unpaid leave, thereby reducing my taxable income, my employer has also accepted that the procedure was unclear. It actually menrions the affect on pension contributions, suggesting that gross pay would be affected.

My employer has offered a small goodwill gesture but it doesn't cover the money I have paid in ni and income tax needlessly, owing to their poor procedure (or perhaps my stupidity). I woukd never have purchased the leave if I had known it would not result in less tax being deducted. I am considering a county court claim and would appreciate any advice or insight. As I understand it, the scheme as it is now explained is lawful, so I am essentially making a case for it not being explained in any documentation.

Thanks for reading.

[ULA]

Before we an assist you further it would be helpful if you can post up details of the arrangements for purchasing a week's annual leave. This must have been done in line with a documented policy or another type of documented procedure in order to make the deductions.

[General Welldone]

I'd rather not post the policy document here as it would identify me to my employer but I could PM you if you wouldn't object. In any event, my employer has accepted, without argument, that the very limited information about the scheme makes no mention of the purchase being deducted from net pay and they are in the process of revising their guidance following my challenge.
The document seemingly implies that the scheme is a form of salary sacrifice by mentioning it may have an effect on pension contributions (which it did not as I was paid my full salary with the annual leave then appearing as a purchase from my employer on my payslip). Their sole argument is that it wasn't established as a salary sacrifice scheme and therefore cannot repay me the tax and NI that was deducted.

[General Welldone]

Sorry, I neglected to thank you for responding.

[ULA]

It sounds like they did not have the proper process in place at the time you agreed your holiday purchase for it to qualify as a salary sacrifice and thereby giving you the benefits of such a scheme. If it was not set up at the time you applied for the holiday purchase as a salary sacrifice scheme, then they are unlikely to have been able to operate it as such under the rules of HMRC for such schemes.

I completely understand your issue but other than a "goodwill gesture" of compensation for what you may be out of pocket for, there is not much else the company can do, particularly if they have operated under the policy document that was in place at the time.

[General Welldone]

Thanks for the response. My employer has agreed that the policy was not clear but it actually suggests the scheme is a form of salary sacrifice as it mentions the possible affect on pension payments (they are unaffected by the scheme as it stands) and it states that 'salary in the period following purchased leave days will be reduced according to the number of days purchased and taken'. It was this in particular that led me to believe it was a salary sacrifice scheme. My salary under the scheme as was did not reduce at all. I was simply hoping this would be sufficient to make the case that the policy is not just unclear but misleading. I'm not looking for compensation, just reimbursement, yet so far just a goodwill gesture that doesn't cover my loss. There argument for not reimbursing me is that it's taxpayers' money, which seems perverse.

[ULA]

From an employment law perspective, I am not sure there is much more you can do. I presume you agreed to the reduction in your salary to pay for the extra holiday?

You mention making a county court claim but unlike an employment tribunal there is a fee dependent on the value of the claim, that you have to pay to the court and the current time to process claims to a final hearing is around a year.

[General Welldone]

I agreed, as you say, to a reduction in salary on the understanding that it was salary sacrifice, not that it was a purchase from my net salary (i.e. there was no reduction in salary). As I say, my employer has accepted the policy was incorrect and did not make this clear. I'm too late for an employment tribunal so the county court is my only option. I'm happy to pay the fee if I have a reasonable chance of success and I can live with the wait.