What is Scheme Protect?
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Scheme Protect is implemented to protect Employers from Early leavers. Early leavers are one of the biggest pain points for employers when looking to implement a salary sacrifice benefit. Halfords has developed Scheme Protection to protect employers against the risk of financial loss when an employee who is part of a salary sacrifice or net deduction scheme resigns from their employment.
This covers you from financial loss and ensures that you can roll out employee benefit schemes with peace of mind.
How do you - the employer, Benefit from adding Scheme Protect
Protect employers against the risk of financial loss when an employee who is part of a salary sacrifice or net deduction scheme resigns from their employment.
How does the Employee Benefit
Increased LOC (Letter Of Collection) amounts as the employer doesn’t need to worry about Early leavers.
How does Scheme Protect work
What is classed as an early leaver?
This is when an employee resigns from their contract of employment whilst in a salary sacrifice or net deduction arrangement with their employer.
With Scheme Protect, the client is protected from the losses that they might accrue from early leavers in case they are unable to deduct the total outstanding amount from the employee’s last salary.
How does the employer make a request for funds through Scheme Protection?
Usually, when an employee leaves their employment early, any outstanding funds from a salary sacrifice or net deduction scheme will be deducted from their final pay, or the employee is asked to pay the outstanding funds via an alternative payment method. However, if the employer is unable to recover the outstanding funds in this way, the employer will need to complete an online Scheme Protect event form. As long as the request meets the terms and conditions*,it will be approved.
What circumstances are not eligible for Scheme Protection?
Certain circumstances are not eligible by Scheme Protection.
- Employer has not taken at least 3 monthly deductions from the employee
- Employee is in their probationary period
- The Employer was aware that the Employee was going to resign
- The Employee recommences employment with the Employer or any of its Associated Company(ies) within 90 days of Resignation (or within their notice period)
- The Resignation was in advance of any anticipated notification of unemployment
- Redundancy or dismissal
- Death in service
What circumstances are eligible for Scheme Protection?
Only an employee resignation will constitute a Scheme Protection Event. At least three-monthly deductions will need to be taken from the employee for Scheme Protection to apply.
What is required to report a Scheme Protection Event?
The employer will need to submit the following evidence through an online Scheme Protect event form:
- Notice in writing that the Scheme Protection Event has occurred within 30 days of the Employee leaving the Company
- Provide evidence detailing the employees start date with the employer
- Provide evidence that Halfords that the Early Leaver Process has been followed, and that on at least two (2) separate occasions within 30 days of the Employee leaving the Company, the Employer has sought to recuperate the losses from the relevant Employee.
- 12-months 5% admin charge
- 24-month 8% admin charge
For Example: Under a 12-month salary sacrifice scheme, if an invoice was raised for a letter of collection (LOC) value of £1000 an admin charge of £50 ( 5% ) would be applied.