Employer: What happens if a participant leaves employment during the funding plan?

Previously, any employee leaving employment before completing their salary reduction payments would be subject to a termination fee equal to the outstanding balance owed to the employer. We have amended this to only be applicable to those employees leaving the business through resignation (as opposed to redundancy or dismissal, for example).

We have made this change because the employer transfers ownership of the goods to the employee there is no debt; therefore, if the employee is removed from employment before all payments have been made, the employer has no statutory or contractual right to recover the outstanding payments.

However, If the employee resigns, the employee will cease to provide work to the employer at the agreed reduced salary which causes the employer damage (up to a maximum of the aggregate of outstanding payments) and the employer can reasonably argue that it can withhold that amount from employee’s final pay.