Taking Away Childcare Vouchers.

The EAT has recently held that stopping childcare vouchers during maternity leave was not discriminatory or detrimental treatment where those vouchers were provided under a salary sacrifice scheme.

Employers will be aware that a woman on maternity leave is entitled to the benefits of all her terms and conditions of employment except sums payable as remuneration which is defined as “wages or salary”.  It has long been HMRC’s guidance that childcare vouchers are not remuneration, even where provided under a salary sacrifice scheme.  But isn’t that unfair where the employee has only received the vouchers because she has given up part of her salary?

Although the Tribunal found that imposing a requirement that childcare vouchers would be suspended during maternity leave amounted to both discrimination and detrimental treatment, the EAT in Peninsula Business Services Ltd v Donaldson disagreed.  The EAT held that the salary sacrifice arrangement was simply a “diversion of salary… redirected prior to it being placed in the employee’s pay packet, in order to purchase vouchers”.  In making such a finding, the EAT held that the HMRC guidance was incorrect and that Parliament couldn’t have intended for an employee on maternity to receive a windfall as a result of a salary sacrifice arrangement.

If an employer is considering stopping childcare vouchers during maternity leave, please note that the EAT stated that it was expressing its findings “somewhat tentatively” as it had not had the opportunity to hear full argument on the issue.  In any event, it remains unlawful to stop childcare vouchers during maternity leave where they were provided in addition to salary (rather than through salary sacrifice).

Finally, it was also announced last week in the Budget that the childcare voucher scheme will be closed to new entrants from April 2018.  Any staff already participating in a scheme will be able to continue to do so as long as their employer keeps running the scheme.

Insights.

Disputing a Will #SolicitorChat with The Law Society
15th April, 2021

How can you ensure wishes are followed and should you consider legal action if you feel a loved one’s wishes are not? Michael Brierley discussed this and more live on…

Impact of Uber ruling on the gig-economy
8th April, 2021

Mona Gholami and Phillip Vallon discussed what impact the ruling have for other ‘gig-economy’ businesses?

Marriage: The Later Years – Have you considered a prenuptial agreement?
26th March, 2021

Judith Fitton and Alice Barrett provide an insight as to ways you can protect and future proof the assets you may have built up previously.

Sleep-in shifts and National Minimum Wage
25th March, 2021

Lucy Densham Brown and Phillip Vallon provide insight to the decision made by the Supreme Court last week in relation to the National Minimum Wage Regulation