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Until recently, there have been conflicting views as to whether childcare vouchers continue to be paid to an employee during maternity leave. This was due to confusion because the Maternity and Parental Leave Etc Regulations 1999 (MAPLE) provide that an employee is entitled to all of their terms and conditions (i.e. non pay benefits) during maternity, except for remuneration. The confusion being whether they are part of the employee’s remuneration or not.
If childcare vouchers are a non pay benefit, stopping the vouchers could in itself be considered discriminatory. The HMRC has guidance which states that during any period of ordinary maternity leave (which is the first 26 weeks of maternity leave), contractual non-cash benefits provided under a salary sacrifice scheme must continue to be provided.
So are childcare vouchers remuneration or non-cash benefits? This matter was recently decided by an Employment Appeal Tribunal (EAT) claim, where the employer stopped providing childcare vouchers during maternity leave and the employee pursued a claim for pregnancy and maternity discrimination under the Equality Act 2010.
The EAT accepted that the HMRC guidance does not have any legal basis; that salary sacrificed childcare vouchers must continue to be provided during maternity leave. The key question therefore was whether the vouchers constituted remuneration. The EAT decided that where vouchers are provided by way of salary sacrifice, the voucher represents part of salary that has been diverted before appearing in the employees’ wages. The vouchers are therefore regarded as part of remuneration which legally means they may be discontinued during maternity leave.
In summary therefore, where childcare vouchers are paid as part of a salary sacrifice arrangement, they can be stopped when an employee takes maternity leave. It may be useful for employers therefore to update their maternity policies to make it clear that these arrangements take place.
Andrew Macmillan, Partner, Motor Industry Legal Services