Childcare Vouchers May Be Stopped During Maternity Leave
When an employee takes maternity leave, she is entitled to receive the benefit of all the terms and conditions of her employment during her absence, as she would have been in receipt of these, had she not taken maternity leave. However, there is one exception to this rule and that is her right to receive the same remuneration.
What did the EAT say?
The Employment tribunal who first heard the case, held that it must be discriminatory for an employee on maternity leave to lose childcare vouchers.
However, the Employment Appeal Tribunal overturned this judgment and defined a salary sacrifice arrangement as a ‘diversion’ of salary, which means that any childcare voucher received under such an arrangement would technically be classed as remuneration for the purposes of calculating what an employee receives while on maternity leave.
The case draws a clear distinction between childcare vouchers that are provided as a benefit by the employer, in addition to their salary, and child care benefits that are received under a salary sacrifice scheme.
Childcare vouchers that are provided as an additional benefit will continue during maternity leave because employees who take maternity leave are still entitled to receive their benefits.
However, childcare vouchers that are provided through a salary sacrifice scheme will not be continued during maternity leave, as these are deemed to be remuneration. A salary sacrifice scheme involves a formal arrangement between the employer and employee in which the employee agrees to sacrifice a part of their salary in exchange for a non-cash benefit.
What does this mean for you?
This judgment may be good news for most employers as it is common practice for childcare vouchers to be paid through a salary sacrifice scheme.
The decision may not be well received by expectant mothers who are about to take maternity leave and receive childcare vouchers under a salary sacrifice scheme for the care of their other children.
Need some advice?
Talk to Tollers! We are here for you.
Tollers’ Employment Law Team are here to help should you have any queries regarding the above judgment, do not hesitate to contact us on 01604 258558.
People mentioned: Rebecca List