Tribunal: childcare voucher provision during maternity leave

Tribunal: childcare voucher provision during maternity leave

The Employment Appeal Tribunal (EAT) has overturned an Employment Tribunal (ET) decision that it was discriminatory to require employees to suspend their childcare vouchers during maternity leave when signing up to the scheme.

In the case of Peninsula Business Services vs Donaldson, a pregnant employee argued that she had been subject to discrimination as the company’s childcare voucher scheme required employees to withdraw from the scheme during certain periods of leave, including maternity leave.

In the original case ET found that employers who made ‘withdrawal from a childcare voucher scheme during maternity leave’ a condition for joining, amounted to direct maternity discrimination and indirect sex discrimination. In a recent appeal of this case, the EAT reversed this decision.

Up until this landmark result, the accepted legal position (based on official guidance provided by HMRC) was that if an employee was not eligible for contractual maternity or adoption pay, employers were required to continue to provide childcare vouchers as a non-cash benefit during the whole of their maternity or adoption leave. The EAT found that the ET had incorrectly assumed childcare vouchers to be a non-cash benefit, and argued that as a ‘salary sacrifice’ benefit childcare vouchers are in fact remuneration, which the law does not require employers to continue to pay.

Peter Done, MD at Peninsula Business Services, said: “Our line of business means we interpret employment law on a daily basis and we were confident that we were not acting unlawfully with our childcare voucher scheme. We are glad that the Employment Appeal Tribunal has agreed with us. As an employer, we deal with the same issues as the clients we represent on a day to day basis and, on this occasion, we have been able to create new ground for them.”

If an employer provides childcare vouchers as a benefit in kind, on top of an employee’s salary, then these would be considered a non-cash benefit and should therefore continue to be paid throughout maternity leave.

To ensure your scheme remains compliant, please seek legal advice before making any changes to your maternity policy.