The provision of childcare vouchers is a benefit offered by a number of employers to their workforce. There has, however, been uncertainty as to whether this benefit should continue during a period of maternity leave.
A recent judgment of the Employment Appeal Tribunal (EAT) has helped clarify this issue, holding that childcare vouchers offered through a salary sacrifice scheme do not have to be provided during maternity leave. However, importantly, vouchers that are provided on top of salary (without a salary sacrifice) must be continued.
In the case before the EAT (Peninsula Business Services Ltd v Donaldson UKEAT/0249/15), the Claimant had alleged that her employer’s policy, which suspended vouchers during her maternity leave, was discriminatory on the grounds of sex and represented less favourable treatment for women taking maternity leave.
Under employment legislation, employers are under an obligation to maintain terms and conditions during maternity leave, with the exception of normal ‘remuneration’. As such, the case ultimately came down to whether the vouchers represented a ‘non-cash benefit’, which would have to continue during maternity leave, or whether they formed part of the Claimant’s ‘remuneration’. Overturning the Employment Tribunal’s original ruling, the EAT held that childcare vouchers provided by way of salary sacrifice should be regarded as remuneration and, in turn, the employer did not have to continue to provide them during maternity leave.
This judgment is likely to be welcomed by many employers and, indeed, the EAT acknowledged that continuing to provide vouchers during maternity leave would impose an additional cost on employers, which could discourage the benefit from being offered in the future. It should, however, be stressed again that is only childcare vouchers that are provided through salary sacrifice that can be suspended during maternity leave – vouchers that are provided on top of salary will need to be continued.
For further advice or information please contact the Employment team on 088 088 6004.