Childcare vouchers count as pay during maternity leave so can be discontinued

A recent case at the Employment Appeals Tribunal found that it does not count as discrimination if an employer discontinues an employee’s childcare vouchers during their maternity leave.

In the case of Peninsula Business Services v Donaldson, an employment tribunal originally found that it must be discriminatory for an employee to lose childcare vouchers during maternity leave since women on such leave are entitled to ‘non-pay benefits’ in line with the Maternity and Parental Leave Regulations 1999. HMRC guidance also suggested that contractual non-cash benefits provided under a salary sacrifice scheme must continue to be provided during ordinary maternity leave.

Peninsula Business Services successfully appealed the decision. The EAT decided that the claim should be dismissed, as there was no legislation in support of the HMRC guidance. The key question they considered was whether the vouchers constituted remuneration? If so then Regulation 9 of the Maternity and Parental Leave Regulations stated that it didn’t have to continue during maternity leave.

The judge decided that the vouchers did represent part of the employee’s salary since pay had been substituted with vouchers under a salary sacrifice scheme. They were therefore to be regarded as remuneration and could be discontinued during maternity leave.

If you’d like more information on an employee’s maternity or paternity rights, please contact Vaishali Thakerar at Lawson-West on 0116 212 1000.

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