Stopping childcare vouchers during maternity leave

Tuesday, 10 May 2016 13:16

C worked for a company that offered a voucher system for childcare via a salary sacrifice scheme. These arrangements are quite common place in industry. C went on maternity leave and her employer stopped the entitlement to the vouchers. C sued her employer in the Employment Tribunal alleging that by stopping her entitlement to the vouchers was discriminatory. C relied on the HMRC guidance which classed childcare vouchers administered under a salary sacrifice scheme as a "non cash benefit" and the vouchers are non transferable and are paid to child care providers and cannot be converted into cash.

Initially C was successful in the Employment Tribunal, but the employer appealed to the Employment Appeal Tribunal. The Employment Appeal Tribunal overturned the decision of the Employment Tribunal and disregarded the HMRC guidance. What the Employment Appeal Tribunal said was that a salary sacrifice scheme was as a result of a "diversion of salary" and should therefore be properly reviewed as remuneration. Under sex discrimination legislation an employer is entitled to stop "remuneration" during a period of maternity leave, and to pay statutory maternity pay instead.

Most legal commentators anticipate that this case will go to the Court of Appeal for a further determination.

Author: Gareth Price, Specialist Employment Lawyer at Davies and Partners Solicitors in Gloucester e;

 

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