Suspending childcare vouchers during maternity leave is lawful

2016-03-11 chris posted:

The Employment Appeal Tribunal has recently held in Peninsula Business Services Ltd v Donaldson, that employers do not have to provide childcare vouchers during maternity leave when offered through salary sacrifice.

Peninsula provided a scheme whereby employees could reduce their salary in return for childcare vouchers. Employees could only join the scheme if they agreed to suspend the receipt of childcare vouchers during various types of leave, such as maternity and paternity leave.

In this case, Donaldson sought to join the childcare voucher scheme. She was refused entry because she did not agree to the suspension of receiving childcare vouchers during maternity leave. She brought a claim in the Employment Tribunal for discrimination.

When the case began in the Employment Tribunal, the Judge relied on HMRC's guidance to conclude that it was unlawful for Peninsula to suspend the receipt of childcare vouchers during maternity leave. HMRC’s guidance states that:

“Non-cash benefits, such as childcare vouchers that can be used only by the employee and are not transferable, must continue to be provided during ordinary maternity leave and additional maternity leave”.

Peninsula appealed to the Employment Appeal Tribunal, who decided that it was not discriminatory for membership of the childcare voucher scheme to be suspended during maternity leave.

However, the Tribunal did make a distinction between childcare voucher schemes that operate via salary sacrifice, and schemes where the employer provides childcare vouchers in addition to employees’ pay. The provision of childcare vouchers in addition to pay does count as a benefit and must continue during maternity leave. As a result of the ruling, employers may be discouraged from offering childcare vouchers.

Employers that deduct money from wages to pay for vouchers are safe for now. But for those who do provide vouchers as an extra benefit on top of basic pay need to check their schemes, as they still have to continue providing this benefit during maternity leave.

For more information about salary sactifice schemes, childcare vouchers and deduction from wages, please contact us today on 01225 632240 or at

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