Review your childcare voucher scheme

2015-06-24 Philip posted:

Requiring an employee leave a scheme during maternity leave was discriminatory.

A recent Employment Tribunal has found an employer discriminated against employees who had to suspend membership of its childcare voucher scheme when they were on maternity or paternity leave.

Peninsula Business Services operated a childcare vouchers scheme: employees agree to a reduction in salary in return for childcare vouchers, which are exempt from tax up to a certain weekly limit. Mrs Donaldson wanted to join the childcare vouchers scheme while she was pregnant. However, she was refused entry to the scheme because she would not agree to suspend membership for the time she was on maternity leave.

Mrs Donaldson argued that the requirement that staff agree to suspend their membership of the scheme during maternity leave amounted to discrimination. The employer's response was to refute that its childcare vouchers scheme was discriminatory. In its response to Mrs Donaldson's grievance, the employer stressed that its policy applied to all staff "irrespective of sex". In particular, the employer highlighted that it treated other forms of absence, such as sick leave, in the same way under the childcare vouchers scheme. The employer considered it "a far more common occurrence for an individual to be away from the business by way of sick leave than by way of maternity leave".

Mrs Donaldson claimed discrimination and detriment in the Employment Tribunal. She won.

The Employment Tribunal stressed that women are entitled to non-pay benefits during maternity leave, in accordance with the Maternity and Parental Leave Regulations 1999. The employer committed pregnancy and maternity discrimination contrary to s.18 of the Equality Act 2010 by making agreement to suspend membership during maternity leave a prerequisite of joining a scheme.

The reason for this unfavourable treatment was because Mrs Donaldson was seeking to exercise her right to maternity leave. It did not matter that employees who took other types of leave were treated in the same way.

Mrs Donaldson was awarded £1,861 for financial loss and £3,500 for injury to feelings. The Tribunal also recommended she be admitted to the childcare vouchers scheme from 1 April 2015.

Practical tips

  • Childcare vouchers schemes must not have as a condition for joining that the employee agree to opt out of the scheme during maternity leave.
  • Under a childcare vouchers scheme, employees should be allowed voluntarily to opt out of receiving childcare vouchers via salary sacrifice, including in the run up to and during maternity leave.
  • Opting out may be preferable because salary sacrifice can adversely affect the amount of statutory maternity pay payable, or reduce the employee's average weekly earnings to below the lower earnings limit, meaning that she is not entitled to receive the pay.

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Thank you for your help sorting out our case in the employment tribunal.

Business on 2nd March 2015


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