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Case law: Employer discontinuing childcare vouchers during maternity leave is not discriminatory

Employers providing non-cash alternatives to salary under a salary sacrifice scheme, such as childcare vouchers, may be able to discontinue them during ordinary maternity leave, following a recent ruling.

Legal Alert

This update was published in Legal Alert - April 2016

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

The law says that employees on ordinary maternity leave must continue to receive non-pay benefits. HM Revenue and Customs guidance said that these included contractual non-cash benefits provided under a salary sacrifice scheme.

An employer operated a contractual salary sacrifice scheme that gave employees an option to take childcare vouchers rather than salary. An employee taking childcare vouchers went on maternity leave, and the employer stopped providing the vouchers. The employee said this was discriminatory.

The employer, however, argued that the vouchers were not non-pay benefits but part of the employee’s remuneration (and that the HMRC guidance was wrong). It was not therefore discriminatory to stop providing them to an employee on ordinary maternity leave.

The Employment Appeal Tribunal agreed: it was not discriminatory for the employer to stop providing childcare vouchers during ordinary maternity leave, and the HMRC guidance had no legal basis.

Operative date

  • Now

Recommendations

  • Employers operating contractual salary sacrifice schemes should consider whether non-cash options offered to employees under the scheme are part of the employees’ remuneration and can therefore be discontinued during ordinary maternity leave

Case ref: Peninsula Business Services v Donaldson UKEAT/0249/15/DM

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