Is suspending an employee’s membership of a childcare voucher scheme whilst on maternity leave discriminatory? In the case of Peninsula Business Services v Donaldson the Employment Appeal Tribunal (EAT) has reserved judgement.
It was maintained by the claimant Donaldson that by her employer suspending her membership to its childcare voucher scheme whilst on maternity leave was unlawful.
Like all childcare voucher schemes Peninsula provided the members of their scheme with the benefit of the vouchers in return for a reduced salary enabling the employee tax and national insurance savings. However, membership of the scheme was conditional on the employees agreeing to suspend their membership when on certain types of leave such as maternity, paternity and sick leave but only where the employee was entitled to statutory sick pay.
Donaldson brought her claim to the employment tribunal as she refused to agree to such terms when she sought to join the scheme whilst pregnant. The basis of her claim was that the requirement to suspend discriminates against women on maternity leave.
By making suspension of membership of the childcare voucher scheme prerequisite to joining, the EAT held that the employer had committed discrimination.
The EAT heard the appeal against the employment tribunal on 22 January 2016. The centre of the argument by the defendant was whether or not childcare vouchers counted as a benefit that had to be continued during maternity leave. The cost that employers would incur if they were to continue childcare vouchers during maternity leave may well be prohibitive and so discourage employers from offering them. It was also argued by Peninsula Business Services that there is no legal basis on the guidance given by HMRC on this issue. Indeed advice from providers has always been that employees should continue to receive their childcare vouchers whilst on maternity leave and HMRC guidance has long since been that employees cannot be compelled to opt-out of receiving their childcare vouchers whilst on maternity leave.
Jane Fielding, partner at law firm Wragge Law, said: “On the one hand, childcare voucher scheme provisions requiring employees to opt out of the scheme when on maternity leave will most likely amount to maternity and sex discrimination.
“This means additional costs because the employer will have to fund the childcare vouchers during the whole of maternity leave with only a small saving in statutory maternity pay (SMP) to offset that cost.
“On the other hand, schemes allowing truly voluntary opt out are permissible. Some women may prefer to opt out of the scheme in the run up to, and during maternity leave, where the scheme permits them to revert to their ‘old’ (pre-salary sacrifice) salary. This is because salary sacrifice can adversely affect the amount received as SMP under the employer’s enhanced contractual schemes based on percentages of normal salary (it also impacts on the first six weeks of statutory maternity pay which is based on 90% of the woman’s salary)
“We await the first appellant level decision on this question, which is viewed by many as a grey area, bringing some welcome clarity on this issue.”
Comment
It has always been an understanding that salary sacrifice is a reduction of salary in exchange for a non-cash benefit and as such is a change in terms and conditions. If the annual value of childcare vouchers was removed at the outset then technically the employer is sitting on the money and so should honour the agreed arrangement by providing salary sacrificed benefits throughout any unpaid periods of leave. The downfall of understanding salary sacrifice came when we were permitted to put such values onto the payslip, now everyone thinks the reduction is month by month, the reality is it is there for information only.
