It was a generally held belief that Child Care Vouchers (CCVs) had to continue during any period of parental leave, which includes maternity leave and nothing could be deducted from statutory payments to cover the cost of the vouchers. Indeed, this was specific guidance issued by HMRC and the DTI (before the DTI became BIS).
This was turned on its head by an Employment Appeal Tribunal (EAT) ruling on 22 January 2016.
Mrs Donaldson, a pregnant employee, declined to accept a term the Peninsula salary sacrifice scheme which suspended the allocation of childcare vouchers during periods of maternity leave, on the basis that the term was discriminatory.
Her complaint was upheld by the Tribunal, which ruled that, under the Maternity and Parental Leave Regulations 1999 ("the Regulations") and by express reference to HMRC guidance, she was entitled to expect non-pay benefits to continue throughout the duration of ordinary and additional maternity leave. Following the Guidance, the Tribunal ruled that the Respondent was obliged to pay the cost of childcare vouchers itself, in circumstances where Mrs Donaldson was not entitled to any contractual enhancement over and above her SMP (from which no deduction could be made).
It concluded that the Peninsula's failure to continue this benefit throughout the Claimant's maternity leave was discriminatory under sections 18 and 19 of the Equality Act 2010 ("the Act").
Peninsula appealed on the grounds that the Tribunal had erred in its application of section 19 of the Act and had further erred in basing its decision on the Guidance which, according to the Respondent, was itself erroneous and had wrongly interpreted the relevant statutory provisions.
Properly analysed, the provision of childcare vouchers under a salary sacrifice scheme was within the meaning of "remuneration" under the Regulations and could therefore legitimately be discontinued during maternity leave (in accordance with the provisions of Regulation 9).
The EAT allowed the appeal and substituted a decision that the claim should be dismissed.
No legislative basis could be identified to support the conclusions of the Guidance. The term 'salary sacrifice' was a misnomer and, on proper analysis, it might more accurately be termed a 'salary diversion', by which salary might be diverted from an employee's pay packet to the voucher provider.
So analysed, the childcare vouchers provided under the Respondent's salary sacrifice scheme properly constituted "remuneration" and could therefore legitimately be discontinued during the Claimant's maternity leave.
Moreover, the EAT concluded that it had never been Parliament's intention to grant an additional "windfall" payment to employees on maternity leave and such an approach risked undermining the future adoption of such schemes by employers.
This decision of the EAT was not appealed by Mrs Donaldson and therefore sets “case precedent”.
You can find the full ruling by copying and pasting this into your web browser - Peninsula Business Services Ltd v Donaldson UKEAT/0249/15/DM
Overall, it is an interesting case, not just because of the outcome, but also because of the actual circumstances of the appeal:
Mrs Donaldson was not represented at the EAT. She had simply submitted a written appeal The EAT worked closely with Peninsula’s barristers the decide the outcome