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Is it discriminatory to discontinue childcare vouchers during maternity leave?

09 June 2016

The Employment Appeal Tribunal has recently decided in the case of Peninsula Business Services v Donaldson that it is not discriminatory to discontinue childcare vouchers during maternity leave where those vouchers were provided through salary sacrifice.

The general position is that women on maternity leave are entitled to continue to receive non-pay benefits.

The Employment Tribunal followed HMRC guidance that contractual non-cash benefits provided under a salary sacrifice scheme must continue to be provided during maternity leave. It decided that it was discriminatory for an employee to lose childcare vouchers during this time. Peninsula appealed the decision.

Peninsula was successful. The key question was whether the vouchers constituted remuneration. The EAT decided that childcare vouchers were ‘diverted’ remuneration and therefore Peninsula were not required to continue to provide them during maternity leave.

"Employers should however approach this case with some caution. First, it only applies where childcare vouchers are provided by salary sacrifice and not where they are provided as a benefit in addition to salary."

Employers should however approach this case with some caution. First, it only applies where childcare vouchers are provided by salary sacrifice and not where they are provided as a benefit in addition to salary. Where they are a benefit in addition to salary the vouchers must continue during maternity leave. Second, the decision may be appealed and result in a different decision particularly as the decision reached by the EAT appears to be somewhat tentative.

For the time being however, employment tribunals are bound to follow this decision.