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Childcare Vouchers during Maternity Leave

Mar 22, 2016
In a recent case, the Employment Appeal Tribunal (EAT) held that employers do not have to provide childcare vouchers during maternity leave when they offered through salary sacrifice.

The employee had made claim at the Employment Tribunal for discrimination as the employer had made it condition of joining their childcare voucher scheme that the vouchers would be suspended while she was on maternity leave.

The Employment Tribunal relied on the guidance from HM Revenue and Customs (HMRC) which states “non-cash benefits, such as childcare vouchers that can be used only by the employee and are not transferable…must continue to be provided during ordinary maternity leave and additional maternity leave”, when it made the decision that the employer had acted unlawfully in making the provision that the childcare vouchers be suspended during an employee’s maternity leave. 

The employer appealed to the EAT against the employment tribunal’s ruling and the EAT has now held that it is not discriminatory for an employer to suspended childcare vouchers during maternity leave as long as the vouchers are provided in return for a deduction from pay. 

There is a distinction between childcare voucher schemes that operate via salary sacrifice and schemes where the employer provides childcare vouchers in addition to employees’ pay. The EAT held that the provision of childcare vouchers in addition to pay must continue during maternity leave.

In 2017 the new government Tax-Free Childcare scheme will be phased in and the current childcare voucher scheme will be phased out. Under the new scheme childcare vouchers will be dealt with between the employee and the government directly, employers will have no involvement.

For further advice and assistance please contact Ezra Moffatt on 0333 400 7920.