click to view mobile Navigation
You are here > Hewett's Legal Corner #43 - Childcare Vouchers during Maternity Leave

Hewett's Legal Corner #43 - Childcare Vouchers during Maternity Leave

Childcare Vouchers during Maternity Leave
It is estimated that about 20% of employers provide employees with childcare vouchers as a benefit of their employment. This is usually by way of a "salary sacrifice" arrangement under which the employee agrees to a reduction in their salary in exchange for the vouchers (although it can be in addition to existing salary). The voucher schemes have been popular because of the tax and National Insurance contributions (NICs)  ( advantages to both the employer and the employee:
The question of whether such vouchers are considered a non-cash benefit or part of the employee's wages or salary has been hotly debated among employment lawyers, as it has an impact on whether they are payable during maternity leave.

Although some employees may choose to leave their employer's childcare voucher scheme during maternity leave (in order that their SMP would be calculated on the basis of their normal, rather than reduced, salary), it would be discriminatory for an employer to require employees to leave the scheme during maternity leave.

In Donaldson v Peninsula Business Services, the employer required employees to agree to leave its childcare voucher scheme during maternity leave (presumably because although the employee's entitlement to receive the childcare vouchers would continue throughout maternity leave, no deductions are permitted from SMP, leaving the employer to pay for the childcare vouchers). This was held to be discriminatory on the ground of pregnancy and maternity. PBS appealed.

The EAT allowed the appeal and substituted a decision that the claim should be dismissed. No legislative basis had been found to support the HMRC guidance. The key question was: did the vouchers constitute remuneration? If they did Regulation 9 of the Regulations did not require this to continue during maternity leave. Langstaff J held that the vouchers did represent part of salary since pay had been substituted with vouchers under a salary sacrifice scheme. On this basis they were to be regarded as remuneration and could be discontinued during maternity leave.

Employers who have queries regarding the above or wish to discuss any other employment matters should contact Sally Morris at or on 01905 734032.

< Go Back


Hewett's Support Worcester Full & Half Marathon 2018
We are pleased to announce that Hewett Recruitment will be supporting St Richards Hospice and sponsoring the Worcester Full and Half Marathon 2018 as it enters its seventh year.
04/01/2018 10:38:41

HR Professionals Conference 2017 - Huge Success
With over 100 delegates, this years' HR Conference hosted by Hewett Recruitment and the HW Chamber of Commerce is now the largest HR Conference in Worcestershire.
27/11/2017 16:55:25

Hewett’s once again pledge their support to local Foodbanks
Hewett Recruitment have once again pledged their full support this Christmas with a Foodbank collection initiative aimed at helping the local communities of Worcestershire who have fallen on hard times.
18/10/2017 10:55:56

Hope & Glory Dinner - 29th November 2017
Spectacular Black-Tie 'Proms' Celebration in Bewdley... Flag waving and singing to a 20-piece orchestra - three course dinner
22/09/2017 12:20:40

Hewett’s ‘values’ recognised at staff awards
Hewett’s Annual Family Fun Day and Company Awards took place at the West Midlands Safari Park in July.
31/07/2017 15:50:48


Louises Column - Salary & Skills Survey
Last month Hewett Recruitment partnered with the Herefordshire & Worcestershire Chamber of Commerce to publish the Salary & Skills Survey 2017.
18/01/2018 10:22:48

Christmas Legal E-Bulletin - Preparing Your Business for 2018
In the last Employment Law E-Bulletin of 2017, learn how to prepare your business for the new year ahead and the recent employment law developments that should be considered.
18/12/2017 12:50:33

Louises Column - The Warriors Community Foundation
Many of us in business engage and support local causes, to help raise awareness and generate much needed funds for charities and local groups to continue their good work. I'd like to highlight and encourage you to get involved with the great work going on at an exceptional and award winning foundation, The Warriors Community Foundation.
07/12/2017 13:57:01

Legal E-Bulletin - Reimbursement Scheme for Employment Tribunal Fees Announced
Sally Morris, Partner and Head of Employment for mfg Solicitors shares recent declaration about unlawful Employment Tribunal fees and the reimbursement that eligible applicants may be entitled to.
04/12/2017 13:22:02

Louises Column - The Importance of Flexible Working
What to do as a job is the most important life decision that most people will ever have to make. This outranks other life-defining decisions such as where to live, starting a family, or getting married according to a recent survey.
15/11/2017 11:13:09