childcare vouchers and maternity pay

[Wilsonlc29]

Hi All

I was hoping someone may be able to advise me with an issue I am having regarding childcare vouchers and maternity pay.

The month before going on maternity I cancelled my monthly childcare vouchers (£250) as I would be at home to look after my first child and the extra cash would be more of a benefit than the vouchers in the short term. I was therefore expecting that my first month’s maternity pay would therefore increase by approx. £250 ( minus tax) as I was no longer receiving the vouchers. On receiving my payslip it appears that this is not the case and on further investigation it appears that the reason is because the maternity pay is calculated as an average over a 2 month period (when I was receiving the vouchers) and that child care vouchers are included in this calculation.

Therefore my maternity pay is being calculated as if I am receiving the vouchers but clearly I am not as I have cancelled them and essentially I am paying for a benefit that I am no longer receiving. I have spoken to the (outsourced) HR department and they advised I cannot re-join the voucher scheme until next year and there is nothing they can do.

I am slightly upset by all this as it appears that not only am I £750 out of pocket for the 3 months where I received full pay , if I had not cancelled the vouchers I would have also received them on top of statutory maternity pay for 6 months as well , so £2250 all told.

In particular I am upset that my company did not make clear the implication of cancelling this benefit prior to going on maternity and I feel that I am being deliberately disadvantaged by being on maternity. After all had I not been on maternity leave, ordinarily the cancellation of the vouchers would result in my pay being adjusted upwards the following month to reflect this. I don’t see how my company can say there is nothing they can do in this case, surely they could either a) re-instate the vouchers ( backdated) or (b) submit a new calculation for the average weekly earnings?

I would be grateful if anyone could advise me if my understanding of how they treat childcare vouchers is correct and if the cancelling of the vouchers after the AWP calculation is performed could lead to this scenario which is blatantly unfair?

Also , can anyone suggest how I can pursue this further with my company , I can’t afford to write off £750 at the moment and this is upsetting me greatly.
Thanks in advance.

[flowery]

Well, I have sympathy, but I do think it's your responsibility to make enquiries as to the implications of cancelling vouchers before doing so, including terms and conditions about how soon you'd be able to come back into the scheme. Information about how maternity pay is calculated is freely available also, and is probably in your maternity policy if you have one.

I don't think anyone is "deliberately disadvantaging" you, unless they are trying to restrict you from returning to the scheme during maternity leave but would allow you to if you were at work.

There is a legal requirement for an employer to recalculate statutory maternity pay for employees who are awarded a pay increase after the calculation period, however HMRC guidance states that although giving up a salary sacrifice arrangement does result in an increase to pay, it doesn't count as a "pay rise" for that purpose.

I really do sympathise, but I'm not sure there's anything you can do, as long as the terms and conditions of the voucher scheme are clear that you can't go back in.

[baffledmum]

Hello OP

While I sympathise with your situation, you need to full understand the terms and conditions of your salary exchange arrangement for your CCVs.
I administer CCVs and although employers must continue with non-cash benefits for the duration of mat leave, they are not required to allow you to start or re-start such benefits once you are actually on mat leave, unless the scheme rules provide for that. Where I work we do allow women on mat leave to join CCVs once on mat leave during the first available annual flex window but it is a grey area of the law and many employers behave as yours does. This doesn't make them wrong.

I agree with Flowery - it isn't down to a HR department to explain to you why you would be better off stopping in a scheme. I did try this once and was told firmly that as the employee's husband had recently left her she needed hard cash more than she needed the vouchers. I was made to feel as though I was prying as the employee hadn't really wanted me to know this, so each case is individual.

So - when is your next full flex window for CCVs and can you rejoin then? If not, why not. If it is because you are on mat leave, then you should challenge this. If it because you don't have sufficient pay to make the exchange AND they apply this fairly across the board e.g. to both men and women who don't have enough pay, then my understanding is that you have far less of a case.

[craskelc29]

Hi

I understand that a common compliant is people leave the scheme(s) and dont realize they cant rejoin for a year or that they could have received vouchers for the period when they are on statutory maternity pay. This is not my issue.

To be clear its not that i cant rejoin the scheme that is my main concern , its the fact that my maternity pay is being calculated as if I am receiving the vouchers ( ie £250 is being deducted from my maternity pay) but in reality I am not receiving any vouchers because I have cancelled them. I expected to cancel the vouchers and my maternity pay to increase by said amount.

ie a deduction is being made from my pay for a benefit I am not receiving.

I have reviewed the documentation from the CCV provider and I cannot see where it states the implication of cancelling CCVs after your avergae weekly earnings have been calculated.

I would be grateful if anyone can send me a link to another providers scheme where this is stated in the terms and conditions?

While i appreciate the fact that i should be aware of the terms and conditions the reality is there is no clear guidance on the matter.

[flowery]

Are you the OP craskel?

There are no deductions being made from your maternity pay, as that would be unlawful. Your SMP is calculated as a fixed amount, and is based on your average earnings in the qualifying period. During the qualifying period your earnings were x, and that's what the calculations was based on.

You opted to leave the scheme after the qualifying period, which has resulted in your pay going up, but no longer entitling you to the vouchers. That was your decision, no one is making any deductions from your pay. It's not that your maternity pay is being calculated as if you have vouchers but no one is giving you vouchers, it's that SMP has been calculated and is now fixed, regardless of what decisions you opt to make about vouchers afterwards.

It's not up to the CCV provider to spell out that if you leave the scheme after your maternity pay is calculated you won't get vouchers any more. The terms and conditions of the scheme should be clear about things like now often you can leave/join/make changes.

Nor is it up to the provider to point out how maternity pay is calculated, which is made very clear in lots of places.

[craskelc29]

Hi - yes not sure whats happened to my user name. Both posts are from me.

Disagree with you statement flowery:
"It's not up to the CCV provider to spell out that if you leave the scheme after your maternity pay is calculated you won't get vouchers any more."

I thought these schemes are designed to help working families ie be easy for everyone to use and understand.

I think if there is an opportunity for a person to make an honest mistake which can substantially disadvantage them financially that this should be highlighted by both the providers and HR.

There is no guidance published anywhere as far as i can see about this specific situation which links how SMP is calculated to the affect of opting out of the scheme after the calculation period?

Happy for you to correct me on this by providing a link where this is stated?

[flowery]

There is loads and loads of guidance explaining how maternity pay is calculated, ie that it is done using an 8 week qualifying period. For example this straightforward maternity pay calculator which asks for your earnings during the period in question.

Do you have a maternity policy? Does it give the impression that maternity pay will be recalculated if you leave a salary sacrifice arrangement after that period? I guess not, and I guess it is clear that maternity pay is calculated on the basis of pay during that period.

I appreciate you made a mistake, but I don't think you can blame anyone else. I don't think any of the guidance available is at all ambiguous about how maternity pay is calculated or does anything to give the impression it will be recalculated if someone opts to leave a salary sacrifice arrangement.

[craskelc29]

the question the website asks is: How much do you earn? (This is your total take-home pay before any deductions, eg tax.)

To me this is your gross salary , it doesn't mention anything about childcare vouchers or how they affect your maternity pay.

The only thing published that refers to the exact calculation is a HMRC document that is published under the "Employers" information section.
Even then this document does not state implicitly the affect of cancelling the vouchers post the calculation period.

I understand you work in HR and this is your area of expertise and everything is obvious to you , I am a lay person in this area and so therefore I expect an explanation of how to use the scheme to be clear and concise.

[flowery]

The effect of cancelling vouchers is no vouchers. I really don't think any document needs to state this explicitly.

I just googled "are childcare vouchers included in calculating my maternity pay" to see what came up. Tons of stuff, making it clear that SMP is based on take-home pay, which doesn't include vouchers.

You really don't have to work in HR to find out how maternity pay is calculated, whether childcare vouchers are included, and to understand that if you cancel vouchers you won't get them anymore.

You've made a mistake and didn't check these things out beforehand, and I understand you are frustrated, but it is not anyone else's fault or responsibility.

[Bearsinmotion]

It is frustrating, you have inadvertently ended up with the worst of both worlds - I have been trying to work out whether it is better for me financially to cancel the vouchers or not, and it isn't easy to do. However in our maternity policy it is very clear that mat pay is calculated at a particular time period and a salary sacrifice scheme like child care vouchers will affect this.

[baffledmum]

Bearsinmotion - contact your payroll team and ask them to do the financial modelling for you. Where I work payroll are happy to do this, employers don't want disgruntled employees.

OP - all that has happened here is that you've made the wrong decision for your circumstances. It is fustratong but that doesn't mean your employer is behaving shoddily.

[craskelc29]

fundamentally disagree here

Ive chosen the right decision for my circumstances , i don't need childcare vouchers at this time , so i have cancelled them , my pay is still being adjusted as if I am receiving them.

I keep being told the information is out there but nobody can actually reference a document that clearly states the implications of cancelling CCV after the calculation period.

I think its a pretty fair assumption to most people that if you receive some sort of elected benefit that you are paying for out of your salary , if you choose to cancel that benefit you would expect your pay to increase the following month by the value of that benefit.

If my pay changes due to a pay rise after the calculation period , guess what - they have to recalculate your average pay to take account of this.

Why should it be any different if I cancel my childcare vouchers after week 25?

anyway , thanks for your opinion , lets agree to disagree.

[flowery]

Well clearly you haven't made the right decision for your circumstances, have you, otherwise you wouldn't be unhappy. There were two other options open to you which would have been better. You could have stayed in the scheme and collected the vouchers for use at a later date, or you could have come out of the scheme earlier so that your earnings were higher during the period used for calculating maternity pay.

"nobody can actually reference a document that clearly states the implications of cancelling CCV after the calculation period."

There is no document stating the implications of cancelling vouchers after the calculation period because there doesn't need to be. The only implication of cancelling vouchers then is that you no longer receive vouchers. There are no other implications so you don't need a document saying so. You were in fact assuming there was another implication, ie that your SMP calculation would be adjusted.

"I think its a pretty fair assumption to most people that if you receive some sort of elected benefit that you are paying for out of your salary , if you choose to cancel that benefit you would expect your pay to increase the following month by the value of that benefit."

Yes absolutely, and when you start receiving salary again, it will be at that higher rate. But you are not receiving salary at present, you are receiving statutory maternity pay, which as is made abundantly clear in many many documents, is calculated using average earnings over a specific period. It is not "pay" or salary in any way, and it is not being "adjusted". No deductions are being made from it, it is what it is. It has to be calculated in the way it has been.

I've already explained that the rule about recalculating SMP in the event of being awarded a pay rise doesn't apply here because no one awarded you a pay rise- this was your decision. You may think that rule should apply here but it doesn't, it's as simple as that.

I do feel for you. We've all made poor decisions at times and wished we'd done something differently. But you're not going to get anywhere blaming anyone else, and would be better off focusing your energies on what you can do to make the best of the situation you are in.

[SlinkyB]

I'm not going to be any help here I'm afraid op, but just wanted to say you're not alone in finding it all confusing. You have my sympathy.

I wasn't sure whether to opt out of the scheme or not whilst on mat leave with dc2 atm, so decided to just drop my amount down to £10 as couldn't afford for £250 to come out of my smp. When I realised that you could receive the full CCV amount AND receive 100% of your stat mat pay, I quickly logged back on to the website and increased it back up to £250. Sadly it took 3 months to sort, so I kinda feel like I cocked up and should have looked into it more, but I had other things on my mind.

Thanks for the explanations Flowery - I'm going to read them again five times and see if it sinks in a bit more