Childcare vouchers and smp(14 Posts)
I thought employers could not take payments for childcare vouchers from smp? Does anyone know?
I signed up this month and the money has come from my smp, I guess I should have checked with payroll first
I don't have any references but I remember looking into this too and I agree - I understand it is illegal to make deductions from SMP
Have a quick google and you'll find more about this
I didn't think you could sign up during SMP. They only have to honour existing benefits.
I've found conflicting info when I google it so bit confused
They can't deduct vouchers from SMP.
Many employers do continue to pay them, but there was a recent employment case where the tribunal said they can withdraw vouchers as a benefit.
I'd definitely give them a call.
My understanding is (admittedly 2 or 3 years old):
- You have to be on some kind of enhanced mat pay to sign up and get vouchers
- once you're getting them then you're entitled to keep getting them
- your salary sacrifice is legally not related to your receipt of the vouchers
- You're legally entitled to keep receiving the vouchers as they're a benefit which all employees (with children?) are entitled to
- if you have a salary your employer will take the value of the vouchers out of your salary, with your consent
- If you only have SMP then your employer can't take any deductions out, but they have to keep giving you the vouchers
So basically if you want the vouchers for free you need to sign up while you're salaried (assuming you get enhance maternity pay, not just SMP)
I am not legal. This is what I gathered from googling though. I gather it's a loophole.
Unlike tax evasion / tax haven etc type loopholes which cost the gov billions per year this seems to be a fairly small one which not many people know about and lots of companies refuse to honour (even though legally they have to - but who is going to take them to court?!)
This link to the government's website clearly states:
Non-cash payments and contractual benefits
You may normally pay some of your employee’s earnings as a non-cash payment, for example, providing board and lodging or giving them goods or services. However, you must pay any SMP in full. SMP cannot be sacrificed or offset against other benefits, it must be paid in cash.
All non-pay contractual benefits must continue during statutory maternity leave. These may include any childcare vouchers, company car or mobile phone provided to the employee as part of their contract of employment.
And also from thr gov link:
If an employee has entered into a salary sacrifice with you their AWE is calculated using the amount of earnings actually paid to them during the relevant period. SMP cannot be sacrificed, it must be paid in full.
Thanks drizzle I will speak to them as I only get smp not enhanced
The position on childcare vouchers during maternity leave changed last year. The Employment Appeal Tribunal ruled that childcare vouchers provided as part of a salary sacrifice scheme are remuneration not a benefit and therefore do not have to be provided during maternity leave, and the HMRC guidance doesn't have to be followed.
Childcare vouchers which are provided not as part of a salary sacrifice scheme would still need to be provided.
You are right to understand that deductions in respect of salary sacrifice cannot be made from SMP though. They are fine not to give you vouchers, but they are not fine to give you vouchers and deduct them from SMP.
Thanks for clarifying flowery, so should my employer have suspended the vouchers which I requested?
It's up to them. Until recently guidance was that they should continue to supply the vouchers anyway, effectively paying for them for you. That changed with the case last year. Now they have two options, they can either provide the vouchers to you free of charge, or suspend them entirely. What they can't do is make deductions from SMP.
I imagine this is ignorance on the part of your employer. You can contact them highlighting that they cannot make deductions in respect of salary sacrifice arrangements from SMP. The risk is that they might then withdraw the vouchers entirely.
Thanks flowery I think I'll have to accept it as I'd rather not risk them scrapping the vouchers altogether!
I fought this with my employer and they dragged it for ages. In that time the ruling had been passed which ruled in favour of employers not having to follow the rules, and my employer refused. The advice of my employer was to cancel the vouchers altogether, which it turns out is poor advice, which luckily I didn't follow. They were unaware of the wider picture and the plans to introduce a new tax free child care scheme. The government said that existing childcare voucher schemes would be closed to new applicants and the only alternative would be the new tax free childcare scheme. At the time it was unclear when existing schemes would close (and if I'm right I think it still is) and there wasn't enough information available to me to tell if I would be better off in the old or new scheme. So rather than cancel entirely, I set my vouchers to the lowest monthly amount (£20), so I was still "in" the scheme. I then returned to work and can now decide which scheme is going to be best for me. If I'd followed my employers advice and left the scheme altogether, I might not have had the choice.
My advice would be to check what the current plans are re: old and new schemes and then decide if it's best for you to stay in even if you go onto the minimum amount while on maternity.
Thanks normandy, I only have one month left of smp so I've done as you said and amended the amount to £20 for now. Have to dip into savings to cover the money which I didn't get this month!
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