Employer refusing to pay childcare vouchers during SMP

[EllasMummy09]

Hi

I hope someone can help me..

If I understand correctly the law regarding Maternity leave benefits changed in 2008. (Amendments made in 2008 to the Sex Discrimination Act (SDA). One of the changes being that the value of the vouchers can only be deducted from my maternity pay providing the actual amount of pay does not fall below statutory maternity pay. Which would mean that my employer need to pay the vouchers while I'm receiving only SMP or have no pay at all.

Is this right?

I have asked about this and my employer is refusing to make any contribution to towards Child Care Vouchers whilst I'm on maternity leave. Has anyone been in this situation before and what was the outcome?

Thanks!

The maternity leave benefits thing is just purely that non cash benefits like your vouchers must continue to be provided throughout maternity leave.

The pay thing is separate, the rule is simply that employers are not allowed to make salary sacrifice deductions from SMP. It's not about them making 'contributions' to childcare vouchers, it's simply that they can't deduct the cost of them from your SMP but must still supply them.

Are they just refusing to supply them altogether?

Sorry to hijack your thread OP but flowery, do you know whether if you do paid KIT days (which for me are paid at an hourly rate in the manner of overtime) that money is then swallowed up by childcare vouchers?

IIRC it's the same as any other benefit you would normally receive while in employment... so if they pay a gym membership for you every month then you're entitled to that throughout your mat leave.

you are legally entitled to SMP + existing benefits.

I think there is a valid reason behind this and I think it is because on SMP you don't earn enough. Am happy to be corrected but I am sure there is something in my contract along these lines.

Bumper yes, if you get paid for a KIT day, that amount will be used towards the vouchers (as I discovered to my cost and I work in HR fgs )

OP they cannot make deductions from SMP so you are entitled to still receive the vouchers but employers don't contribute to them so not sure what you mean?

Employers DO pay them for you while you are on SMP which is nuts but great!

Thanks for the info about KIT days. Won't bust my arse to make up some of my wages then!

I queried this with HR of my employer, company policy is that once payments drop from CMP to SMP that they don't pay for the vouchers.

The HMRC advice which has been linked to on her apparently is just guidance and states that an employer could theoretically leave themselves open to a discrimination claim, however it seems, from further googling that it is not clear cut that childcare vouchers definitely are a non-cash benefit, and also it has not been tested in court or tribunal. See the article below

www.personneltoday.com/articles/2009/07/06/51328/childcare-vouchers-high-price-to-pay.html

I've decided, seeing as I actually get a very generous deal overall, that it would be pretty dumb to try and kick up against my employer's policy. To be honest, it doesn't even feel unfair to me that they shouldn't pay for them whilst they can't deduct. It would have been nice if I could have them for free, but I certainly don't feel entitled

Up to you of course, however for most people a year's worth of childcare vouchers isn't something to forego to avoid irritating their employer.

Prevailing guidance is that they are a benefit rather than remuneration. Not every single aspect of employment law has a test case to follow.

Yes it's possible an employer might decide they disagree with official guidance. They may decide that, on taking legal advice (which would be to supply the vouchers) they feel so strongly they'd rather disregard that as well. But most employers are more sensible than that.

It may not seem logical/fair to the employer, but then again lots of people may take the view that it's not fair on the employer that they have to pay a year's holiday pay to someone who's not at work for a year, or that they have to continue making pension contributions as a percentage of full salary rate while the employee can reduce theirs to the appropriate percentage of SMP rate.

So the article, in which a couple of lawyers say that it is not clear cut whether vouchers count as non-cash benefit is just plain wrong then?

Also, what do you suggest I'd do? Take them to tribunal or threaten with legal action? I'm not unionised, the policy was in the contract I signed when I took the job, so I wouldn't know how to fight it, even if I wanted to. It only affects four months for me, which I think is just not worth the grief and possible damage.

With regards to pension contributions, my employer's policy is, that if an employee doesnt take a pension holiday (they advise agsainst pension holidays), they will collect the employees contributions within 6 months off return to work, or alternatively, offer that the employee can pay their contribution by direct debit whilst on SMP. Is that illegal too then?

this might be useful OP - EHRC guidance which acknowledges some ambiguity about car allowances, mortgage subsidies and the like, but is very clear to include childcare vouchers in with gym membership, company car etc as a benefit rather than remuneration.

Plus here is the HMRC guide to salary sacrifice during maternity leave, which also is very clear throughout that childcare vouchers are a non-cash benefit - doesn't suggest this is debatable at all.

Sorry widow - yours is a perfectly valid decision of course, I'm just keen that the OP and anyone else reading this doesn't feel they shouldn't challenge their employer if they are denied their benefits.

x-post

Articles aren't 'wrong', they are opinion. Most employer's wouldn't be daft enough to say a couple of lawyers think it's not clear, set against the official guidance which says it is, and therefore not provide them. In another thread yesterday someone linked to an article in the DM by a senior employment lawyer which was complete nonsense!

It's up to you what you do. If you want to challenge it, bring a grievance first then take it further if you want to. Sounded like you were happy not to bother.

The pension situation is also clear - in the event of a contributory employer pension, the employer must continue to make contributions as if the employee is on full salary, while the employee only has to make them based on SMP.

Your employer's policy sounds out of date.

Not sure if this is helpful but this is what I know. When I filled in my voucher form, it stated that you cannot claim for childcare vouchers if having that money deducted from your salary takes you below minimum wage. Can't remember the details but it did mention maternity leave and stated that you should opt to leave the scheme before you go on mat leave so that this doesn't happen.

Does that make a difference?

I've just read the article and it's 18 months old, plus it only seems to be one lawyer in it who is suggesting there's any ambiguity at all, and that's purely on the basis that there is no specific case. The general guidance in the article including from the Department of Business, Innovation and Skills is that vouchers must be supplied. Can't see any employer using that article as justification for refusing them.

You can't have vouchers if they would take you below minimum wage, no.

One more thing (sorry!)

It's very easy and perfectly understandable, if an employer is generally quite good, treats staff well and has generous policies, to assume they are getting everything right. They may not be, which will not be malicious, will be through ignorance in most cases.

The other thing is that many employers don't check their policies very regularly at all, and often only find out they are out of date when someone points it out to them.

I'm not implying any criticism of you at all widow. Everyone has to take in the information available and decide the best course for them, but if your employer is good generally, there doesn't have to be a big legal battle about it.

Well, I've taken the advice document you've linked to to them and asked to review it.

They passed it on to the people who look after payroll (outsourced). I've been told they look into it and would take legal advice, and came back after a week confirming that they wouldn't provide them during SMP.

I didn't think that you implied maliciousness or anything, but thought that if it were an oversight, then raising the question informally should have sorted it, so understood it that it is open to interpretation and not clear-cut.

I'm not doubting your expertise, you're clearly experienced in those things, and give good advice.

I just feel a bit between a rock and a hard place - I think raising a grievance would be an extreme step (and there's a lot of women with children where I work who generally are happy with the policy), at the same time my husband is annoyed with me for not fighting this harder.

Well I think if your employer themselves took actual legal advice from a solicitor rather than passing the buck to an external payroll provider and assuming they will do so, the outcome would be different.

It's really difficult for you I know. It's very easy for me to sit here and give advice, and much harder for someone to actually challenge their employer, but on the other hand you would be very much within your rights to do so and I can certainly understand why your husband would be annoyed. Even a couple of months of free childcare vouchers makes a lot of difference when you've taken a drop for maternity leave anyway.

You have to take a decision whether the potential argument and hassle is worth it for the amount you'd be gaining and that's a very individual decision. I sit here doling out the advice but with the luxury of having no personal involvement or knowledge of the situation.

Hi There, could I ask you to confirm this for me? Forgive me but have recently had a baby and head still a bit woolly, are you saying that, since 2008, once you pass from what the company pays you for maternity leave (in my case, 6 months full pay) to SMP (i.e £124.88 per week for the remaining time up to 9 months) they will still transfer £243 of this SMP money (around 500 quid per month so there is enough there) to my Childcare Voucher provider before tax as normal?

They definitely stopped them after 6months during my last maternity leave but this was in 2007/2008. If this is correct, that's great.

Can I ask another related question? I worked FT and as part of my job requirement I was given a monthly shift allowance written into my contract and paid through payroll monthly. At the moment (I am still in the first 6 month full pay period) this is still being paid. Should it continue when I move to SMP?

Alos, I was required to be on the on-call rota which had an annual payment which was paid twice yearly in January and July and was not added to my contract as such - a separate letter. I went on maternity leave in September and my manager has pro rate'd it so I only got the amount from July to September, not the full 6 month amount. Is this right? Should I still get this during maternity leave? (CMP? SMP? the last 3 months with no pay?). I am still technically available to work on maternity leave so shouldn't this be covered?

Yes you get vouchers when you are on SMP and when it's finished as well.

What your employer pays in terms of their enhanced maternity arrangement is entirely up to them so check the terms and conditions of your maternity policy about the shift allowance.

Yes the on call stuff sounds right. You are not available to work while you are on maternity leave unless you specifically agree a Keeping In Touch day.

Thanks flowery. So 6-9m on SMP I get £243 deducted from the £500 odd quid a month before tax, I understand that. How can I get them in months 9-12 if I take that last remaining bit of my AML or whatever it is called as I won't be being paid anything. Do they really still pay £243 a month into my childcare provider account? I have looked at my T and C's and it says something about having to pay back any deductions made for salary sacrifice if the money not there or something, or that i can take out an interest free loan to cover it.

Thanks for your help

It can't be deducted from SMP, that's the point. They are a benefit which you must therefore receive during your mat leave, same as you accrue holiday throughout, and can keep a company car throughout. It doesn't matter whether it's paid mat leave or unpaid.

If you get any enhanced maternity pay, your employer can make deductions from that, but nothing can be deducted from SMP at all.

Your employer can't then penalise you by deducting extra when you come back from mat leave either.

Thanks for your replies.

My employer is supplying child care vouchers during the first 9 months, but will deduct the value from SMP without contributing anything towards the vouchers. I've tried to question this disicion but they are not interest.

As Flowery said, year's worth of childcare vouchers is a big thing, but I just don't know what to do next..

Have you given them the HMRC info Ella? See my post on Sat 29-Jan-11 14:11:51, I gave you a link to the official HMRC guidance on salary sacrifice schemes during maternity leave, which makes it explicitly clear that they are not allowed to make deductions for salary sacrifice from SMP. That's quite a serious thing - your employer will be getting all or most of your SMP reimbursed by HMRC and if they are taking some of it away from you that's absolutely not allowed.

There are two issues - the first is not being allowed by HMRC to make deductions from SMP, and the second is having to supply benefits throughout maternity leave.

I would suggest as a first point you provide them with both the links in that post of mine earlier, saying you feel legal guidance is clear that they are not allowed to make deductions from SMP and that all your benefit must be provided during maternity leave. If they read that info and still refuse it's grievance time.

I've already sent them the HMRC info last week and their view is still the same. Thanks for the links though!

Our maternity policy also clearly says that employee is entitled to FULL benefits during 52weeks (of course not for a full pay..), which obviously isn't the case. I will also need to check their view on pension, I haven't even thought of that before it was raised here.

I think I will contact citized advice bureau tomorrow and ask their oppinion before speaking to HR again.

I seeeeeeeeeeeeeeeeeee

So I get enhanced mat pay of full pay for 6 months so they can take it out of that as per normal. But then when and if I don't go back to work and move to 6-9m SMP only and 9-12m nothing just unpaid leave, they still have to put £243 a month into my provider account. Great!

Will be amazed if my company stick to it but you're right, in a later version of the passage on benefits they have added "you will be liable to repay a sum equal to the balance of the outstanding salary sacrifice amount that would otherwise have been applied during that time (SMP only or unpaid leave) together with the unpaid costs relating to any blah blah, childcare vouchers over £243 per month, finacila advice blah blah, interest free loan available etc etc.

The bit about childcare vouchers has been added since my last maternity leave so I read that as the 243 childcare voucehrs are not repayable? (but can you get vouchers over £243?)

You can get childcare vouchers over £243 if you have a workplace nursery. There's rules that the employer has to contribute to the running costs of the nursery.