Maternity Leave and Childcare Vouchers again

[Coconutfeet]

I am currently on maternity leave. I understand from here that I am entitles to continue receiving my childcare vouchers while on mat leave, and that they cannot be deducted from SMP.

According to my contract, if I do not return to work I have to repay the 12 weeks of half pay that I receive, so I have requested to have this held back in case I decide not to return.

My employer has said that they are looking into my claim for vouchers as they have not heard of this before. I am still waiting for a reply. Meanwhile, this month I have had the money for them deducted from my SMP (I have just started the period of half pay which is being withheld). I just want to check that this is not correct and that they should be deducted from the half pay portion, which I will not receive if I do not return to work.

Can anyone clarify please? I don't want to muddle things by making incorrect assertions.

You are right. Vouchers cannot be deducted from SMP but may be deducted from the extra. Your SMP should arrive in your account intact!

Have you provided them with the HMRC guidance/rules on the subject?

Thanks Flowery, that's what I thought. Gah!

Yes I did forward them the link to the HMRC guidance but my query has been passed around to various people and none of them have clarified the situation. I'll chase them again.

My employer told me I couldn't have them when I found out 7 months later at end of maternity I should have had them they denied they'd said I couldn't hav them and refused to back order them for me!!

Flowery is incorrect. They are not deducted from normal pay and they cannot be deducted from maternity pay. A salary sacrifice entails a reduction in contractual salary and the provision of a benefit to a corresponding value. So when you sign up you are actually agreeig to a reduced salary.

So when you get half pay this can be based on the reduced salary (in the same way that your 90% for 6 weeks will be if you are on the scheme during your qualifying weeks).

For example if your pay was £400 a week and you were getting £50 a week vouchers, your new pay is £350 a week. So when you are getting 50% of pay, you would get £175 a week plus £50 childcare vouchers.

This is different to a deduction where you woudl get £200 (50% of £400) but then get £50 deducted so £150 plus £50 childcare vouchers.

I'm not remotely incorrect. They can't be deducted from SMP but can be deducted from any additional maternity pay the employee receives. HMRC guidance is very clear on that.

Salary sacrifice is never a deduction. It entails a reduction of salary and HMRC guidance is clear on that (although a lot of HMRC guidance is very confused).

As I said above the OMP may be based on reduced salary which gives the impression of a deduction (particularly where OMP is equal to 100% of salary as this actually leads to exactly the same amounts) but where it is a different percentage there is a difference. Trust me I'm definitely right! But aware this is not well known even amongst HR community.

Sorry I'm genuinely not trying to come across like I'm criticising flowery as I am so aware of how much you know and how much help you offer this is just one point that is a bit complicated and can cause confusion

I'm not sure being pedantic about whether it's called a deduction or a reduction is particularly helpful tbh. I understand perfectly well how salary sacrifice arrangements work but for the purpose of advising the OP, all she needs to know is whether her employer is allowed to take money away from her SMP and whether they are allowed to take money away from her contractual maternity pay.

HMRC guidance does actually refer to the rules about making 'deductions' from SMP and also refers to SMP being 'reduced' in respect of a salary sacrifice arrangement. Either way, it is unlawful to take money from SMP for a salary sacrifice, but is perfectly lawful to continue to apply the sacrifice and deduct/reduce OMP by the value of the vouchers, assuming there is enough OMP element to cover it. If there isn't, the vouchers must continue to be provided anyway.

It's not just being pedantic. There is a difference in how it is handled - see the example above where OMP is 50% - if it's treated as a deduction she would get £150 cash and £50 Childcare Vouchers. If it's treated (correctly) as a reduction she gets £175 cash and £50 childcare vouchers.

HMRC back up the point that a salary sacrifice is not a deduction:

"Misunderstanding: employers sometimes believe that the effect of a salary sacrifice arrangement is that the employee is still entitled to the previous gross salary but that a deduction, representing the amount of salary sacrificed, should be taken from that gross figure to leave a net salary entitlement.
Comment: a salary sacrifice arrangement involves a legally binding change in the contractual terms and conditions relating to pay. While the sacrifice remains in force the employee is only entitled to the reduced amount of cash wages or salary."

www.hmrc.gov.uk/employers/sml-salary-sacrifice.pdf

They also use an example of 50% OMP calculated as a reduction as above

Yes, as I said, I know how it works.

I think we're just going to have to agree to disagree on this.

I'm quite comfortable with my view that although HMRC does restrict SMP from being reduced, altered, deducted from etc in respect of vouchers, it has no such jurisdiction over occupational maternity pay which is between the employer and employee.

There is no legislation or case law that I'm aware of that states that the adjustment cannot be made to OMP just as it can to salary. Salary is reduced by whatever amount and childcare vouchers paid in lieu of the difference, nothing saying OMP can't be reduced by the same amount.

All the legal guides on the subject that I can find are in line with my view, and I never form views about employment law subjects without research.

Perhaps at some point someone will challenge the right of an employer to reduce their internal OMP by the amount of childcare vouchers they are providing in a tribunal, which would will be interesing case law and will no doubt clarify the situation.

Is smp the first 6 weeks? Or is that OMP?

SMP is 90% of average weekly earnings then £135.45 for 33 weeks. Anything your employer gives over and above this is OMP

So I've received £561.15 for my last month of OMP (due back at work Monday). My boss has deducted £243.00 voucher do I received a total of £318.15 this month.
Is that all correct procedure?
Sorry if I sound thick because I am.

I am the OP and wanted to resurrect this thread. I contacted my employer about this and received the following reply:

"I?m afraid you have been misinformed.

All income is taxable and niable up to certain limits. As your SMP declines, so will your tax and ni liability. These are statutory deductions and are calculated on an individual basis according to your tax code and income over the year because you are on a cumulative coding. Not everyone is entitled to OMP so it is not possible to only deduct it from that part of the package. If you decide to come back and we pay you the half pay, this will be taxable and niable. Note that your childcare vouchers are reducing your liaibility as they come off the gross pay."

I received £343 this month as my childcare vouchers have been deducted. Does this sound right? My payslip is really complicated and I'm embarrassed to say that I don't understand it.

I have been told that once the half pay part of my maternity pay has finished (at the end of this month) they will pay my Childcare vouchers to the end of my maternity leave so that's great, but I'm still unsure what should have been happening during the half-pay period.

I've just realised that I didn't thank the people who responded earlier on to my first question. Sorry about that - we were in the middle of a house move with a small baby at the time.

It would be groundbreaking if a court were to meddle in this kind of private contractual arrangement between the parties. I don't see any reason why an employer offering an additional benefit should not be able to stipulate whatever basis of calculation it chooses. Our OML scheme provides that OML will be offset by any additional benefits the employee receives. So I agree with Flowery.

OP I cant understand how your employer's response relates to the question you asked.

No, I can't understand either Leftwing! I've supplied documentation to back me up and tried to go further up the chain but they're refusing to engage with my questions and I've just had one-line answers. Thankfully the union are now taking this up on my behalf and I'm hoping they'll have more success. The shocking thing is that I work for a large local authority and I would have expected them to be more clued up about this issue. They initially told me I needed to leave the childcare voucher scheme altogether.