Childcare Vouchers and Maternity Leave

[speedbird17]

Just trying to establish what I am entitled to as there is lots of advice contrary to what my employer is saying out there!

I am entitled to SMP only, so employer has stated I will be forced to suspend my vouchers until I am earning a salary again. It was flagged up to me by an acquaintance that their employer goes by HMRC rules that if maternity pay does not cover non-cash benefits such as childcare vouchers, a car etc that the company must carry on paying the amount on your behalf.

My employer has answered my query by stating that the class the voucher as a remuneration and as such will not class it as a non-cash benefit and will force me to suspend my participation in the scheme.

Can they do this? Is the information I have read on HMRC and other childcare trust sites etc correct? I am not wanting something for nothing, but if I am entitled to the payment it would greatly help to have it IYSWIM...

Any advice and info appreciated! Thanks in advance!

I am receiving mine on top of SMP. Are you in a union?

Yes I am, have e-mailed them and awaiting response. So are your company paying for them whilst you are only receiving SMP?

My work keep paying childcare vouchers when I'm on SMP.

"My employer has answered my query by stating that the class the voucher as a remuneration and as such will not class it as a non-cash benefit"

They don't get to decide that. If they withdraw a contractual benefit while you are on maternity leave that will be unlawful discrimination under the Equality Act.

Yes, my employer is paying. I am a teacher though, so it is the local authority who are absorbing the cost rather than a private employer.

You are entitled to them. You have sacrificed that portion of your salary contractually (hence this is a 'salary sacrifice' scheme) and so it is no longer part f your remuneration. It is not salary, it is a benefit.

The upshot is, your employer has to pay the vouchers while you're on maternity leave. They are not permitted to deduct them from SMP, so if you earn in excess of SMP in a wage slip they can deduct them (up to excess of SMP), if you only earn SMP then they must pay the vouchers on top because they can't deduct them from SMP. HMRC will back you on this if you report your employer.

[despite this working out very well for those on SMP, I do worry that it's a reason for employers to not offer the scheme in the first place. The scheme is optional, and could work out very expensive for employer of people who take maternity/paternity leave]

I was told by HR that childcare vouchers must continue. I also only get SMP. Sadly I don't work in HR so don't know the relevant document to quote.

Thanks all, I asked for the reasoning behind them deeming it a remuneration. Got told again it is not a non-cash benefit and that they are sorry I do not agree with company policy, case closed. So I will be going to my Union and also talking to ACAS about it, as essentially I am going to even worse off, by about £75 which would have been the tax free element of the voucher. Just so angry at the situation and the stress it is causing me.

My communications were with the head of payroll and I'm so disappointed!

Your loss is much higher than £75 OP. Your employer is obliged to provide the vouchers you normally receive free of charge to you throughout the entirety of your maternity leave, including the unpaid part. You can take up to a year off as I'm sure you know, so by denying you this contractual benefit they are taking (up to) 12 x however much you usually receive a month in vouchers. If you receive £243 a month, that's a total of nearly three grand's worth of vouchers they're saying they won't give you. That's an awful lot of childcare.

You need to raise a formal grievance citing maternity discrimination under the Equality Act, and I'm sure your union will help you.

I get what you're saying, but due to salary sacrifice I am not losing out on all of it, as I am not earning anything surely? Everything I have researched has pointed to it not being an absolute obligation, but the majority of companies offer it under the changed HMRC legislation, and that the is no absolute right or wrong of it being maternity/sex/equality discrimination...

Either you're getting the vouchers or you are not. As you will have seen if you have read the HMRC guidance, and as has been explained on here, your employer is obliged to continue to provide the vouchers throughout maternity leave, and cannot make deductions in respect of them from SMP. That means if your employer doesn't continue to provide the vouchers, you are losing the entire value of them.

Not sure what you've read saying that the obligation of employers under the Equality Act to continue to provide contractual benefits doesn't apply to childcare vouchers?

Sorry you're having to go through this

I agree with what everyone else has said. I was getting £243 per month in childcare vouchers, and went on mat leave (public sector) for 12 months. I was paid for the first 9 months (SMP only for latter part), then took 3 months unpaid.

I was worried that £243 coming out of SMP would leave me with no money, so I stupidly reduced the amount to £10 when my pay dropped. I then researched it here on MN, and discovered I could receive the full amount on top of SMP AND whilst on unpaid mat leave, so hastily put in a request to increase it back up to £243. It took a couple of months, and my payroll dept did try and fob me off, but I got there in the end.

As ds1 is 3 and gets 15hrs free, I've been saving the vouchers up for when the baby needs them (as you can use the vouchers for a different child). I've got about £700 saved up.

Good luck setting them straight.

See FAQ about maternity leave discrimination here on Maternity Action website, there is a specific question about it, and the answer confirms that childcare vouchers are a non cash benefit and as such must be provided throughout maternity leave.

Advice for employers from the government website, specifically using the example of CCV as a non cash benefit

CIPD advice from 2008 confirming vouchers must be provided free of charge

Thank you flowery, I have seen the maternityaction.org site and it is really useful, as well as the actual legislation from the government national archives, but another website I saw, said that actually it wasn't an obligation. So I feel uneasy as to where I stand especially as the head of payroll (and it's not a small company) has e-mailed saying various things. Will paste his e-mails here if I can.

Employers for childcare charitable group FAQs

Family and Childcare Trust

Hi Speedbird,
I have been passed your query with regards to Child Care deductions continuing whilst you are on Maternity Leave, it is quite a common question as a result we have got a standard response which I have pasted below.

Childcare reductions do not take place where you do not receive enough pay to cover the cost of your agreed monthly reduction. At the moment, legislation does not allow any reduction from statutory maternity pay for childcare vouchers. Your participation in the scheme is suspended until you receive enough pay to cover the cost of the agreed monthly reduction. This means that if you continue your childcare arrangements during your maternity leave, you need to ensure that you pay your childcare provider directly.
If there is a balance of funds in the account whilst you are on maternity leave, you can continue to pay your carer(s) as normal. On returning from leave normal salary reduction will automatically recommence unless you advise of a lifestyle change.

has reviewed its position following the publication of the HMRC guidance and can confirm that its scheme operates within legal limits. Whilst this does not correspond to the HMRC guidance, the tax free rules are clearly about remuneration. Where terms and conditions are about remuneration, they do not have to be continued during maternity leave.

I hope this answers your query, if you need anything else please let me know..

Kind Regards,
Head of payroll

Payroll people aren't employment law experts, and beware of assuming that big companies are always right. I can assure you I am though.

Hi Head of payroll,

It doesn't answer my query as I had already been quoted this when I called voucher provider myself. I would like to know how classifying the Childcare Vouchers, which are a non-cash benefit as a remuneration means that the government advised obligation to continue paying non-cash benefits during both AML and OML does not apply.

I have read all of the HMRC, governmental and Childcare Trust documentation on the matter and everything I have read has pointed in the direction of this being an obligation of the company. As I will only be receiving SMP as per my contract obviously Childcare costs for my daughter are something I am acutely aware of.

I can of course send copies of all the information I have, but I also need to understand how company's policy differs and gets around this as from what I have read and understood from the information available to me and a conversation with an advisor on the matter, it would appear that legally I am entitled to these vouchers.

Your stock answer states that my involvement in the scheme will be suspended, but from my understanding I do not have to suspend my involvement in the scheme due to maternity and should not be 'forced to suspend existing scheme participation'. I have been pointed in the direction of the union and Citizen's Advice Bureau for this matter, but would much prefer to resolve without external involvement if possible.

Kind Regards,
Speedbird

Flowery, I could kiss you, I have been fretting that I am getting it wrong all day and been quite panicked. I have e-mailed my Union, do I need to raise a grievance separately?

Hi Speedbird,
Childcare Vouchers are not deemed to be a non-cash benefit in a way a company car or medical benefit are, these benefits would be classed as an addition to an employee’s salary. Whereas employees fund their own Child Care by having a deduction from their basic salary.

This has been raised numerous times before and has gone through our legal department who helped create the response below.

Kind Regards,
HoP

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Hi HoP

I'd like to see how Company deem that the vouchers are not a non-cash benefit, as every piece of documentation I have read including government, HMRC and legal information classes them as such.

Again, I am happy to share each article, document and piece of information that I have to try to understand why Company have decided to alter the classification of this benefit to the detriment of colleagues.

Although it is a salary sacrifice ie. a deduction as you call it, each voucher saves the recipient £75 in tax and NI, to have both my salary and this benefit taken away due maternity leave does not put my family in a position to continue paying Childcare, which is essential to continue my existing child's ongoing place within nursery and pre-school.

I would like to see proof that it is not a non-cash benefit, as from my research and legal advice, it very much is, and should be treated accordingly.

I feel very let down and disappointed in Company's policy regarding this benefit and do not feel supported as a parent in a role that I give much of my time and enthusiasm to.

Kind regards,
Speedbird

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Hi Speedbird

Unfortunately there is nothing more I can add to what has been stated before.

I appreciate you do not agree with this however this is the companies stance on this matter.

Best Regards,
HoP

Just to echo what flowery says I'm getting the full £243 a month in addition to SMP. (I'm on leave since sept). I'm planning on staying home a full year. And given I don't have any extended maternity deal, and they can't deduct from SMP, I'm getting £243 x 12 in addition in effect. That's a lot of money. For me it's buying me childcare while on maternity, so I have time with my newborn without DD1. It really helps my sanity!

Good luck and hopefully your Union can help you.

I've queried this with my payroll today and been told my occupational maternity pay is calculated after salary sacrifice so it's detrimental for me to continue to sacrifice the full amount. Obviously this has no bearing if you only receive SMP.
I hope you get this resolved OP.