Salary sacrifice (chidlcare vouchers and pension scheme) and maternity leave

[Naturegirl82]

I'm hoping someone here will be able to help me (I'm hoping this is the right place to post). I am a member of my works salary sacrifice scheme. I am now 29+3 days pregnant.

I received my payslip for this month today and I have been kicked out of the pension salary sacrifice scheme because I am due to go on maternity leave. I have spoken to payroll who have informed me I can't be part of the scheme whilst on maternity because once I start receiving SMP then I will have nothing to sacrifice. I was part of the scheme during my qualifying weeks for maternity pay.

My work do offer an enhanced package (9 weeks full pay, 9 weeks half pay, then SMP) but my understanding is my maternity pay will be based on the amount of taxable income I was being paid during my qualifying weeks (so my salary would have been lower because of the sacrifice).

I have checked the terms and conditions that I was provided with when I signed up to the pension scheme, and there is nothing saying that I can be kicked out of the scheme because I am due to go on maternity leave. There is an "opt-out" clause if you experience a lifestyle event (of which maternity would be considered) but it is something for me to request and work to agree to. It does not suggest that I can be kicked out (especially without any notification).

Is it true that I can't be part of a salary sacrifice scheme when on maternity? Or are my work trying to get out of paying me a benefit I would be entitled to just because I am on maternity leave (as this obviously affects the amount of tax I pay so is detrimental to me)?

I am also due to start paying for childcare vouchers, which I also thought was through salary sacrifice but I have been told I will have to stop these whilst on maternity leave as well.

If anyone can provide me with any help or information it would be greatly appreciated as I have another meeting with HR tomorrow to discuss this.

TIA

Is this your first child? Whilst work have to maintain your childcare vouchers if you go on maternity leave, they aren't obliged to add you to the scheme whilst you are on leave, AFAIK.

The pension thing certainly seems wrong to kick you out now as you would have some salary to sacrifice if you so chose in the period before SMP. I think salary sacrifice into pension, which is variable by employee choice and by firm, may be a different kind of benefit to the childcare vouchers which are the same value for every parent.

You need flowery for a definitive answer though.

As I understand it as a provider of a salary sacrifice pension as an employer I gain by salary sacrifice as I don't need to pay employers NI on that portion of your salary. But due to this gain I must keep paying this portion of your salary you have sacrificed into your pension on top of your SMP whilst you are on maternity leave. The total I would have to pay when anyone is on maternity leave is likely to be less than the total employers NI I would pay on everyone salary sacrifice so I still win.
So your employer is trying to have their cake and eat it.

Your employer is wrong. They are making the same mistake quite a few employers seem to make, effectively saying you are buying the pension and childcare vouchers. That isn't how salary sacrifice works. If it did there would be no tax benefit and therefore no point in entering into a salary sacrifice arrangement. They cannot kick you out of the pension scheme or the childcare vouchers just because you are on maternity leave. This is illegal discrimination.

Thanks for the reply.

This is dc#2 so I would be in the childcare voucher scheme before starring maternity leave so would be a pre - existing benefit.

I spoke to acas last night who seemed to think it broke employment law and was discrimination to kick me out but have also advised to speak to the pensions advisory service as well which I'll do this morning.

You have confirmed what I thought so will be putting this to HR in my meeting today.

Thanks

Thanks for the reply.

This is dc#2 so I would be in the childcare voucher scheme before starring maternity leave so would be a pre - existing benefit.

I spoke to acas last night who seemed to think it broke employment law and was discrimination to kick me out but have also advised to speak to the pensions advisory service as well which I'll do this morning.

You have confirmed what I thought so will be putting this to HR in my meeting today.

Thanks

Sorry for the double post!

No that's definitely not right. Certainly didn't happen in my case (currently on mat leave). I do know of people who held their childcare vouchers during the qualifying period and then restarted them after so that their income would be higher which I thought was quite iffy.

I'd certainly challenge them on this. How have they been generally as employers?

more they are usually ok with me (it's a kind if love it or hate it type place!) but this scheme is still fairly new so I don't think they know the implications. I'm not the first person to go on mat leave though since it started but I don't know if the other person was in the salary sacrifice scheme or not. They have been funny about my mat leave start dates both this time and last time though so unfortunately it didn't suprise me.

Pensions advisory service have confirmed what you have all said and I've got some info from their website to take to my meeting with me. Hopefully it will go ok.

Ah yes, your employers are trying to avoid paying the CCV and SS pension contributions whilst you are on Maternity Leave.

It was quite clear on the HMRC site before that they need to continue to pay these arrangements during the period of paid SMP but now that they have moved over to .Gov.uk site there isn't as much info do sadly I can't link.

There is a historicsl archive of HMRC documents on this that you can access. If you have any trouble with your employers come back to the thread and I will see if I can find the stuff in the archive.

So I think it's all sorted. HR were misinformed by the pension broker so had the wrong information to go off. They have reinstated me back into the salary sacrifice scheme and will continue to pay all contributions when I'm on mat leave. They are also adding a bonus to this month's pay to make up for the money I lost on tax in April's payslip.

Childcare vouchers aren't run through a salary sacrifice here so I am entitled to keep buying them for as long as I want and opt out when I want but they don't pay for them on top as it isn't a change in my contract. I can understand that as I can alter the amount I buy each month so think that's sorted as well.

Thanks for your advise, helped loads being able to go in armed with all the facts.