SMP & Child Care Vouchers

[studioghibli11]

Just looking for some advice, I am due to go on maternity leave & I am currently receiving salary sacrifice child care vouchers. My employer only pays SMP. I did think that my child vouchers continued whilst on SMP, but I see from a tribunal last year there is no longer an obligation on employer to maintain payments.

Does anyone know if I have interpreted this correctly? Or had their CCV stop when on SMP?

I saw something about new TFC scheme but this isn't applicable for me as I am in Wales.

Any advice would be appreciated.

It has always been the case that childcare vouchers are paid by you from your salary and that can continue on Maternity leave - capped at the value you earn.

Employers have never been obliged to pay them for you while on maternity leave.

There was a period of time when this was a grey area and some employers did and some didn't but has now been clarified.

You are correct OP. Guidance used to be that childcare vouchers were a non-cash benefit, therefore payable during maternity leave, however there was case law last year which overturned that.

(please go with flowery - she has more knowledge than me!)

SMP is the statutory minimum pay, therefore employers can't make salary sacrifice deductions from it.

I was told that you can't salary sacrifice if you only receive SMP, basically that's the minimum you should receive so they're not allowed to take any more out of it. But if your employer offers additional maternity pay on top of SMP then you can get the vouchers.

www.workingfamilies.org.uk/articles/tax-free-childcare-changes-to-help-with-childcare-costs-from-autumn-2015/

I'm sure you know more about it than me, but are you sure the new tax free childcare scheme doesn't apply in Wales? The above link suggests it covers all the UK. My understanding of it all is that it depends on your circumstances as to which scheme is better for you.

It is still possible to make deduction in respect of salary sacrifice from anything over SMP, yes.

Basically it's been clear for years that employees on maternity leave must continue to receive contractual non-cash benefits, however here was no case law establishing absolutely clearly whether childcare vouchers were or were not non-cash benefits.

In the absence of case law, HMRC who obviously have responsibility for salary sacrifice arrangements and also statutory maternity pay, issued guidance on the subject, stating clearly that childcare vouchers must be funded in full by the employer during maternity leave and deductions cannot be taken from statutory maternity pay. HMRC does have responsibility for deciding whether salary sacrifice deductions can be made from statutory payments, but it is the employment tribunals who decide whether an employer's failure to pay the vouchers during maternity leave would be discriminatory or not.

In areas where employment tribunals and HMRC both have an interest, although tribunal case law and HMRC advice are not binding on each other, commonly they do agree. Therefore in the absence of specific case law on childcare vouchers, most employers took the decision to go along with that advice, on the assumption that a tribunal would be most likely to agree, and they didn't want to risk it. Most legal guidance available on the subject followed the HMRC guide for similar reasons.

However then there was specific case law last year which came up with the opposite decision, so employers cannot make deductions from SMP but do not have to therefore fund the vouchers themselves, they can instead stop issuing them.

Thanks all, flowery that is really helpful.

Thanks for link bee I will look into.