Dispute over SMP pay due to childcare vouchers - please help

[hindsightisgreat]

I really need any help/advice anyone can give me as i just don't know what to do

I've been working for the same employer for 8 years, started of as full time but moving to part-time when my son was born in Feb '05. Since i returned to work part time (4 years ago) my son has attended nursery & i've taken part in the company busybee childcare voucher scheme.

I told my boss at the begining of Jan this year that i was expecting again & baby was due 13/07/09. Didn't think anything more of it.

Anyway, done all the usual MAT1B form etc & told them that i would like SMP to start from 1st June & take my accrued a/l at the end of my maternity leave so i would affectively return at the begining of April '10.

Had NO contact from HR re advice/guidance on implications of childcare vouchers whilst on SMP etc so blindly believed i would get 90% of my FULL monthly salary for the first 6 weeks then the standard SMP rate of £123 per wk for the remaining 33 weeks etc.

So you can imagine my shock when i rec'd my June pay packet to see that they've paid me FAR less than i expected because of the childcare vouchers. Basically because of that i'm going to be £35 a week worse of for the WHOLE of my maternity leave.

Having now researched this i see that they are right in that they have to work it out on my salary AFTER my childcare vouchers have been deducted not BEFORE. However my argument is that at no point did anyone in HR advise me on this - had i of known this i would have come out of the childcare voucher scheme for the 2 months qualifyng period to ensure i got the full amount i was expecting.

I sent my boss & my HR department an email last week to say how disappointed i was at their lack of advice & guidance on this issue & how i am now considerably out of pocket because of it.

Today i've had a reply from HR which in a nutshell says tough luck! They say their calculations are correct & the implications of childcare vouchers on SMP is mentioned in the childcare scheme 'pack' that i would have received on joining the scheme. May i remind you that i joined the voucher scheme 4 years ago so how am i expected to remember this?!

I've sent another email to my boss just now to say again how dissappointed i am at the Companys lack of help with this & how i feel i have been let down by them.

I'm so upset by this whole saga & can't stop crying - i don't know how we're going to cope financially for the next 9 months. I'm 38 weeks pregnant & the last thing i need is the extra worry of un-expected financial loss.

By the way, they did at least advise me that whilst i was getting SMP they would pay my childcare costs (as mentioned on previous threads). Unfortunately (!) in June i got paid my annual bonus for the year Apr '08 to Apr '09 so as this was considered 'normal' pay & not SMP they still deducted my childcare voucher (my bonus was £243.84 & my childcare voucher is £243 so i got the grand total of 84p of my bonus). I will at least get my July & Aug vouchers paid for me (son starts school in Sept) but even taken that into account i will still be £35 a week worse of.

Sorry to rant on but felt i needed to give you the whole picture & was just wondering if there is ANYHTING i or my employers are able to do to rectify this? They've already told me that they can't use their 'discretion' when working out SMP but i'm not so sure.

Any advice really would be appreciated.....

Really sorry to hear of your upset - childcare vouchers can be a bit of a minefield.

i'm no expert but afaik your employer can't use their discretion when calculating SMP, as it all gets submitted to the Inland Revenue (the company claims your SMP back from the Revenue as a rebate on their tax, so it has to be done correctly) and they have to show what they've paid out and to who.

Also, I think I'm right in saying that you can't leave a childcare voucher scheme for a couple of months and then rejoin on a whim, you can only leave or join if you have a particular event such as the birth of a child or a child starting school etc, so you couldn't have left the scheme temporarily just to get your full SMP.

It's a bummer when money you counted on isn't available, but I'm not sure your employer can help here, and it's not really up to them to make sure you've read all the documents. It would have been nice of them to mention it though.

Hope you feel better soon.

I'm sorry but afaik your employer is quite right and you are out of luck. It is made very clear that the vouchers reduce your gross income - that's how they work and you benefit from that because you don't pay tax and NI on that portion. There really is nothing they can do because you were paid less in the qualifying period. Your baby will have been born by the time your son starts school so can you not carry on claiming the vouchers and sort of bank them for when you go back to work and need childcare for the new baby?

SMP is strictly worked out on your average weekly pay during a set period, not what your average pay would be if a,b and c were the situation. It's what your pay is. It's not something anyone can use discretion about - it's reimbursed to the company by HMRC so has to be correctly calculated.

If you've had childcare vouchers for 4 years then it's been a long time since you've actually received a 'full' salary, so it's not as if this is a recent thing. Your employers have to work out SMP based on your pay, which they have. They are obliged to continue to provide your childcare vouchers during your maternity leave, which they are doing I think? So you haven't 'lost' anything. As a member of the childcare vouchers scheme you elect to sacrifice some salary and receive childcare vouchers instead. You get 90% of salary as SMP for the first 6 weeks, which they are giving you, and will continue to benefit from the childcare vouchers, even though nothing will be deducted from your salary during that time to cover the cost of those vouchers.

I don't understand the paragraph about the bonus I'm afraid.

I think you are being harsh on your company though saying they haven't 'helped' you. They provided all the appropriate information at the appropriate time and I'm sure if you'd asked them how SMP works with the vouchers they would have happily explained it to you.

Sorry, what your average pay would be.

Sorry - the other posters are right. Your employer is correct. You will find it also affects your pension if you have one. It will all be spelt out in the pack. Nothing your employer can do, and they would be in a spot of bother with the IR if they tried anything dodgy at this point.

Agree with Northernlurker - ask them to pay you the childcare vouchers for the duration of your maternity leave. This should build you up a nice credit for future use either for your baby, or for school holiday clubs, and after school clubs for your son. Appreciate it doesn't help your cashflow in the short term, but it will help in the longer term..

Hi - thanks for all your replies. I know they are 'right' in how they have calculated what SMP i will get paid. What i'm really upset about is the fact that they didn't offer me any advice/guidance on what's best to do re childcare vouchers & SMP? I even spoke to the IR helpline re my SMP pay a couple of months before i started my SMP & was asked what my monthly 'earnings' were not my 'take home'. So was even told by them that i would qualify for the minimum of, at the time, £117 per week! On the research i've since done i've found out that you can 'opt' out of the voucher scheme for the qualifying period to prevent getting paid less than the basic SMP of £123 (i'll be getting about £86). Re claiming the childcare vouchers past Sept for next baby - not sure i can do this as we've since been told that our childcare vouchers will have a 6 month expiry date on them, which means they will run out 3 months before i return to work. Presumably my nursery can't 'cash them in' until baby actually starts?? Sorry, i must seem really dumb about this but guess i've learnt my lesson! Maybe my next job should be in HR hey!!

Who is your childcare provider? We are with Accor, and their vouchers do not expire, from their FAQ:

Can I accumulate vouchers if I am not paying for childcare at the
moment?
Electronic vouchers may be accumulated indefinitely and may be used to pay
for childcare at any point in the future. Paper vouchers are valid for one year.

We had to accumulate about 7 months of vouchers once, due to their being so slow to register our childminder.

Hi Cosette. I've just spoken to our voucher provider (Fidelity) & they say that i need to swap over to the electronic system which means i have an on-line account in which my vouchers will just accumulate (spelling!!) but they do have a 6 month expiry on them (set by my employers not the voucher company). But basically i can then use the funds as & when i need, for as many childcare providers i need & for which ever child i choose. So i can, for arguments sake, use them for holiday clubs, before & after school clubs for my eldest & then for nursery for new baby. I will of course have to see if nursery would be prepared to 'bank' the payments in lieu of baby starting but if i swap over to this system from my Sept 'pay' then i'll have until begining of March to use up my credits. I would have started baby at nursery end of March anyway so would only be a couple of weeks difference. Does that make sense?? If thats the case then i'll actually end up better of than if i got what i expected on SMP as i would have just stopped my childcare vouchers in September!!

Can't see how nursery would not accept that as it will mean them getting quite a lump sum up front rather than the usual monthly payments so will benefit them also

Yes, I would think the nursery would be very happy to have payment upfront, and remember each voucher will be valid for 6 months, so you have to use up September's by March, October's by April etc.

Also curious as to why your employer has set a time limit on the vouchers, seems a bit off, unless there is some financial impact for them? Maybe you should ask HR as to the reason they are time limited - perhaps someone has gone for a default tick in the box and they'd be quite happy to make them last longer?

Oh great - sounds like you've worked it out alright then. Good luck making the necessary arrangements.

Hang on, I didn't think they could reduce the £123 SMP to take payment for the childcare vouchers?

No they can't trixy. That's why women are better off staying in the voucher scheme, because deductions can't be made from SMP, but childcare vouchers must still be provided. Essentially if you are in a childcare voucher scheme at the moment during maternity leave you basically get free childcare costs from your employer.

Which is why i opted for SMP over our CMP (Company MAternity Pay), because as flowery says they can't deduct childcare vouchers from SMP. It was just unfortunate for me that i got paid my annual bonus 2 months late (June instead of April) & therefore they still deducted my childcare vouchers for June - as this is seen as normal pay in addition to SMP. If i'd been paid my bonus in April or May then they wouldn't have deducted my childcare voucher in June. If that makes sense LOL!

Cosette - my employers switched voucher providers in May & in doing so enforced new rules on the scheme. Not only do they now expire after 6 months (but like you say thats per voucher - pregnancy brain really kicking in now LOL!), but they also now CHARGE employees a fee each month for taking part in the scheme!! I now have to pay £14 a month admin fee for vouchers - may not sound like much but it's a half days nursery fees each month. Hey hoe, what can ya do!

hang on, they charge you £14 a month admin fee? It's hardly worth having the vouchers if they're going to charge you that much, you only save about £30 a month by having them in the first place don't you?

Is that legal, those in the know? My understanding was that the admin was covered by the company's equivalent reduction in employer's NI contributions, isn't that correct?

This sounds fishy to me.

Just found this section of HMRC, all very useful.

Don't know about admin fees off the top of my head, and can't see anything in that information about whether an employer can charge them.

There is a reference to admin fees on the HMRC site - "If you give your employees childcare vouchers, the first £55 a week is free from both tax and NICs if the qualifying conditions are met. Any associated childcare voucher administration costs you pay are also exempt.", but it doesn't say they can't charge them.

www.hmrc.gov.uk/childcare/childcarefactsheet.htmm

Yes, it may be tough luck according to them, but are they still paying you the CCV on top of your SMP as they should do!! If not get back in touch asap. Thet are correct in calculating the SMP on your sacrificed salary, but you should still be recieving the CCV's as a non-cash benefit due during Maternity leave.

Sorry, just read your post again - you should be better off if you are still receiving the vouchers. You would have lost out on the 6 weeks at 90% but that's all.

£14 admin fee??? Do we think this is their way of discouraging people from taking part in the scheme and getting 'free' vouchers on maternity leave?

Northernlurker in my opinion you've hit the nail on the head. The letter they sent employees advising us of the new admin charges states that they've 'had' to implement it to cover the costs of running the scheme. I would imagine it costs the company a fair bit to continue paying vouchers for those that are on SMP for 9 months. But then having said that we're not a huge company (about 2,000 employees) & of those the majority are men. They're very keen to show that they're a 'caring' company & have various work life balance policies etc etc which they like to boast about so i guess they don't want to cause a storm by actually pulling out of the scheme altogether.

I understood that the costs of running the scheme are supposed to be met by them not having to pay Employer's NI on the amount you have for vouchers. Think they are out of order - but don't suppose there's much that can be done about it.