Employer charging 3% to use childcare vouchers

[pleasechange]

I was quite ! I've heard people complaining about childcare providers charging to accept them, but I hadn't heard of employers charging to use the scheme.

ok 3% not huge, but still!

bit rich when they save the employers NI if done on a salary sacrifice basis (which the majority are I think).

cheeky! are they allowed to do that?

yes it's a salary sacrifice

I don't understand why the government chose to introduce the tax benefit in this way. Why not just let people claim the tax back at the end of the year - bonkers that people aren't getting the full benefit when some providers and employers are charging

Sadly I think they are allowed to do that, or at least I haven't been able to find anything to say that they can't, but it's very cheeky as they save more in NI than the cost of running the scheme.

Are there many of you receiving them, can you mount a campaign to get this policy revoked?

that's a good point about the employers NI, I hadn't even thought of that - how cheeky of them!

It is a very big employer as well, so there must be loads of people affected (my friend's employer not mine)

They are allowed to charge, and I suspect more and more employers will do so. They are now required to continue paying childcare vouchers to women on maternity leave even though they cannot make any deductions for them from SMP, meaning that for a big employer who has women on maternity leave on and off all the time for up to a year each, they are potentially having to fork out for a whole lot of free childcare vouchers. I expect more employers will start charging to have the scheme to try and cover this extra cost.

flowerybeanbag - is that so?! i was told, cant recall by whom that i should stop claiming my vouchers by week 15/25 (can't remember which) as it would affect mat wages, but if i had realised i would still get vouchers might be worth still getting them!

flowery - I guess that maybe is why they're charging. The government never seems to think around the consequences of introducing some of these rules

Pavlov it will affect your SMP rate as when you are sacrificing some of your salary for vouchers, SMP will be calculated on the actual amount you get. But as you are indeed entitled to claim the vouchers throughout mat leave and deductions cannot be legally made from SMP, then yes it may well be better to keep them going.

I agree allnew, this is one of those marvellous schemes the government has introduced that is now backfiring a bit as they possibly didn't think it all through properly.

As a result of sex discrimination legislation and case law, women on maternity leave now get all their contractual benefits throughout maternity leave, and that includes childcare vouchers. But the anomaly is that it is not legal to make deductions for salary sacrifice schemes from SMP, so as a result, employers are now finding they have to keep paying for and providing the vouchers despite the fact that they can't take any money for them from the employee.

The amount I sacrifice is not that much so I would not think it would affect the smp too much, and comparatively, the amount I will get back when on mat leave, might be worth doing, I will look into that, seeing as I only get a short amount of paid mat pay from work and rest will be smp, thats a good while of vouchers without deductions. Thanks!

HMRC guidance

Slightly off the scope of the original email, but flowery, do you have any idea what you should do about childcare vouchers if you get PILON'd in a redundancy situation? I presume you don't get, say, 3 months' worth added into the pot because you could go and get a new job the next day and get childcare vouchers from the new job in theory. But I wondered if there is a definitive answer anywhere?

I imagine it would depend whether PILON was contractual or not. If contract says employer can PILON, then the contract would normally say x months salary, and wouldn't include childcare vouchers, holiday or any other benefits that would have been accrued during that time.

If PILON is non-contractual, and therefore effectively compensation, the amount should then reflect the actual loss incurred by not giving proper notice, which should take into account holiday and benefits.

I imagine employers will now choose to opt out of salary sacrifice/vouchers schemes?

Absolutely no help to parents if this is the case.

Don't forget though that SMP will only effect women who already have a child/children, are requesting Childcare Vouchers and are pregnant again.

For the employers, running a Childcare Voucher scheme is at worst cost neutral - the provider does charge an administration fee but this tends to be less than the savings they'll make.

The trouble is busybee99, particularly for big employers, that group could be quite big. Yes the scheme might be cost neutral to run generally, or even slightly financially beneficial, but if an employer only offers SMP, and has a workforce profile that has a lot of women of childbearing age, they could be looking at large additional costs that were not factored in when they initially starting running the scheme.

There could be potentially a whole year's worth of vouchers having to be supplied completely free of charge to any woman in the scheme who gets pregnant a second time, which let's face it, quite a lot of women do! In something like, for example, retail, where they often have lots of mums working because of the part time hours they can do, that could be a lot of money. In other sectors, or in businesses where the workforce profile is different, the impact could be a lot less.

For smaller businesses who run a very tight budget, especially in this climate, but can just about offer the scheme because it doesn't cost them anything, even one woman going off for a year and requiring a year's worth of free vouchers can be crippling. Most of my clients are small businesses, and I do encourage them to think creatively about benefits they can provide at low or no cost because they are on small budgets. Now when advising them about options for low cost benefits to offer I make sure they are fully aware of the potential cost of offering childcare vouchers should someone take them then go off on maternity leave.