Any employment law / HR experts about? Need some advice please.

[Jojay]

I'm manager for a department store chain and a member of staff has just left on maternity leave to have her second baby.

Before finishing work she sent her first child to nursery 2 days per week and had around £250 per month deducted from her gross salary to pay into her Care 4 account, which paid the nursery direct.

I've received an email from HR to say that she hasn't altered her salary deduction since she finished work, and that they are unable to take this money from her statutory maternity pay. They say that is it classed as a cash benefit, and it would be discriminatory of us to stop paying the money, so as a company we are picking up the tab for this £250 a month, even though she is on maternity leave and therefore doesn't need childcare.

I have several issues with this.

1. Surely the cash benefit part of using childcare vouchers is that you don't pay tax on your childcare, and I think basic rate tax payers end up about £80 a month better off by using the vouchers. I don't see why we have to pay the full childcare cost, why not just the £80 that was the benefit of being in the scheme.

1. What irks me even more is that I too have 2 kids and have taken 2 mat leaves. When I finished work to have DC2 I cancelled my Care 4 deductions as I wasn't using childcare. Had I known that my company would have carried on paying them regardless then I certainly wouldn't have cancelled them and would have been £2.5k better off! If they set a precedent by paying out for her, would I have any basis to claim back the money that I wasn't paid???

If you've made it to the end of this, I thank you Hopefully it makes some sense

it's shocking isn't it! I couldn't believe it

unsure about your Q Cat but from the little I know as I understand nothing can be decucted from statutory pay (as it is statutory) so this even includes pension contributions (and so of course may mean union fees)

I guess it also depends on how 'with it' your employers are! My employers know all about this I think and so I doubt I will get away with it

hopefully somebody will be able to answer your Q soon

Very interesting- I'm not yet using the voucher scheme, have been intending to though, and have wondered how it will affect mat pay.

I'm confused about one thing though- if you're in the voucher scheme, your mat pay is worked out based on your salary after the vouchers come out isn't it? So by being in the scheme would lower the actual amount of pay you get on maternity leave? I'm guessing that the benefit of the vouchers continuing is worth a lot more than the money you stand to lose? Will have to try doing some number crunching later.

Another thing- benefits can't be deducted from SMP, but what if you receive more than SMP? As a teacher I get a good maternity deal, could the money for vouchers be reclaimed from the 'extra' that I get on top of SMP?

yes the first 6 weeks of your mat pay is 90% of your average salary. Your average salary is determined by the salary you received during an eight week period, 15 weeks before your due date.

so what I have done and what many people do is cancel the vouchers during that eight week period. What I am not intending to do is restart the vouchers (they have said I can do this but they know of hte loophole as it were so I don't think I'll be getting away with it!)

the alternative as you say would be to just keep the childcare vouchers going during this eight week period - this would allow you to continue claiming them throughout your maternity leave. The potential benefit of £244 childcare vouchers for 9 months is nearly £2.5k! so well worth crunching those numbers later

this is all off the top of my head by the way and it is late so happy to be corrected on any of it!

By JetSetWilly Wed 26-May-10 22:01:52

"so what I have done and what many people do is cancel the vouchers during that eight week period. What I am not intending to do is restart the vouchers (they have said I can do this but they know of hte loophole as it were so I don't think I'll be getting away with it!)"

What do you mean by you 'don't think you'll be getting away with it'? How wouldn't you get away with it? They've said you can restart the scheme and they won't be able to deduct from your SMP so what's the problem?

HR say there is a sticking point with regard to the vouchers/mat pay but she needs to find out what it is. She also mentioned that as the purpose of the childcare voucher scheme is to save tax/NI deductions, this would not really help me as statutory mat pay is not taxable... not that this is any of her beeswax

I work for a law firm that specialise in employment law so I think they have been doing their research! I imagine they have been caught out previously.. She said there has been recent case law on this point but on what point I don't know.

Can they refuse to let me rejoin the scheme? I am wondering how they can not let me rejoin and continue to receive the vouchers but not deduct the mat pay - when statute and legislation support my right to do so

Whether you can rejoin the scheme will depend on the rules of the scheme.

If they let you rejoin, they will have to provide you with the vouchers throughout your maternity leave and will not be able to deduct from your SMP.

Now your 8-week period is up, as long as you don't receive anything over and above SMP you have nothing to lose by starting the scheme again if the scheme rules allow you to do so. If your employer then refuses to give you your vouchers or tries to take money from your SMP, you will then be able to take the appropriate action.

They are wrong to say SMP is not taxable. It IS taxable but if it is the only income you receive in the month your income will be below the tax free allowance for the month so you will not have a tax charge for that month.

There is a difference between non taxable income and having income low enough to be covered by the tax free allowance which results in you not actually having a tax charge.

Very little is NON taxable, all benefits are taxable, but things such as interest earned on an ISA is NON taxable and is not counted as taxable earnings when totting up your total taxable income. Also, the old student grant was non taxable but that disappeared a long time ago (showing my age here! )

Anyway, they are trying to bluff you. They know very well that the benefit of receiving childcare vouchers while only being paid SMP is that they are not allowed to deduct the cost of them from your pay.

Me rejoining the scheme in time for June payday doesn't seem to be the problem flowery - she appeared to have no problem with that. However I just can't see them letting me rejoin when they know of the possible implications. Will be interesting to see what they come back with. Trouble is I think to not let me rejoin would be discriminatory although I really don't think I would fight this point with new baby on the way etc (also hoping to follow up promotion when I return don't imagine this would help!)

I def won't be receiving anything over and above the SMP

Yes Lady I agree they are wrong about the SMP being taxable, you are quite right. I did word it wrong there as that is what she said - that it is so low it will come under the tax free allowance. However it's still none of her business is it - and how does she know my income will come under tax free allowance! You're right I think it's a bluff!

thanks for all your input everybody - sorry have completely taken over your thread jojay!

JetSet, I think they have realised that there is nothing in the scheme rules to allow them to stop you rejoining the scheme right now, and getting free vouchers while you are on SMP, so she is trying to persuade you that there is no point in you rejoining.

Seems like one big bluff to me!

I'm gonna call it lol!!

Will def post here to let you know how I get on

To be honest wish I had stayed on the scheme - lots less fuss and lots more saved!

Looking forward to seeing how you get on.

Stick to your guns, sounds like they know they don't have a leg to stand on so I doubt if they will push it if you make it clear you know what your rights are.

Well I went and spoke to HR at my work, and they told me that this 'loophole' is a result of changes to the law in April 2009.

I went on mat leave in autumn '08 so have no grounds to try to claim back payment - not sure I would have had grounds anyway.

My employers were well aware of the loophole but do not promote this to people. They inform empleyees that they have the right to stay in the scheme or leave, and highlight the affect that staying in the scheme will have on SMP, but there is no mention of the benefit of staying in the scheme

They say that they give everyone the same info, so they are not discriminating between those who receive the benefit and those who don't.

They said that obviously it is a cost to the business and that if everyone claimed it it make make the childcare voucher scheme unsustainable for the company.

Anyway, I feel the matter is put to bed for me, but I still think this benefit needs wider publicity, so I'm off to start a thread about a thread to make sure no-one else misses out on this money

Help me keep it bumped!

more than happy to keep it bumped!

I will also let you all know how my employers deal with my situation - what happens if you are about to go on maternity leave but want to rejoin the scheme (with your employers knowing full well of the cost implication to them!)

Or did your employers mention anything about rejoining the scheme Jojay?

Here it is.

No, they didn't mention rejoining the scheme, and I didn't ask that question once I found out I'd be ineligible anyway due to the dates.

Looking forward to hearing how you get on JetSet.

If they've said you can rejoin the scheme, do so. If they suddenly change their mind and say you can't rejoin because you are going on maternity leave and it will cost them money, then that would be discrimination. If they specialise in employment law it seems unlikely they'd do that tbh.

just spoken to Accor - they will not comment on anything related to maternity pay! They say that my employer can refuse to allow me to join

obviously if my employer do refuse, then they will be discriminating

keep fingers crossed for me!

It's not really up to Accor - they just provide the vouchers. You need to refer to the scheme rules you should have been given when you joined the scheme.

However, if the rules say nothing specific about exclusion periods if you want to temporarily stop vouchers, I would say that they are not allowed to stop you re-joining as such schemes have to be open to all employees and to exclude you just because it is going to cost them money would be discriminatory.

yes you're right ladymauve - they really wasn't interested! funny how they went v quiet when i mentioned statutory mat pay - as somebody has previously said if everybody cottoned on to this employers would never join the sheme!

reading up all my terms and conditions for the childcare vouchers now. interesting clause under the terms:

If you are going to embark on unpaid leave or are on long term unpaid sick leave (more than 8 weeks) then these circumstances count as lifestyle events and mean that you will be removed from the Scheme. The reason for this is that your statutory payments are not affected by the salary sacrifice you have undertaken. The same rule will apply for maternity leave where you should exit the scheme 15 weeks before you commence maternity leave so that the statutory maternity payments you receive are based on the salary you received before undertaking the childcare voucher scheme and thus giving you the maximum savings possible

i was told to exit the scheme 15 weeks prior to commencing maternity leave!

Another interesting clause on the terms of the application form

6. Acknowledge that it is at the employer?s discretion to reinstate the employee?s salary should the employee leave the scheme. The employee will not be able to re-join the scheme within the same financial year

However the last month that I received childcare vouchers was February therefore this does not apply to me

going to chase HR today!

JetSet - I'm afraid that does not look good as it reads like you can be removed from the scheme even if you had not left voluntarily 15 weeks before commencing leave.

I don't think the clause can be held as discriminatory as it applies equally to any staff having extended unpaid periods.

Any advice on this from HR bods?

People who take unpaid leave or are on unpaid sick leave won't be entitled to the vouchers, which is why they are removed from the scheme - deductions cannot be taken so vouchers need not be give, so removal from the scheme is going to result.

Although it says the 'same rule' applies to maternity leave, it actually then goes on to say the employer should exit the scheme in order to make sure her SMP is based on highest salary. It doesn't actually say employees on mat leave will be forcibly removed from the scheme. As employees on mat leave would be entitled to vouchers due to sex discrimination legislation, where employees on unpaid leave would not be, I think they might struggle to forcibly remove you.

JSW I imagine your HR department is frantically trying to work out whether/how they can get out of it.

Lady - i did read it how flowery has - i don't have to exit the scheme - it even makes my position a little stronger in the sense that if I left

yeah I think you're right - they are probably frantically trying to find a way to not allow me to rejoin / wriggle out of paying me

however i've just received an email - they are allowing me to join the scheme

i just know they are going to try to wriggle out of it though - i truly cannot see them paying out the £243 a month

also why did she mention case law when I mentioned rejoining the scheme... gonna have a look to see if there is any case law now

thanks for everybody's input as always

as they have now said I can rejoin the scheme, if they now forceably try to remove me, then that will be discriminatory surely?

sorry didn't finish first paragraph!

I was going to say that the first makes my position a little stronger as to the leaving/rejoining angle in the sense that I could argue I was advised to leave the scheme and it would now be unfair to say that I cannot rejoin

however this is all academic now as they have let me rejoin. now I think they will rely on forcibly removing me from the scheme. looking at the only terms i have been given - I read it that to do so would be discriminatory

Hope I am wrong, and flowery has a lot more experience in this so I would think her interpretation is right.

They could certainly make an argument that they could remove her LIM, I just think the wording isn't firm enough for them to do that successfully, especially given the unusual legal situation surrounding salary sacrifice and maternity leave.

Let's see what happens!