The EAT has held in Peninsula Business Services Ltd -v- Donaldson 2016 that it was not discriminatory for an employer to suspend childcare vouchers (which had previously been provided through salary sacrifice) during maternity leave. HMRC guidance to the contrary was mistaken.

It was a condition of Peninsula’s childcare vouchers scheme that provision of the vouchers would be suspended during periods of maternity leave. The vouchers could ordinarily be paid for by staff via a salary sacrifice arrangement. The Claimant argued that this policy was discriminatory. Under the Maternity and Parental Leave Regulations 1999, women are entitled to non-pay benefits during maternity leave. In contrast, ‘remuneration’ does not have to be continued during maternity leave. The EAT held that it was inherent in the nature of a salary sacrifice scheme; the vouchers represented part of the salary that the employee had chosen to ‘divert’ into the vouchers. The vouchers were therefore part of the employee’s remuneration, and could be lawfully withheld during maternity leave. It was unclear what the legislative basis for the HMRC guidance had been, and as such it was disregarded.

The EAT contrasted this arrangement with other schemes, whereby childcare vouchers are provided as an additional benefit on top of salary (rather than through salary sacrifice). In such instances, the vouchers would amount to a non-pay benefit and they must be continued during periods of maternity leave, under the 1999 Regulations.

This decision provides helpful clarity although employers should note that the childcare vouchers scheme is being closed to new entrants from April 2018 and will be replaced by the tax-free childcare scheme during 2017.