HMRC, ACAS and BERR (formerly the DTI) have issued new guidance on how salary sacrifice and non-cash benefits should be treated for employees on maternity leave following revised regulations which take effect on 5 October 2008.

The Maternity and Parental Leave Etc. and Adoption Leave (Amendment) Regulations 2008 and The Sex Discrimination Act 1975 (Amendment) Regulations 2008 come into effect for employees whose expected week of childbirth (EWC) begins on or after 5 October 2008.

The effect of these regulations is that there is no longer any distinction between the rights and obligations of employees on ordinary maternity leave (“OML”) and those on additional maternity leave (“AML”).

Employers must keep paying contractual non-cash benefits to employees on OML (as before) and also to those on AML i.e. for up to 52 weeks rather than up to 26 weeks.

Non-cash benefits include:

  • childcare vouchers;
  • mobile phones;
  • company cars;
  • medical/dental/critical illness etc insurances.

Many companies provide such benefits, particularly childcare vouchers, through salary sacrifice schemes, whereby the employee agrees to vary their employment contract such that their contractual entitlement to cash salary is reduced and a non-cash benefit is provided instead.

The new guidance, titled “Statutory maternity leave – salary sacrifice and non-cash benefits” can be found at

The guidance provides example calculations of how different benefits are treated before and after the regulations come into force and ends with a useful table summarising the new entitlements during maternity leave, so it is well worth a look.

By way of reminder as to cash benefits, employers are not obliged to provide wages or a salary during OML or AML other than Statutory Maternity Pay (“SMP”) or contractually enhanced maternity pay (employers often call this “occupational maternity pay”). Employers are also under no obligation to provide the employee with cash benefits such as housing allowances, fuel or car allowances, first aid allowances or retail or luncheon vouchers.

Employers should review their maternity and adoption policies to make sure that the changes under the regulations are in place in time – broadly, the reference date of 5 October 2008 means that employers should update their policies for any employees going on maternity leave now, since maternity leave can usually start on any date from the beginning of the 11th week before the EWC.