This ruling, in the case of Peninsula Business Services Ltd v Donaldson, may also have implications in relation to pension contributions made via salary sacrifice during maternity leave, but the position is not clear.

Facts

Peninsula Business Services Ltd (Peninsula) offered its employees a scheme providing childcare vouchers through salary sacrifice. It was a condition of entry of the scheme that employees agreed that vouchers would be suspended during maternity leave (during which Peninsula paid statutory maternity pay only). Ms Donaldson, an employee of Peninsula, wished to join the scheme but refused to do so on the grounds that she believed this condition of entry was discriminatory.

Ms Donaldson brought a discrimination claim which was upheld in the Employment Tribunal’s original decision. The Tribunal noted that women on maternity leave are entitled to continue to receive their normal non-cash benefits during maternity leave, and it considered that the childcare vouchers were such a non-cash benefit. The Tribunal had referred to HMRC guidance stating that during any period of ordinary maternity leave, contractual non-cash benefits provided under a salary sacrifice scheme must continue to be provided.

EAT, however, could not find any statutory basis for the HMRC guidance and considered that it was incorrect. Allowing Peninsula’s appeal, it held that salary sacrifice childcare vouchers represented part of the employee’s salary, albeit that this was diverted before reaching the employee’s pay packet. The vouchers were therefore to be properly  regarded as part of the employee’s remuneration, rather than a non-cash benefit, which can be discontinued during maternity leave. The position would be different if the vouchers were provided as a benefit in addition to salary.

Opinion

Employers may seek to review their practices in light of this decision if they currently offer salary sacrifice childcare vouchers throughout maternity leave. However, EAT did express its conclusions in the case “somewhat tentatively” and it is not yet clear whether the case will be appealed to the Court of Appeal. Employers may, therefore, wish to allow the dust to settle on this decision before taking any action.

The Chancellor has also now announced that childcare voucher schemes will be closed to new entrants from April 2018, meaning that this question could eventually become academic (although existing members as at April 2018 will still be able to continue in their scheme for so long as the employer chooses to continue operating it).

It is not clear whether this case will impact on pensions contributions made via salary sacrifice because an employee’s pension rights during maternity leave are protected by different legislation. Employers should therefore proceed with caution if reviewing their practices in this area and should seek advice before taking any action.

Further Information

If you would like more detailed advice in relation to this case, benefits during maternity leave more generally or require pensions support, please contact Doug Mullen.

New Model Rules for CLTs
New Model Rules for CLTs

Anthony Collins Solicitors has updated the National Community Land Trust (“NCLTN”) Model Rules.

The spread of necrotising fasciitis
The spread of necrotising fasciitis

Necrotising Fasciitis, more commonly known as the ‘flesh-eating disease’, is a significant medical condition that requires urgent treatment.

Richard Handley Inquest
Richard Handley Inquest

Many of us who have been following the unfolding Inquest, are not surprised that the Coroner found gross and significant failures on the part of those caring for him.

Recovery of fire safety costs from leaseholders
Recovery of fire safety costs from leaseholders

In all the action to remove defective cladding, leaseholders have been the elephant in the room. Whilst social landlords might have adopted a wait and see approach private landlords do not have that luxury.