The Lifeline Project was a well-regarded charity. Failure to carry out the targets within the contracts led the charity into insolvency and resulted in a personal, 7-year disqualification order.
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.
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.
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.
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.
On 23 July, trainees from Anthony Collins Solicitors will host an ‘experience day’, which will involve various activities and presentations, with lawyers and non-lawyers from across the firm.
The Office of the Immigration Services Commissioner (OISC) has launched a new scheme specifically for charities and not-for-profit organisations who want to advise EU citizens on UK settlement.
In the second part of our series on contract management pitfalls, we look at the risks and opportunities presented by payment mechanisms in construction contracts.
Under most construction contracts, the contractor takes on the ground conditions risk. However, a recent case has demonstrated that the risk can fall on the employer.
The UK Government has been consulting on how it should promote social value in its procurements. Here is our response that we submitted to the consultation...
The Tenant Fees Act 2019 came into force on 1 June 2019.
A recent case in the Court of Appeal will no doubt bring a sigh of relief for employers, but a corresponding sigh of disappointment may be uttered for equality and gender balance in the workplace.
This briefing assists response to the consultation paper by outlining the consultation questions, providing some background information and prompting some thoughts and potential answers.
A report published on 29 May by the Institute for Fiscal Studies (IFS) has found that since 2009-10, local government spending on services has fallen on average by 21% in real terms.
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