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Childcare vouchers whilst on maternity leave: to provide or not to provide?

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This was a question recently considered by the Employment Appeal Tribunal in respect of those employees who receive childcare vouchers while they are on maternity leave. 

And the answer? The EAT has decided that childcare vouchers provided to employees through a salary sacrifice arrangement should be classified as ‘remuneration’, meaning that employers do not have to continue to provide them to an employee on maternity leave.

This ruling is at odds with the previously understood position and the approach taken by most employers, that being that employees on maternity leave were entitled to retain all the usual terms of their contract of employment, save for those relating to remuneration which are replaced with statutory maternity pay (SMP) or the employer’s enhanced maternity pay scheme. All benefits which are not classed as remuneration must be continued during maternity leave.

So how should you proceed? Well, it would be risky for employers to rely on this authority as the basis for any decision to stop providing any childcare vouchers to employees on maternity leave. This is particularly so for employees who are currently on maternity leave and receiving vouchers, who have an expectation that this will continue.

Finally, it is worth noting that the government plans to implement a tax-free childcare system from 2017. This may well change the position yet again.

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