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Childcare vouchers provided under a salary sacrifice scheme count as remuneration and therefore can be discontinued during maternity leave.
D, who was pregnant, refused to accept a term of her employer’s salary sacrifice scheme which provided that childcare vouchers would be suspended during maternity leave. She complained to a tribunal that this amounted to discrimination because of pregnancy and indirect sex discrimination. During maternity leave, all rights to contractual benefits continue apart from the right to remuneration, which is substituted by a right to statutory maternity pay. The question was whether childcare vouchers under the salary sacrifice scheme counted as remuneration. If they did, then the employers were entitled to suspend them during maternity leave. Following guidance from HMRC, the tribunal ruled that the vouchers were a non-cash benefit and therefore not remuneration, so they could not be suspended. The EAT disagreed both with the tribunal and with the HMRC Guidance. It criticised the Guidance for merely setting out ‘some unknown official’s’ interpretation of the tax legislation written in ‘cosy and therefore perhaps over-simplistic language’ and for failing to supply a reference to the relevant legislation. Since the salary sacrifice scheme diverted part of her remuneration into the vouchers, those vouchers constituted remuneration and could be suspended during maternity leave.
The position would have been different if the vouchers had not been provided under a salary sacrifice scheme. Childcare vouchers which are provided in addition to salary are a non-cash benefit and therefore should continue during maternity leave.
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