The Employment Appeal Tribunal (EAT) has reserved judgment on whether suspending an employee’s membership of a childcare voucher scheme during their maternity leave is discriminatory.
In the case of Peninsula Business Services vs Donaldson, Peninsular’s childcare voucher scheme requires employees to suspend their membership during various types of leave, including maternity leave.
An employment tribunal had previously held that it was discriminatory to make withdrawal from the scheme while on maternity leave a condition of joining.
The EAT heard the appeal against this decision in January 2016. It is yet to give its decision on the case.
HM Revenue and Customs (HMRC) classes childcare vouchers as a non-cash benefit, which should therefore be continued throughout maternity leave. However, this guidance does not have force of law.
Jayne Flint, employment lawyer at Shoosmiths, said: “It’s frustrating that we will have to wait longer for the decision in this case [because] it is very much hoped it will provide some clarity on the legal status of childcare vouchers.
“The problem for employers stems from the fact that women may now take 12 months’ maternity leave and that, unless their employer has a more generous contractual scheme, they receive only statutory maternity pay followed by a period of no pay during that time. But it is unclear whether childcare vouchers should be classed as remuneration or a benefit, and some employers and childcare voucher providers sought innovative ways around this perceived legal problem, but, as this case shows, the risk of discrimination claims is ever present when dealing with women on maternity leave.
“Whatever the outcome of this case, it could prove to be too little too late because a new tax-free childcare scheme is expected to come into force in early 2017 and from this time employees will no longer be able to join existing childcare voucher schemes.”
Sean Nesbitt, partner at Taylor Wessing, added: “The best advice for employers is to stay with the guidance from HMRC; to not force staff to opt out of a voucher scheme during a period of parental absence.
“HMRC’s guidance is in line with a common understanding that business and advisers have held since 1999, and the lack of prior challenge shows the strength of consensus for a principle that also applies to other benefits such as pensions.
“To many employees, it will just not sound right that a benefit designed to support family life is removed when families grow. Pure financial arguments against the discontinuance of the benefits are unlikely to override employee attitudes.
“Even if the appeal is upheld, the childcare voucher scheme in its tax-free form is due for revision with a new fixed–back scheme now due to come in early 2017. Even if it is possible to avoid providing the benefit following the appeal judgment, this may have limited application. It would be better to take a considered position in the light of incoming policy changes.”