Suspension of childcare vouchers not discriminatory

A recent judgment will come as a welcome relief for employers after the Employment Appeal Tribunal (EAT) confirmed that it is not discriminatory to suspend the provision of childcare vouchers through a salary sacrifice scheme whilst an employee is on maternity leave.

It had been thought that childcare vouchers are a non-cash benefit and thus an employee remained entitled to receive them during maternity leave even if there was insufficient pay to sacrifice in order to pay for them.

In the recent case of Peninsula Business Services Ltd v Donaldson, the employer made it a condition of entry to their childcare voucher scheme that the provision of vouchers would be suspended during maternity leave. Employees were paid maternity pay at statutory level. An employee refused to join the scheme on these terms and brought various claims including pregnancy and maternity discrimination.

The Employment Tribunal found in the employee’s favour but this was overturned on appeal by the EAT. The EAT considered that as the vouchers were provided through salary sacrifice rather than as an additional benefit, they should be considered as “remuneration”. In line with current legislation whilst contractual benefits must continue during maternity leave, remuneration does not (subject to paying statutory maternity pay).