EAT Disapproves HMRC Guidance on Childcare Vouchers During Maternity Leave

Louise Walker
28th Apr 2016

The Employment Appeal Tribunal (EAT) has held that childcare vouchers provided under a salary sacrifice scheme are part of the employee’s remuneration under Regulation 9 of the Maternity and Parental Leave Regulations 1999. They therefore do not have to be provided during maternity leave.

Employment law shared maternity leave

It is not an unlawful detriment, nor discriminatory, for the employer to stop providing them during a period of maternity leave as the obligation to maintain terms and conditions during maternity leave does not extend to remuneration.


However, where the vouchers are provided in addition to salary, without a salary sacrifice, they are not part of the employee’s remuneration and must therefore be continued during a period of maternity leave.


HMRC guidance for a number of years has been that childcare vouchers provided via salary sacrifice are a non-cash benefit. The implication, if HMRC were correct, was that the vouchers must continue to be provided during maternity leave. The problem with this was that employers could not lawfully make a deduction from an employee’s Statutory Maternity Pay to fund the vouchers. Therefore, during maternity leave, employers would have to fund the cost of their employee’s childcare vouchers themselves.


This guidance has now been disapproved by the EAT, which will be welcomed by employers. However, any affected employers should take advice on the arrangements in their own particular scheme before acting upon this decision.


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