Maternity Pay & Childcare Vouchers

Pure_Genius

Hi all,

New here and have been reading many posts on this very same subject, but wanted to explain my EXACT situation and ask for advice.

I work for NHS & am on Maternity Leave, I have , however had months of wrangling with my payroll department regarding my Pay.

Heres a brief summary

I earn Circa 15000 per year
I make salary sacrifice for childcare vouchers of Circa 3000 per year (or to be exact 12 x £243 = £2916)

Remaining salary therefore Circa 12000 per year

during weeks 17-25 of my pregnancy, my earnings where 1000 per month plus my chidcare voucher

therefore for maternity pay purposes, my average earnings have been calculated at roughly £33 per day.

Since i went on Mat leave, I have been paid OMP & SMP but an additional £243 has been deducted monthly for Childcare


According to Government website, My salary Sacrifice of £243 per month is classed as a "non-cash benefit"

It's my understanding that my company are obliged to continue providing my Non-Cash Benefits (childcare vouchers) throughout the full duration of my maternity leave, even when I'm on AML (ie weeks 40-52) when I am recieving No Pay.

I believe this to be my entitlement as my Maternity Pay Daily rate calculation (for OMP & SMP purposes) has already accounted for my salary sacrifice.

I am getting nowhere fast with Payroll who believe its correct to work out my average monthly earnings after my salary sacrifice for childcare vouchers, Then pay my maternity pay and deduct childcare vouchers AGAIN.

Any feedback would be greatly appreciated

onlyroz

Do you earn anything above SMP? Childcare vouchers cannot be deducted from SMP, but can be deducted from any salary earned above this.

Pure_Genius

Yes I was getting OMP for first few months, but my agreement with NHS was that Childcare vouchers are a salary sacrifice as a non-cash benefit,

It's my understanding that because the salary sacrifice has already been made in order to calculate my OMP & SMP rates, they can not be deducted again from ANY maternity pay

as i mentioned, I have scoured the baoards here including this excerpy....

"Childcare vouchers may be provided as part of a salary sacrifice scheme, where an employee has agreed under a variation to contract to reduce their salary entitlement and receive childcare vouchers instead, or they may be provided on top of existing salary. In both cases, they will not be classed as wages or salary and should therefore be provided on top of any SMP or occupational maternity pay (OMP) payable.

Neither SMP nor OMP should be reduced to take account of the fact that childcare vouchers are also being provided. It should be remembered that in the case of salary sacrifice arrangements the employee’s SMP and OMP will already be based on the reduced pay."


Also, goverment website advises that .......

Salary sacrifice is not a deduction - it is simply the term used to describe a change in the contract between employer and employee. Essentially the amount sacrificed through the change reduces the amount of contractual pay the employee is entitled to be paid. (These reductions are sometimes shown on wage/salary slips - to record the amount of wages/salary to which the employee has ceased to become entitled. These entries on the payslip can be misleading – they suggest that the amount of salary sacrificed is a deduction from pay. It is not.)

and also states.......

　
the employee is entitled to continue receiving during OML and AML any non-cash benefits she was entitled to as a term of her employment contract. No contrary contractual agreement between employer and employee can override this requirement. If an employer proposes to change the contractual benefits provided to women only, it may give rise to a claim under the Equal Pay Act or the Maternity and Parental Leave Regulations.

onlyroz

I don't understand what you mean about "calculating SMP rates". This is a flat £128.73 a week at the moment. Only the first 6 weeks gets paid at a higher level.

rpc

Vouchers cannot be deducted from SMP (90% salary for 6 weeks, £128ish thereafter).

If you receive contractual maternity pay that is better than statutory, vouchers can be deducted from this provided it does not take you below the statutory amounts.

If that still isn't clear, can you post details of any contractual maternity pay you are entitled to. You aren't giving enough details to work out whether your employer is correct.

Fitzio

I work for the Civil Service and recently started mat leave. Prior to this, hubby received Childcare Vouchers, but we have switched them to me as it is beneficial as you described because when I am earning SMP, I will still receive Childcare Vouchers with no deductions from SMP. In the FAQs at my work, it's worded as follows:

26. What will happen when I go on maternity leave?

When you go onto maternity leave, and are in receipt of contractual maternity pay, we will continue to make deductions from your salary and provide you with childcare vouchers at the amount you have requested.

However, when you are in receipt of statutory maternity pay (SMP) only, we will stop making deductions for your childcare vouchers. However, we will continue to supply you with the same amount of vouchers until the end of your maternity leave unless you advise us that you wish this to stop, or advise us of a reduction in the amount of vouchers you wish to receive.

Therefore, Childcare Vouchers would still be paid to me for the full 52 weeks should I decide to take the full time off.

Pure_Genius

onlyroz wrote: »

I don't understand what you mean about "calculating SMP rates". This is a flat £128.73 a week at the moment. Only the first 6 weeks gets paid at a higher level.

What i mean is that the calculation of my maternity allowance is based upon my earnings in weeks 17-25 of my pregnancy

My earnings in these months were 1243 per month, but because i make a salary sacrifice of 243 in exchange for the non-cash benefit (childcare voucher) provided by my employer, this means my average pensionable pay was 1000

to calculate mat pay rates, they used this 1000 per month to calculate maternity pay daily allowance (works out at £33ish for me)

as you said, SMP is a flat rate, but the SMP makes up a % of my total maternity allowance (SMP or £550is per month PLUS OMP of 450ish per month) which totals £1000 per month

I agree with the calculation....I SHOULD be receiving 1000 per month for first 2 months as my mat leave terms are for 100% pay for first 8 weeks

in months 3-6 my agreemant is for Half pay PLUS SMP
this again totals roughly £1000 as (SMP is 550 and my half pay is 500ish also)

months 6-9 i should get just SMP of £550ish

and months 10-12 i get no pay

my problem is that for months 1-6 they have been deduction a furthe £243 per month for childcare vouchers

IF my childcare voucher agreement was for the employer to provide them within taxable limits as part of my remuneration, I believe the figures would be correct.

The terms of my employment with my employer though states that the vouchers are provided in lieu of a £243 salary sacrifice and are therefore constituted as a "non-cash benefit"

HMRC website states:


Employers must continue during AML (as well as OML) toprovide any non-cash benefits that they have agreed to provide as a term of theemployment contract.



These non-cash benefits are what she is entitled to underher contract of employment, apart from sums payable by way of monetary wages orsalary. These non-cash entitlements would include:

company cars, mobile phones, living accommodation or other assets provided tothe employee for non-business use, without being transferred to the employee;

medical / dental / critical illness / travel / car insurance provided undercompany insurance policies; employer-provided health checks;

non-cash vouchers, such as childcare vouchers which can only be used by theemployee for qualifying childcare and are not transferable;

the right to accrue contractual annual leave (employees are already entitled tothe statutory minimum amount of annual leave per year, regardless of whether ornot they take any maternity leave).



I believe therefore, that because my salary sacrifice hasalways been made in exchange for a non-cash benefit provided by my employer,which has resulted in my Maternity pay being calculated at my reduced earningsrates, that they are duty bound to continue providing my Childcare vouchersthroughout my entire OML & AML without making any deduction from myMaternity Pay.

rpc

Pure_Genius wrote: »

What i mean is that the calculation of my maternity allowance is based upon my earnings in weeks 17-25 of my pregnancy

You are confusing terms, please don't. Maternity Allowance is something that can be paid to those who do not qualify for SMP.

I agree with the calculation....I SHOULD be receiving 1000 per month for first 2 months as my mat leave terms are for 100% pay for first 8 weeks

For the first 6 weeks, deductions can't take your pay below 90%. After that, they can't take it below £128.73. So you can have some money deducted here.

in months 3-6 my agreemant is for Half pay PLUS SMP
this again totals roughly £1000 as (SMP is 550 and my half pay is 500ish also)

Vouchers can be deducted from the half pay, nothing wrong with that.

months 6-9 i should get just SMP of £550ish
and months 10-12 i get no pay

No deductions for vouchers can be made from this, but they must still be provided.

I believe therefore, that because my salary sacrifice hasalways been made in exchange for a non-cash benefit provided by my employer,which has resulted in my Maternity pay being calculated at my reduced earningsrates, that they are duty bound to continue providing my Childcare vouchersthroughout my entire OML & AML without making any deduction from myMaternity Pay.

Then, as far as the law goes, you believe wrong. A contract could provide for enhanced benefits, but I've never heard of one and it sounds like yours doesn't.

Salary sacrifice (and other deductions) can be taken from you enhanced maternity pay.

Reduced maternity pay is a hazard of vouchers and some people get caught out when the cancel the vouchers after the qualifying period. Yet you still get the vouchers, so you haven't lost anything. You just haven't got them for free.

rpc

From the horses mouth
http://www.hmrc.gov.uk/employers/sml-salary-sacrifice.pdf

Page_3 wrote:

Therefore where a salary sacrifice arrangement is in place during the set period, the SMP average weekly earnings [AWE] calculation will be based on gross earnings subject to Class 1 NICs. Under that arrangement, the salary or wages will be payable at a reduced level; and any other remuneration chargeable to Class 1 NICs may also be changed. So any SMP due will be based on that lower salary and changed remuneration.

Page_5 wrote:

No contractual agreements can exclude, limit or otherwise modify SMP payments due. Therefore any SMP payable must be paid in full and in cash, for up to 39 weeks, regardless of any contrary contractual arrangements. In particular, the SMP payable cannot be further reduced by the terms of a salary sacrifice arrangement.
Contractual maternity pay (e.g. Occupational Maternity Pay as in Example 4), however, is different. A salary sacrifice arrangement can reduce not just salary entitlement; depending on the terms of the contract, it can reduce also an employee’s entitlement to contractual maternity pay which is payable in excess of SMP.

Elelyn

rpc wrote: »

You are confusing terms, please don't. Maternity Allowance is something that can be paid to those who do not qualify for SMP.

For the first 6 weeks, deductions can't take your pay below 90%. After that, they can't take it below £128.73. So you can have some money deducted here.
Vouchers can be deducted from the half pay, nothing wrong with that.

No deductions for vouchers can be made from this, but they must still be provided.



Then, as far as the law goes, you believe wrong. A contract could provide for enhanced benefits, but I've never heard of one and it sounds like yours doesn't.

Salary sacrifice (and other deductions) can be taken from you enhanced maternity pay.

Reduced maternity pay is a hazard of vouchers and some people get caught out when the cancel the vouchers after the qualifying period. Yet you still get the vouchers, so you haven't lost anything. You just haven't got them for free.

I'm afraid I don't agree with you there. I think this would only make sense if the OMP had been worked out on OP's full salary prior to the deduction of the amount of the vouchers (i.e her half pay would be half of £1243 not half of £1000 which is what they've done). OP I think you've got it exactly right.

Pure_Genius

Elelyn your understanding of the situation seem to be the same as mine