Childcare Vouchers!

monstermunching

Childcare Vouchers!
Hi, would really value some help. I pay my daughter's childcare by childcare vouchers that are deducted from pay before tax deductions. I have been on maternity leave since October last year but didn't receive a payslip until December. I noticed in my December pay that I hadn't had my childcare deducted. I contacted payroll who looked at their systems and I hadn't paid childcare since September. My pay hasn't been noticeably different, hence reason I haven't realised before hand. I have not initiated anything my end to stop childcare vouchers so I was a little concerned. Despite work not deducting them from my pay, they have paid my vouchers and therefore informed me I owe them a lot of money!!!

My question is what are my rights with regards to paying this back? I appreciate that work have paid my childcare vouchers for me, yet surely it's not my fault that they've cancelled them! They told me they wanted me to start paying back this month yet as pay is reduced with being on mat leave, I haven't agreed to this. Just wondered whether there were any laws that mean if work make a mistake you are not liable to pay back money owed? May be a bit of wishful thinking! Thanks

rpc

This has been dealt with a few times on the forum and there is a dedicated thread.

Are you receiving SMP or do you have enhanced contractual maternity pay?

Childcare vouchers are classed as a non-cash benefit and it is unlawful for your employer to stop giving you them during maternity leave. It is also unlawful for your employer to continue any salary sacrifice that would take you below SMP. Therefore, most women receive childcare vouchers "for free" during maternity leave.

Salary sacrifice can be made from contractual maternity pay, but not beyond the minimum SMP so you can end up paying some of the sacrifice, but not all, for some months.

Full details here http://www.hmrc.gov.uk/employers/sml-salary-sacrifice.pdf and perhaps this would make for some good reading by payroll.

lovecake

Yes! Great explanation by rpc. Your employer should be giving you your SMP and your childcare vouchers. They cannot reduce your SMP to take any money back off you.

Do not let them make you think that they can!

You may be liable for a small amount on the first 6 weeks of your mat. leave pay, but after that if you are on SMP then they cannot take anything from your wages. As rpc says - most women who are on SMP get their vouchers for 'free' at least for weeks 7-39!

Maybe payroll just haven't come across this before and are confused, but the company I work for only has 9 employees and even I know enough about salary sacrifice to know that we can't penalise someone when they are on Mat. leave.

Hope you get it sorted soon!

rpc

If you receive the SMP level of 90% basic salary, no deductions can be made in the first six weeks.

From week 40, where the additional maternity leave is unpaid, the employer still has to provide the childcare vouchers. This changed in 2008.

HMRC wrote:

The contractual non-cash benefits must continue to be provided during any Additional Maternity Leave (weeks 27 to 52) as well as during any OML - regardless of any contrary contractual agreement between employer and employee and regardless of any salary sacrifice arrangement

pinkshoes

Unfortunately, many employers didn't realise the vouchers counted as a benefit that has to continue to be paid during maternity. I know of 2 companies that have since stopped the scheme because of this!

rpc

Which they are entirely at liberty to do, however they then miss out on 13% NI savings (less the cost of administering the scheme) from all of the employees who are not on mat leave.

I know of one company who almost withdrew from the scheme, but they then crunched the numbers and decided that they still came out on top over a period of time. Those that do stop the vouchers usually seem to do so as a knee-jerk "OMG got to give vouchers without getting them paid for" reponse.

Salary sacrifice is an employer benefit as much as an employee benefit!

CL

Quote:
Originally Posted by HMRC
The contractual non-cash benefits must continue to be provided during any Additional Maternity Leave (weeks 27 to 52) as well as during any OML - regardless of any contrary contractual agreement between employer and employee and regardless of any salary sacrifice arrangement

Is it important that the word contractual is used? I'm on maternity leave and get childcare vouchers, but they were not offered when I started and aren't referred to in anyone's employment contract. I work for a private company.

rpc

Salary sacrifice is a contractual arrangement. Otherwise, what authority does the employer have to dock your pay?

If you are in salary sacrifice, you are receiving contractual benefits. There is no other way to spin it.

Takeaway_Addict

rpc wrote: »

Which they are entirely at liberty to do, however they then miss out on 13% NI savings (less the cost of administering the scheme) from all of the employees who are not on mat leave.

I know of one company who almost withdrew from the scheme, but they then crunched the numbers and decided that they still came out on top over a period of time. Those that do stop the vouchers usually seem to do so as a knee-jerk "OMG got to give vouchers without getting them paid for" reponse.

Salary sacrifice is an employer benefit as much as an employee benefit!

Presumably they only miss out on those that are doing salary sacrifice.

Really its only likely to be viable for large companies where the %'s are alot less.

Its not that attractive overall for alot of companies hence why its becoming less common in my experience