Childcare Vouchers whilst on Maternity Leave

Reason123

Hi all


I am a little confused and have conflicting info. I hope you can help!


A little background
My partner works part time. Through her work she is on a salary sacrifice scheme for childcare vouchers.
We want to keep our 2yr old in childcare and are due our 2nd child in 2 months.


My partner asked her employer if they will continue paying for the childcare vouchers for the duration of her maternity leave (total 9 months) and that this will not affect her stat maternity pay.


The employer reply was 'its our policy not to pay for the childcare vouchers whilst you are on maternity' - but they can pay if we ask them too but it will come out of the stat maternity pay..


Her employer leads us to the following
Which is confusing in itself because it leads us back to the employer?
--
30. What happens if I go on maternity leave? The effect of maternity leave on your Childcare Vouchers will depend on the specific details of the Childcare Vouchers scheme that your employer operates, and the terms and conditions of your contract of employment.
If you receive Childcare Vouchers and will be going on maternity leave, we recommend you contact your employer at the earliest possible point to discuss your options. http://www.childcarevouchers.co.uk/Parents/HelpAndSupport/Pages/FAQs.aspx




After putting in a few hours research and reading posts from people with the experience they say that employers are legally required to continue paying for the childcare vouchers and not reduce stat maternity pay? The problem is that some of these posts date back to 2008 so unsure of the latest?


I found the following but its a little over my head
http://www.hmrc.gov.uk/employers/sml-salary-sacrifice.pdf


I guess I therefore have 2 questions


Can an employer take from SMP to pay for childcare vouchers?


Can anyone advise or lead me to a site / link that shows in plain easy English if an employer must continue paying for the childcare vouchers without reduction to SMP or if im barking up the wrong tree...


Thanks Rob

Reason123

I have also looked on the following which gives no help.
I have also tried the number several times but always engaged?
http://www.maternityaction.org.uk/wp/advice-2/advice-line/

Icequeen99

The HMRC guidance for employers that you link to above answers both questions - that is the guidance you need to send to your employer.

If your partner is in a salary sacrifice scheme for childcare vouchers, they are a non-cash benefit. Non-cash benefits must continue to be provided during maternity leave in addition to statutory maternity pay.
They cannot be deducted from SMP.

Both of your questions are answered in that guide and here http://www.maternityaction.org.uk/sitebuildercontent/sitebuilderfiles/commonmaternitypayquestions.pdf

I would send the guidance to the employer stating you believe they are incorrect. You might need to ring ACAS or similar about how you can challenge this and what you need to do.

IQ

Icequeen99

Also, just to say the part the employer is quoting that you have posted above is not wrong. Not all employers provide childcare vouchers under salary sacrifice arrangements - so the rules are different for everyone. Plus some people get contractual pay - so it depends on the contract of employment and the circumstances.

IQ

Reason123

Thanks IQ
I have re-read everything and read further items.
Everything so far reads positive apart from this on the ACAS FAQ

How does salary sacrifice affect Statutory Maternity Pay (SMP)?

If there is a salary sacrifice agreement in force, then the worker's eligibility for SMP will be based on her income after the salary sacrifice has been made.

This could mean that the salary sacrifice reduces her income below the eligibility level, or reduces the amount of SMP payable.

If the worker is eligible for SMP, then salary sacrifice payments should not be deducted from the SMP payments themselves.

However, there are different rules if part of the salary sacrifice is taken in the form of childcare vouchers. In this case, you should contact HM Revenue and Customs for further advice.

--

The hunt continues? Or ignore this one when presenting the other findings to her employer?

I looked on the HMRC site and could not find any advice?
I havnt called as its too late and can call them tomorrow?

Reason123

I have gone further, found and sent the below to her employer.
Furthest below is the response from her employer.


[FONT=Times New Roman, serif]--[/FONT]
[FONT=Times New Roman, serif]Hi [/FONT]
[FONT=Times New Roman, serif]I understand you have been looking into this further for me.[/FONT]
[FONT=Times New Roman, serif]My partner has also been looking into this for us and has found the below various for your perusal.[/FONT]
[FONT=Times New Roman, serif]--[/FONT]
[FONT=Times New Roman, serif]http://www.maternityaction.org.uk/sitebuildercontent/sitebuilderfiles/commonmaternitypayquestions.pdf[/FONT]
[FONT=Times New Roman, serif]Copy pasting the relevant[/FONT]
[FONT=Times New Roman, serif]I receive childcare vouchers under a salary sacrifice scheme, will it affect my SMP? [/FONT]
[FONT=Times New Roman, serif]SMP is based on your average earnings, which are subject to National Insurance, in the eight weeks or two months before the 15th week before your baby is due. Therefore, your SMP will be reduced if you are receiving childcare vouchers which are exempt from National Insurance contributions under a salary sacrifice scheme. You may be entitled to leave a salary sacrifice scheme during pregnancy so that your SMP is not affected, subject to the terms of the salary sacrifice agreement, but you will need to do this well before the SMP calculation period for average earnings and you will need to discuss the consequences of this with your employer. [/FONT]
[FONT=Times New Roman, serif]Your employer cannot make you opt out of a salary sacrifice scheme. [/FONT]
[FONT=Times New Roman, serif]Can my employer deduct the value of childcare vouchers from my SMP? [/FONT]
[FONT=Times New Roman, serif]No, you are entitled to your SMP in full. Childcare vouchers are considered to be a non-cash benefit which you continue to be entitled to during your maternity leave even if you are no longer earning any salary that can be sacrificed. Your employer cannot sacrifice your SMP and must continue to provide childcare vouchers as a benefit during ordinary and additional maternity leave.[/FONT]
[FONT=Times New Roman, serif]--[/FONT]
[FONT=Times New Roman, serif]http://www.acas.org.uk/index.aspx?articleid=4536[/FONT]
[FONT=Times New Roman, serif]Copy pasting the relevant[/FONT]
[FONT=Times New Roman, serif]Going on parental leave does not affect an employer's obligation to provide non-cash benefits associated with a salary sacrifice scheme. This is true even if the employee is not sacrificing salary while on leave - unless some kind of voluntary opt-out has been agreed for the leave period.[/FONT]
[FONT=Times New Roman, serif]http://www.synthetix-ec2.com/clients/acas/faqtAgent.html?search= Childcare Vouchers whilst on Maternity Leave#[/FONT]
[FONT=Times New Roman, serif]8. Do contractual benefits continue while a worker is receiving Statutory Maternity Pay (SMP)?[/FONT]
[FONT=Times New Roman, serif]The worker will be entitled to continue to receive the following contractual benefits:[/FONT]
[FONT=Times New Roman, serif]vouchers, such as childcare vouchers[/FONT]
[FONT=Times New Roman, serif]122. How does salary sacrifice affect Statutory Maternity Pay (SMP)?
If there is a salary sacrifice agreement in force, then the worker's eligibility for SMP will be based on her income after the salary sacrifice has been made.
This could mean that the salary sacrifice reduces her income below the eligibility level, or reduces the amount of SMP payable.
If the worker is eligible for SMP, then salary sacrifice payments should not be deducted from the SMP payments themselves.
However, there are different rules if part of the salary sacrifice is taken in the form of childcare vouchers. [/FONT]
[FONT=Times New Roman, serif]In this case, you should contact HM Revenue and Customs for further advice.[/FONT]
[FONT=Times New Roman, serif]--[/FONT]
[FONT=Times New Roman, serif]http://www.hmrc.gov.uk/employers/sml-salary-sacrifice.pdf[/FONT]
[FONT=Times New Roman, serif]Copy pasting the relevant[/FONT]
[FONT=Times New Roman, serif]2. Contractual non-cash benefits during Statutory Maternity Leave [/FONT]
[FONT=Times New Roman, serif]Introduction [/FONT]
[FONT=Times New Roman, serif]When a woman is on statutory maternity leave there is no statutory obligation that she should continue to receive remuneration from her employer. [/FONT]
[FONT=Times New Roman, serif]However the terms and conditions of her employment may entitle her normally to receive benefits other than remuneration. If so, amendments made in 2008 to the Sex Discrimination Act have extended the period during which she may continue to benefit from contractual non-cash benefits during statutory maternity leave (there will be no change to the position for sums payable as wages or salary or pension contributions). [/FONT]
[FONT=Times New Roman, serif]At present, employees must continue to receive all their contractual benefits other than remuneration during OML (OML - the first 26 weeks). These may be described as contractual non-cash benefits. [/FONT]
[FONT=Times New Roman, serif]As a result of the amendments employees must continue to receive all their contractual benefits except pay during Additional Maternity Leave (AML - the second 26 weeks). Employees who are denied this entitlement will be able to bring a claim of sex discrimination against their employer. This is explained in more detail below - including timing of implementation. [/FONT]
[FONT=Times New Roman, serif]The effect of the changes to the Regulations is to do no more than extend the period during which contractual non-cash benefits must be provided. [/FONT]
[FONT=Times New Roman, serif]What must the employer continue to provide to a woman when she is on statutory maternity leave, as a result of these changes to maternity leave legislation? [/FONT]
[FONT=Times New Roman, serif]Employers must continue during AML (as well as OML) to provide any non-cash benefits that they have agreed to provide as a term of the employment contract. [/FONT]
[FONT=Times New Roman, serif]These non-cash benefits are what she is entitled to under her contract of employment, apart from sums payable by way of monetary wages or salary. These non-cash entitlements would include: [/FONT]
[FONT=Times New Roman, serif]non-cash vouchers, such as childcare vouchers which can only be used by the employee for qualifying childcare and are not transferable [/FONT]
[FONT=Times New Roman, serif]Are there any exclusions? [/FONT]
[FONT=Times New Roman, serif]Wages or salary - There is no statutory obligation for employers to continue during OML or AML to provide any monetary wages or salary previously payable (however employers may continue to pay them voluntarily or under the terms of the employment contract - eg Occupational Maternity Pay). [/FONT]
[FONT=Times New Roman, serif]o Vouchers which have a transferable cash value. This could include, for example, luncheon vouchers, retail vouchers and some vouchers for recreational benefits like membership of sports or other clubs or attendance at sporting fixtures. However this does not include non-cash benefits, such as childcare vouchers which can only be used by the employee and are not transferable - these must continue to be provided during OML and AML. [/FONT]
[FONT=Times New Roman, serif]Contractual non-cash benefits and salary sacrifice [/FONT]
[FONT=Times New Roman, serif]Contractual non-cash benefits may sometimes be provided under arrangements in which the employee agrees to sacrifice cash salary of a comparable value. [/FONT]
[FONT=Times New Roman, serif]Non-cash benefits provided under these arrangements must be treated in the same way as any other contractual non-cash benefit during AML - ie they must continue to be provided during AML as well as during OML. This obligation continues to apply even though the employee may not be receiving any salary or wages that can be sacrificed. [/FONT]
[FONT=Times New Roman, serif]SMP cannot be sacrificed in any circumstances.[/FONT]
[FONT=Times New Roman, serif]Example 7 - where the week the baby is due begins on 19 October 2008, when the new regulations took effect:[/FONT]
[FONT=Times New Roman, serif]She will be entitled to continue to receive: [/FONT]
[FONT=Times New Roman, serif]2) Contractual non-cash benefits: [/FONT]
[FONT=Times New Roman, serif]a) Exempt from tax and NICs - childcare vouchers up to the exemption limit (£55 per week at time of drafting). [/FONT]
[FONT=Times New Roman, serif]b) Subject to tax and Class 1 NICs - childcare vouchers provided £100 per week, tax and NICs-exempt £55, so subject to tax and Class 1 NICs £45 per week.[/FONT]
[FONT=Times New Roman, serif]Occasional misunderstandings: [/FONT]
[FONT=Times New Roman, serif]Misunderstanding: employers sometimes believe that, where during statutory maternity leave the employee has no cash pay (or insufficient cash pay) to sacrifice, they should not continue to provide benefits as part of a salary sacrifice arrangement. [/FONT]
[FONT=Times New Roman, serif]Comment: the employee is entitled to continue receiving during OML and AML any non-cash benefits she was entitled to in the period before statutory maternity leave. This entitlement continues to apply even though the employee may not be receiving any salary or wages that can be sacrificed. SMP cannot be sacrificed in any circumstances. It may be discriminatory for a woman's pay to be reduced after her maternity leave as a direct result of her employer providing contractual non-cash benefits during her statutory maternity leave. [/FONT]
[FONT=Times New Roman, serif]--[/FONT]
[FONT=Times New Roman, serif]In conclusion[/FONT]
[FONT=Times New Roman, serif]If I am in a salary sacrifice scheme for childcare vouchers, they are a non-cash benefit. [/FONT]
[FONT=Times New Roman, serif]Non-cash benefits must continue to be provided during maternity leave in addition to statutory maternity pay.
They cannot be deducted from SMP.[/FONT]
[FONT=Times New Roman, serif]Thanks and regards[/FONT]

---

[FONT=Times New Roman, serif]Hi
[FONT=Times New Roman, serif]You cannot be a salary sacrifice employee and be in a non- cash benefit scheme at the same time, as you have quoted in your conclusion? As mentioned before your vouchers are deducted from your salary therefore if you are not receiving a salary and only receiving SMP then we will either lower your contributions to the minimum requirement or stop them, we do not other a non-cash benefit scheme?[/FONT]
[FONT=Times New Roman, serif]Kind regards[/FONT]
[/FONT]

Icequeen99

Not sure what I can really say to that. Childcare vouchers are a non-cash benefit. Non-cash benefits must be paid during maternity leave and SMP cannot have salary sacrifice taken from it.

I would suggest you send a simpler reply to the employer saying:

'HMRC guidance is very clear that childcare vouchers are non-cash benefits. Equality law states that non-cash benefits must be provided during ordinary and additional maternity leave, this includes childcare vouchers. In addition, salary sacrifice cannot be taken from SMP. This means that employers must continue to provide childcare vouchers but cannot deduct the amount of the vouchers from any SMP.

The Daycare trust have produced a leaflet for employers which outlines the position. See http://www.daycaretrust.org.uk/data/files/Information_Services/Factsheets/Employer-supported_childcare_during_maternity_leave_October_2012.pdf I also refer you again to the HMRC guidance that outlines the same rules (ADD LINK TO THE GUIDANCE DOCUMENT)

If you do not agree that childcare vouchers are non-cash benefits please can you refer me to the appropriate guidance from HMRC that confirms this'

I suggest you ring the ACAS helpline for some advice - as you may have to take action against the employer if they refuse.

IQ

Takeaway_Addict

Let's see how long the employer keeps the scheme going when they realise they will have to pay out...

superbigal36

The employer can surely just withdraw the Scheme then.

Icequeen99

superbigal36 wrote: »

The employer can surely just withdraw the Scheme then.

My understanding is that they would have to do it for everyone and it would be an alteration of people's contracts. But yes they could stop offering childcare vouchers.

IQ

Reason123

Thanks IQ - you have been a great help so far!


The plot thickens and believe they have us over a barrel?


Although my partner is in a 'salary sacrifice' scheme and on her pay slip it reads 'salary sacrifice' - her company now says she does not have a salary sacrifice contact with them. She has a salary sacrifice contract with the 'Computershare voucher services'?
[FONT=Calibri,sans-serif]http://www.computersharevoucherservices.com/Pages/default.aspx[/FONT]

Her company says they simply work to the instructions and terms and conditions Computershare set.


So if the contract is not with her employer - we are doomed right?