Salary Sacrifice, Child Care Vouchers and Maternity Leave!
by Philip
The devil is in the detail as always. Some employers may operate a childcare voucher scheme, whereby the employee sacrifices, say £60.00 of their weekly salary, in return they receive a voucher from the employer which they can then use to pay for childcare. The benefits for the employee is that they can pay for childcare using gross (ie pre tax ) income, the benefits for the employer being a saving on employers NI.
However according to HMRC guidance issued recently a voucher is a non cash benefit (ie it is not remuneration), therefore the employer will be obliged to provide the employee with this benefit during both OML and AML (for women with due dates after 5 october 2008). The sting in the tail being that the employer cannot deduct the value of the voucher off the employee’s SMP. Ouch!
As always with well intentioned schemes like childcare vouchers, the road to hell is paved with such good intentions. I can see employers saying well if it costs me more to provide vouchers than I get back in benefit, I’m not going to bother.
For those of you who consider life to be too short to read HMRC Guidance documents, then I have pasted the relevant guidance below from page 8:
As explained above contractual non-cash benefits may sometimes be provided under a salary sacrifice arrangement in lieu of sacrificed salary. During any Ordinary Maternity Leave [OML] (weeks 1 to 26) they must continue to be provided.
In future, following amendments made to Regulations in 2008, the period during which such benefits must continue to be provided is being extended. 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
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Very useful info. thanks
early potty training said at March 8th, 2009 at 12:34 pm
Due to this ‘helpful’ legislation my employer is considering withdrawing from the scheme in case the only member of staff on the scheme (me) decides to have a another child! Is this legal?
Carolyn said at August 16th, 2009 at 7:42 pm
[...] get out clause for employers to scrap the scheme given the recent decision that the vouchers are a benefit which must be continued during maternity leave presenting employers with a hidden cost of the [...]
Childcare vouchers » PJH Law - Employment Law Blog » Blog Archive said at November 9th, 2009 at 12:36 pm
Me and my girlfriend come to your site often. We love reading your posts. Thank you!
Gillyard said at January 13th, 2010 at 3:38 am