Salary Sacrifice schemes can be discontinued during maternity leave

Thanks to Karen Jackson of didlaw for preparing this case summary

Is it discriminatory to discontinue childcare vouchers during maternity leave?

No, held the EAT in Peninsula Business Services v Donaldson.

Women on maternity leave are entitled to non-pay benefits pursuant to the Maternity and Parental Leave Regulations 1999. Following HMRC guidance that contractual non-cash benefits provided under a salary sacrifice scheme must continue to be provided during ordinary maternity leave, an employment tribunal held that it must be discriminatory for an employee to lose childcare vouchers during maternity. PBS appealed.

The EAT allowed the appeal and substituted a decision that the claim should be dismissed. No legislative basis had been found to support the HMRC guidance. The key question was: did the vouchers constitute remuneration? If they did Regulation 9 of the Regulations did not require this to continue during maternity leave. Langstaff J held that the vouchers did represent part of salary since pay had been substituted with vouchers under a salary sacrifice scheme. On this basis they were to be regarded as remuneration and could be discontinued during maternity leave.