Contractual Benefits & Maternity Leave

Family Friendly and Parental Rights

Is an employee on maternity leave entitled to receive childcare vouchers?

There has been a recent decision of the Employment Appeal Tribunal concerning employee rights during maternity leave, namely in relation to benefits during maternity leave.

The Law

The law regarding maternity rights is set out in the Maternity & Parental Leave regulations 1999 which state that during Maternity Leave, an employee has the right “to the benefit of all of the terms and conditions of employment which would have applied had she not been absent”, except for the terms and conditions about “remuneration”. Remuneration is defined as sums payable to the employee by way of wages or salary.

The Facts

Ms Donaldson was employed by Peninsular Business Services, and one of the benefits Peninsular offered their employees was a Childcare Voucher Scheme which operated by way of salary sacrifice.

One of the terms of the scheme was that;

“During periods of time spent on maternity leave, paternity leave, additional paternity leave, parental leave, periods of sick leave during which the only payment payable to the employee is statutory sick pay and any other unpaid leave, provision of childcare vouchers and adjusted monthly salary will be suspended and salary payments will revert to normal i.e. the pre-variation position. During the voucher suspension period the employee will remain in the scheme.”

When Ms Donaldson became pregnant she wanted to join the scheme, but upon review of the terms decided not to join as she believed it to be discriminatory.

Ms Donaldson made a claim in the Employment Tribunal for pregnancy and maternity discrimination in accordance with the Equality Act 2010 and she was successful in her argument at first instance, however Peninsular appealed.

 The Decision

The key question for consideration by the Employment Appeal Tribunal was whether the vouchers constituted remuneration.

In looking at the way in which the voucher scheme worked they concluded that the vouchers really represented part of an employee’s salary which had been diverted and returned in a new form. They were not a benefit but actually part of the salary and therefore Peninsular were not required to pay them during maternity leave and the claim for discrimination was not successful.

Points to note

The law surrounding employee rights during pregnancy and maternity leave can be complicated and for employers who do not have pregnant employees regularly it can be difficult to stay on top of what is required.

This case provides helpful guidance for employers who operate such salary sacrifice schemes.

What action do you need to take?

1) Ensure that you are aware of your obligations towards employees who are pregnant or on maternity leave;

2) Check your staff handbook and contracts to determine what your obligations are for pregnant employees and those on maternity leave;

3) Seek advice if you have a pregnant employee and you are unsure of your obligations.

Case Name

Peninsular Business Services v Donaldson – Employment Appeal Tribunal

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The information contained in this blog post is provided for guidance and is a snapshot of the law at the time it is written. It is provided for your information only and should not be used as a substitute for obtaining legal advice that it specific to your particular circumstances.

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