Child Care Vouchers - Peninsula Business Services Ltd v Donaldson

The EAT has held that as childcare vouchers provided under a salary sacrifice scheme are part of the employee's 'remuneration' it is not discriminatory or detrimental to discontinue them during maternity leave. However, where the vouchers are provided on top of salary, without a salary sacrifice, they are not part of the employee's remuneration and must therefore be continued.

The provision of childcare vouchers through salary sacrifice arrangements is widespread and hitherto there has been some uncertainty as to whether salary sacrifice makes the vouchers a 'benefit' or a part of 'remuneration'. The distinction is significant because during maternity leave employers are obliged to continue to provide benefits as if the employee were still attending work. Employers can however lawfully suspend normal remuneration and, if eligible, the employee will receive statutory maternity pay instead.

The continued provision of childcare vouchers during maternity leave represents a cost to employers and some have sought to avoid it by making entry to their childcare voucher scheme conditional on agreeing to give up the vouchers during a period of maternity leave. That was the case at Peninsula Business Services Ltd (Peninsula). Its employee, Ms Donaldson, who was pregnant at the time of wishing to join the scheme, believed the condition of entry was discriminatory and so refused to join.

Ms Donaldson brought claims for detriment and discrimination. She argued that the Maternity and...