Childcare vouchers during maternity leave, which were provided through salary sacrifice, would be suspended during maternity leave. Donaldson wished to join the childcare vouchers scheme but refused to join on these terms as she believed that it was discriminatory.  She brought a claim instead in the Tribunal that her employer had discriminated against her on the grounds of pregnancy and maternity under s18 of the Equality Act 2010.

The Tribunal noted that women on maternity leave are entitled to non-pay benefits during maternity leave in accordance with the Maternity and Parental Leave Regulations 1999 and that it followed that it must be discriminatory to require an employee to forego any such benefit during maternity leave. In so finding, it had regard to guidance from HMRC, which states that during any period of ordinary maternity leave, contractual non-cash benefits provided under a salary sacrifice scheme ‘must continue to be provided’. The EAT found the guidance by HM Revenue and Customs was wrong and should not be followed. It could not have been Parliament’s intention to require employers to continue providing vouchers at a time when there was no salary that could be sacrificed in respect of them.

The EAT allowed the appeal. It noted that the key question was whether the vouchers constituted ‘remuneration’, which, under Regulation 9 of the 1999 Regulations, does not need to be continued through maternity leave. The EAT noted that many employers provide vouchers as a benefit in addition to salary and, in such cases, under Regulation 9 these benefits continue during maternity leave. In cases where the vouchers are provided by way of salary sacrifice, however, the true picture is that the vouchers represent part of salary that has been diverted before appearing in the employee’s pay packet. Thus, such vouchers are properly to be regarded as part of ‘remuneration’, which may be discontinued during maternity leave under Regulation 9.

This is a helpful decision for employers and one which they may consider useful when deciding how best to package up the remuneration package for employees. The key here in this case was that the vouchers were part of salary sacrifice and thus remuneration.  One can foresee other arguments around this issue and other benefits provided as part of salary sacrifice.