You may be aware of the recent odd Employment Appeal (EAT) decision on childcare vouchers and salary sacrifice schemes, Peninsula Business Services Ltd v Donaldson. Our very recent blog on this case provides all you need to know.
Somewhat alarmingly, despite the oddness of the judgment and despite commentary in the legal press (and our good selves) suggesting that the judgment is too unsafe to be followed and is likely to be overturned soon, we have learned in the last few days that HMRC has written to the Childcare Vouchers Providers Association (CVPA) to say that the judgment means that employers will no longer be legally required to provide childcare vouchers during an employee’s maternity or adoption leave, and to remove them during maternity leave will no longer be sex discrimination.
Leading childcare vouchers providers are informing their clients of this at the moment and you may well have received such an email.
However, for the reasons we set out in our blog, we urge you not to follow such advice from HMRC, the CVPA or your childcare voucher provider (at least, not yet).
Our strong view, similarly held by all decent employment law commentators, is that the EAT’s judgment simply does not stand up to scrutiny and it is highly likely that the law will revert to the normal position shortly when another judgment overturns the EAT’s decision.
Our view is that HMRC and the CVPA were foolish to jump the gun and are likely to soon have to retract their new advice, with egg on their faces (to mix our metaphors).
If an employer were now to decide to deny childcare voucher payments for female employees on maternity leave, our view is that the employees will have a very strong claim for sex discrimination; and the fact that the employer may claim to have relied upon HMRC and CVPA advice will not be any defence. Bear in mind that HMRC only has an interest in the tax side of things, and does not make – or formally have a view on – employment law.
To repeat: following HMRC’s new advice will not provide you with a defence to a sex discrimination claim.
If this odd EAT decision is reversed, as we suspect it surely will be, there will be quite a bit of unravelling needed and some fairly disgruntled employees to manage. We suggest you would be wise to avoid such a mess!