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Childcare is costly for Lancashire mothers

Lancashire mothers will no longer be entitled to childcare vouchers while on maternity leave.

But business owners are set to benefit by up to £3,000 per employee taking the full 12-month maternity leave, as a result of last week’s ruling.

A decision by the Employment Appeal Tribunal means women accruing childcare vouchers during maternity leave will no longer be able to do so.

The historic salary sacrifice arrangement has meant that employees can have their salary reduced by up to £243 per month in exchange for non-taxable childcare vouchers.

The recent appeal of Peninsular Business Services Limited v Donaldson decided that during the period of maternity leave, the vouchers can be discontinued as there is no salary available from which the deduction can be made to provide the vouchers.

Peter Byrne, employment partner at Taylors Solicitors, based in Blackburn, said: “Both employers and employees will be significantly affected by this decision, which reverses the long-standing established practice of providing childcare vouchers during maternity leave.”

In accordance with the Maternity and Parental Leave Regulations 1999, childcare vouchers were allowed to continue throughout the course of a woman’s maternity leave and the Regulations indicate that whilst a woman is on maternity leave, she is entitled to non-pay benefits.

But the case determined that the vouchers constituted ‘remuneration’ under the 1999 regulations.

Mr Byrne added: “It is a significant decision which affects every sector and every employer.

“Many mothers on maternity leave accrue their vouchers in order to accumulate a credit with a childcare provider for future use when they return to work. This practice is now likely to stop.

“Employers are however expected to make substantial savings - as a year’s childcare vouchers can cost each employer nearly £3,000 for each employee who undertakes a full 12-month maternity leave period.”

A new tax-free childcare scheme is expected to come into force in early 2017 and from this time, employees will no longer be able to join existing childcare voucher schemes.

Taylors Solicitors is a commercial law firm with offices in Blackburn and Manchester. The niche firm boasts dynamic and highly-experiences staff across a range of commercial legal services.

For more information, contact Peter Byrne at Taylors Solicitors.

This was posted in Bdaily's Members' News section by Lisa Woodhouse .