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Roger Pollard
Member - 6 posts
The changes to Statutory Maternity Leave mean that non cash benefits such as Child Care Vouchers or our cycle to work (C2W) scheme (both operated though salary sacrifice schemes) have to continue during unpaid AML but as there is no pay the employee (in effect) stops paying for them. Extension of the the period eg for C2W to enable the employee to repay when back on pay is not permissable. As a result we are thinking of stopping salary sacrifice schemes. Has anyone solved this problem?
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Paul Glover - Workplace Law Network
Online advisor - 5 posts
I can't see that the C2W scheme would be of benefit to an employee who has just had a baby and is on AML. I doubt that they would use the C2W scheme in the weeks after conceiving, especially if they are on AML.
In order for any salary sacrifice scheme to be allowable, in the terms of what HMR&C permit, the employees contract needs to be amended in advance of the sacrifice commencing. HMR&C provide useful information on this topic, and the circumstances that you describe in their manuals (EIM 42750) here: http://www.hmce.eu/manuals/eimanual/eim42750.htm.
This seems to suggets that as long as the earnings in the year are reduced by the amount of the benefits received in that year then a sacrifice is permissable.
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Roger Pollard
Member - 6 posts
The issue though is - what happens if the employee has signed up to the salary sacrifice sheme before they go off on Mat Leave
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Julie Kenworthy
Member - 1 post
I recently returned to work from maternity leave. Our organsiation had just implemented the salary sacrifice scheme which I and another colleague signed up to. It saved us approximately £70 per month. My colleague became pregnant again, and asked how this would effect her. Having looked in to this our HR department discovered that they would still have to pay the childcare vouchers for up to 12 months maternity, even though the member of staff would only be on statuatory pay during 9 months maternity leave. This would cost the company £1000's of pounds. This is not something they were aware of when they set up the scheme, and have now consequently withdrawn this from the whole organisation, including form me and my colleague. Small business are unable to afford this so many more oragnisations are likely to withdraw - is there no way around this?
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Roger Pollard
Member - 6 posts
Thanks Julie for your comment - it seems evident that there is no way around the new regulations and its possible that we also will withdraw all salary sacrifice schemes.
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