Salary sacrifice arrangements and non-cash benefits during maternity leave

Produced by Tolley in association with

Employment Tax

Guidance

The Maternity and Parental Leave etc Regulations, SI 1999/3312 are designed to ensure that a woman on additional maternity leave (AML) is entitled to the same level of benefits she would have received whilst on ordinary maternity leave (OML).

Outline of the regulations

The main impact of the regulations is that when an employee who has been provided with non-cash benefits, such as a company car, goes on maternity leave, her employer could be considered to be sexually discriminating against that employee if those benefits are withdrawn or postponed.

Following the Employment Appeal Tribunal ruling in the Peninsula Business Services Ltd case, the position for childcare vouchers (CCV) offered under salary sacrifice differs from that relating to other non-cash benefits to the extent that the vouchers are to be considered as cash benefits rather than benefits in kind. This brings CCV in line with pension contributions.

This distinction is important because the requirement to provide pension contributions during maternity leave is restricted to periods of paid maternity leave, ie when

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Robert Woodward

Employment Tax Manager at Frank Hirth plc

Robert is an expert in UK employment tax matters for employers with UK based employees, including UK employees working overseas, and overseas employees coming to the UK. He has extensive experience of advising clients with regards to PAYE matters, employee benefits and social security as well as employment related payments outside the payroll functions such as termination settlements and payments to consultants and other non-payroll labour.After graduating in Politics and Law from the University of Southampton, Robert started his tax career at HMRC as an employer compliance officer undertaking enquiries into employers' expenses and benefits systems before moving into a large international practice and then into the Big 4. Here he assisted with tax investigations, flexible benefits planning, employment tax compliance and international social security.Robert has presented to various audiences and has had a number of articles published in various magazines on employment tax matters.Robert is a fully qualified member of both the Association of Taxation Technicians (ATT) and the Chartered Institute of Taxation (CTA).

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