Official advice: must do better

The most senior judge in the Employment Appeal Tribunal has criticised the “cosy” and “over-simplistic” advice being offered on Government websites, after finding the published guidance on maternity pay was incorrect.

Mr Justice Langstaff said statements on a site by HM Revenue & Customs had no force in law and were part of a growing problem for both employers and employees in obtaining correct information on their rights.

The judge, President of the EAT, made his comments in overturning a decision by an employment tribunal which had found in favour of a pregnant employee who claimed she had been discriminated against by not being given childcare vouchers while on maternity leave.

The EAT found that the decision at first instance was based on “erroneous” guidance that employers “should” continue offering vouchers once the employee was receiving maternity pay. The correct position was that this was an entirely voluntary arrangement, and the employer was not compelled to do so.

Must do better

As well as commenting directly on the HMRC guidance, Mr Justice Langstaff said the UK Government generally had to do more to ensure that changes in the law which affect employment were being made known. Otherwise, he said, access to justice would be compromised.

“It is unfortunate that the guidance – in common, it appears, with the most obviously relevant websites – simply does not contain any easily accessible link to the applicable legislation to alert the occasional practitioner to the actual law (rather than some unknown official’s interpretation of it, supposedly in clear if cosy, and therefore perhaps over-simplistic, language, which is not a proper basis for decision making in the courts). Someone who is a lay litigant, as is the claimant here, is in an even more difficult position when trying to gain access to primary material.”

He went on: “It is worth making specific reference to the problem, because it is replicated in other areas of law relevant to appeals before the EAT (especially where out-of-date provisions are posted, or alternatively where it is very difficult to find the legal provisions applicable to relevant conduct at the time it occurred, because those provisions have since been amended), and the numbers of those appearing before the Appeal Tribunal who are not professionally represented has increased from around 40 to some 60% over the last six years, such that it represents a growing problem in achieving justice.”

The original tribunal in Manchester had found in favour of Laura Donaldson, who had brought her claim against Peninsula Business Services Ltd under the Equality Act 2010 as an act of sex discrimination.

The employers operated a scheme offering childcare vouchers to all staff, but not women on maternity leave. The tribunal held that was indirectly discriminatory to women, and also a breach of the Maternity and Paternity Leave Regulations 1999, which say that women on maternity leave should receive the same “benefits” as if they had been at work (other than pay).

However, the EAT found that the tribunal had based its decision in part on HMRC guidance about how schemes of this nature should operate, which had stated that receipt of childcare vouchers “should” continue during maternity leave. Justice Langstaff said this statement had “no legislative force,” and the employer was under no obligation to do so.

Benefit, or remuneration?

The EAT looked in detail at the different childcare voucher schemes operated by employers. Some employers paid for these vouchers as a “benefit” on top of salary. In these schemes, the vouchers would have to continue to be offered during maternity leave.

It analysed the scheme offered by Peninsula differently. Although this was described as a “salary sacrifice scheme” by the employer, the EAT found this was a misnomer. The vouchers were purchased with money deducted from salary, with no contribution by the employer. The employee gained financially from having to pay less tax.

However, when the employee went on maternity leave, instead of salary she would then receive statutory maternity pay, and the EAT said this meant things changed – the employer was duty bound to make this payment in full to the employee.

This took the scheme outwith the category of “benefits”, which were protected under the Maternity Leave Regulations, and into “remuneration”, which the employer was entitled to reduce under the usual maternity rules. This also meant it was not discriminatory.

If the employer was compelled to meet the cost of childcare vouchers during maternity, this would both give a “windfall” to the employee and impose a cost on the employer. Moreover, it had not been the intention of Parliament to require employers to continue providing vouchers at a time when there was no “salary” which could be sacrificed in respect of them.

“The policy… is to enable more women with young children to remain in or return to the workplace. This is a real benefit economically to the employer, who then has a wider range of skilled and valuable workers from which to choose, as well as a real benefit to employees by alleviating to some extent the costs of remaining in work. It incentivises women to remain at work; and therefore is overall of economic benefit to the country.

“But the scheme is entirely voluntary on the employer’s part. If entering such a scheme had the consequence that once employees became pregnant the employer would face a cost beyond that it would already face by provision of statutory maternity pay, it would have the effect of discouraging employers from offering such a scheme. This is particularly acute where small and medium enterprises are concerned.”

The appeal being successful, the claim was dismissed. The judgment, numbered UKEAT/0249/15/DM, does not indicate whether the claimant remained in employment with Peninsula. There was no finding in relation to expenses.