In the case of Peninsula Business Services v Donaldson, the employee was told that during maternity leave period she would not benefit from child care vouchers. On this basis she refused to join the scheme and raised a claim alleging maternity and pregnancy discrimination, amongst other things. The child care vouchers operated as a salary sacrifice scheme - the money being taken at source to pay for the vouchers before any deductions were made for tax or national insurance. At the Employment Tribunal, the Claimant succeeded in arguing that withholding this benefit during maternity leave was discriminatory. HMRC had previously produced guidance stating that contractual non-cash benefits provided under a salary sacrifice scheme (as in the case here) must be provided during maternity leave.
Peninsula decided to appeal this decision and were successful. The EAT held that there was no legislative basis to support the HMRC guidance. The EAT considered whether the vouchers amounted to remuneration. If so, they would not have to be continued during maternity leave.
The EAT held that the vouchers represented part of the employee's salary since pay had been substituted with vouchers under a salary sacrifice scheme. On this basis they were to be regarded as remuneration and therefore the arrangement did not have to continue during maternity leave.