The simple answer is yes they are. But you are not allowed as an employer, to deduct the value by way of a salary sacrifice from any statutory payments. You cannot salary sacrifice from statutory maternity or paternity pay. And this issue is not simply a childcare voucher issue, it applies to all benefits offered to your employees.

But you are allowed to deduct by way of salary sacrifice from any enhanced payments you make to them, over and above the statutory payment.

You can also supply childcare vouchers as a salary addition whilst they are on leave.

The broader issue is regarding the advice given to parents.
The first issue is that some parents would be better advised to come off vouchers some time before they go on leave to minimise the impact of the vouchers on their statutory pay.

But benefit legislation that has been in place for some time does state that all employees that receive benefits, including vouchers, have the right to continue receiving them if they wish whilst on maternity leave, up to a period of 12 months. The period was extended from 6 months this year (2008). It is also noted that companies must comply with any discrimination legislation as well.

There appears to be a section of the legislation that allows for employment contracts to override this, so an employees contract would state that certain benefits would be voluntarily excluded during leave or absence periods.

As far as we are aware the advice coming from the legal profession, HMRC and other bodies, including childcare voucher scheme operators is varied.

The Inland Revenue themselves cover this topic in their salary sacrifice sheet, http://www.hmrc.gov.uk/employers/sml-salary-sacrifice.pdf
and it clearly states

'subject to the terms of the contract the employee may be able voluntarily to opt out of receiving the non-cash benefit under the salary sacrifice arrangement. However it is important to emphasise that the employer cannot compel the employee to opt out of receiving the benefit.'

Our interpretaion is that it is perfectly legal to have a contractual clause that limits the benefits at times of leave if the agreement is voluntary. The timing of the contracts would be important. We can supply the relevant sections of legislation as we see them if you require them. We seem to agree with Accor, the biggest childcare voucher provider in the UK today. We do have a copy of the Accor take on childcare vouchers during maternity leave.

The exposure of companies is seen as quite small as most companies do offer existing benefits through leave and absence periods through enhanced packages. And most benefits are given and taken by mutual agreement anyway.

If you are in any doubt regarding the treatment of employees whilst on leave with regard to any benefits

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