The government has been accused of undermining its own attempts to push flexible working practices by forcing employers to offer non-cash benefits for workers on maternity leave.
The British Chambers of Commerce has written to Stephen Timms, financial secretary to the Treasury, warning that adoption of childcare vouchers in particular could be greatly undermined by the legal change.
Rules introduced on October 5 mean that employers must continue to provide non-cash benefits to staff on maternity leave.
Since staff previously paid for childcare vouchers by sacrificing a percentage of their salary, the rule change means employers offering this benefit are forced to pay for something that was previously free for them to operate.
The legal loophole could deter others from adopting childcare vouchers, according to the BCC. Chris Hannant, the BCC’s director of policy, said: “Businesses and employees have traditionally enjoyed using an uncomplicated, no cost, child voucher scheme.
“By confusing the system, and introducing potential costs for employers who provide it, the government risks undermining any incentive to take it up.”
Longview Media, a sales agency in Ipswich, is one small business that is reconsidering its decision to offer childcare vouchers.
It employs just five people, but must now find an additional £1,538 to support one of its staff members currently on maternity leave.
Sue Lewis, company director, says it is not a matter of opposing flexible working as the employee concerned had been allowed to work from home and change her hours to fit with childcare requirements .
“The stupid thing about it is she doesn’t particularly want childcare vouchers while she is on maternity leave because she is at home,” Lewis said.
Peter Mandelson, the business secretary, this week confirmed he had rejected requests to delay beyond April the extension of the right to request flexible working to all parents with children up to 16 years old.
Business groups had opposed the government’s plans to formalise flexible working requests because they claimed it places an extra administrative burden on business, particularly smaller companies.
The Federation of Small Businesses, which represents more than 215,000 companies, said the proposals would create difficulties for its members. It had urged a pause on the extension to this legislation given the already difficult economic climate.
Not all small businesses believe that greater flexible working rights will be bad for them.
Ben Black, who started My Family Care three years ago to help people manage care of the elderly and children, said his experience was that people who work flexibly are more motivated and engaged and less financially ambitious.
“The truth is that flexible working makes commercial sense for an awful lot of companies,” he explained.
