Should employers play a greater role in funding childcare?

Child moulds from plasticine on table. Hands with plasticine.


Balancing childcare commitments with a full-time job can often be difficult for employees, who can find themselves faced with additional costs for facilitating appropriate care. As a result, organisations may consider implementing company-funded initiatives that can assist with the cost of childcare and encourage the worker’s continued commitment to their role. In these situations, employers should evaluate the potential benefits of implementing such systems, alongside the feasibility of offering them within their current business structure.

It is important that members of staff within a company feel supported in their role, including those with childcare responsibilities. By offering additional assistance with childcare an employer can aim to balance out the needs of their employees with the requirements of a working day whilst avoiding alternative options, such as flexible working, that may not be feasible due to business need.

Childcare funding can also help to attract highly talented individuals to the organisation, thus offering further potential for the company’s continued development and growth. In particular, working mothers who wish to avoid taking significant time out of their career could benefit significantly from this and avoid being placed at a disadvantage to their colleagues.  Such actions can also help to encourage a strong business reputation and also reduce the likelihood of employees seeking employment elsewhere.

However, given the current climate, stresses on certain industries such as retail or hospitality may mean that this is not economically viable for some businesses, potentially limiting the extent to which employers can provide this. There is no legal requirement on employers to facilitate additional funding for childcare arrangements and, in these situations, employers should take a look at the number of employees who would benefit from such a programme and evaluate if it would be cost effective for their company.

It would also be a good idea for management to maintain open levels of communication with their workforce, outlining why they have taken any decisions not to introduce funded childcare and any alternative assistance that they are willing to offer. Employers should always bear in mind that they are obligated to provide statutory maternity and paternity pay and can face significant fines it is found they have refrained from doing so.

If an employer does wish to introduce additional funding options for childcare they should consider which option would be the most economically viable for them. Generally, additional funding or assistance is provided through on-site nurseries, establishing partnership schemes with local childcare facilities or offering the childcare voucher scheme initiative. It should be noted that the current employer led voucher scheme is ending for new applicants in October, meaning employees will no longer be able to take advantage of this option. It is being replaced by tax-free childcare, which is a government funded initiative that will provide up to £2,000 for each child up to the age of 11.  Although employees already within the voucher scheme will be able to continuing using it employers should therefore ensure they are fully up to date on what this will mean for both current and new employees within their organisation.

Introducing funded childcare arrangements is not a statutory requirement and may not be suitable for all businesses. Employers should therefore consider if the benefits of such initiatives would outweigh the costs.

*Kate Palmer is Associate Director at HR consultancy Peninsula. 

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