Salary Sacrifice against National Living Wage compliance

25 January 2016

According to some research from Jelf Employee Benefits, less than one in 10 (9%) of employer respondents have reviewed their use of salary sacrifice against the new national living wage requirements.

The survey of 180 employers also found that 39% of respondents are unaware that salary sacrifice arrangements could result in employers inadvertently breaching the new minimum wage requirements.

The research also found:

  • 19% of respondents are aware of the possible implications of using salary sacrifice, but have yet to review this to ensure compliance.
  • 16% of respondents support the idea of the voluntary living wage of £8.25 an hour and £9.40 an hour in London, and have already signed up to it.

Steve Herbert, head of benefits strategy at Jelf Employee Benefits, said: “…some employees have a number of sacrifices in place for different benefits, and the cumulative impact of this may unexpectedly place employees close to the new legal minimum income of £7.20 an hour for the over 25s. With time now of the essence, we would urge employers to act now or risk breaching the new rules.”

Read the full article from Employee Benefits.

 

 

Businesses are being advised to prepare early for the changes on 1 April 2016, when the new wage will become law, and make sure they follow these 4 simple steps:

  • know the correct rate of pay - £7.20 per hour for staff aged 25 and over
  • find out which staff are eligible for the new rate
  • update the company payroll in time for 1 April 2016
  • communicate the changes to staff as soon as possible.

Employers can find out more by visiting www.livingwage.gov.uk.