salary sacrifice benefits: what are the possible pitfalls?

Implementing a salary sacrifice scheme requires careful planning and thought. In particular you should be aware of the following:

• It will be necessary to change an individual's terms and conditions of employment if they decide to take advantage of a salary sacrifice benefit; 
• Salary sacrifice must not bring the employee's hourly wage below the minimum wage level. In addition as it reduces an employee's cash pay, salary sacrifice can have an effect on earnings related benefits such as the state pension, statutory maternity pay and statutory sick pay. The most significant consideration for state benefits will be if cash income falls below the lower earnings limit;
• Be aware of multiple sacrifices if for example an employee chooses childcare vouchers and to purchase a bicycle;
• Salary sacrifice may effect other salary driven benefits such as life assurance or disability insurance;
• The need to keep the Inland Revenue informed;
• It requires careful communication to ensure that employees understand the implications;
• Due to the complexity of the calculations required it is difficult and burdensome to run salary sacrifice on a paper basis.