When it comes to salary sacrifice, electricity distribution organisation UK Power Networks has traditionally been risk averse from a tax perspective, according to Steve Remnant, head of reward and HR services. This means that the government’s moves to limit salary-based benefits have had limited day-to-day impact.
“I think that, overall, employers are probably less inclined towards salary sacrifice than they were. There is a general feeling that the government is looking to tighten things up,” Remnant explains.
Despite this cautious approach, the organisation is still able to offer a range of salary sacrifice benefits to its 6,000 UK employees. These include a bikes-for-work scheme through provider Blackhawk Network Europe, as well childcare vouchers, although the latter is winding down ahead of the government’s replacement tax-free childcare scheme. Employees can also sacrifice salary to purchase extra holiday.
“At the moment, we are reviewing our benefits with KPMG and plan to launch a new automated flex tool from April 2020. As part of this, we will be taking a second look at what is available in terms of salary sacrifice,” Remnant notes.
When ensuring employees do not dip below minimum wage levels, the key for UK Power Networks is clear communication and robust payroll processes.
“Our employees are pretty well rewarded generally, but everything does feed back into the payroll system to ensure people do not fall below the minimum inadvertently,” Remnant explains. “Alerts come up on the system, and we do a lot of secondary checks and running of reports. When it comes to affordability, we don’t, for example, allow people to trade more than five days of holiday. We’re also careful to explain how the cycle-to-work scheme works, especially around the end of the contract.
“There is an element of employees needing to take some responsibility for this themselves; at the end of the day, they sign the declaration and the risk sits with them. But we do also rely on our provider to communicate and explain things clearly."
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