9% have reviewed salary sacrifice against national living wage compliance

Steve Herbert 430

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

Its 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.

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The government’s national living wage rate of £7.20 an hour for employees aged 25 and over will come into effect in April 2016. It was first announced by chancellor George Osborne in July 2015.

The national living wage is distinct from the higher voluntary living wage rate, which is calculated according to the basic cost of living in the UK and implemented by employers on a non-mandatory basis.

Steve Herbert (pictured), head of benefits strategy at Jelf Employee Benefits, said: “These findings are more than worrying. The income level and date of introduction were both established in the summer Budget statement, and we would therefore have expected employers to be taking action to ensure compliance with this new edict.

“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.

“We hope that the increased media noise around the national living wage also results in many more employers applying for voluntary living wage accreditation.”