Learn how salary sacrifice can affect statutory payments and how pension contributions are handled during statutory leave.
Salary sacrifice reduces an employee's earnings for National Insurance purposes. Because statutory payments are based on these earnings, both eligibility and payment amounts may be affected.
Pension contributions during statutory parental leave
During paid statutory parental leave (excluding Statutory Sick Pay):
Employer pension contributions continue and are based on the employee's normal pre-leave salary.
Employee contributions are based on the employee's actual pensionable pay during leave.
If there's no pay available to deduct employee contributions from, the employer covers those contributions for the paid statutory leave period.
Salary sacrifice during maternity leave
Statutory Maternity Pay (SMP) can't be sacrificed. However, because salary sacrifice is a contractual benefit, employers must continue providing the agreed benefit throughout the paid statutory maternity leave period (Ordinary Maternity Leave and paid Additional Maternity Leave).
This doesn't apply to unpaid maternity leave unless the employment contract or pension scheme rules state otherwise.
Pension contributions during sick leave
There are no statutory rules requiring employers to maintain pension contributions during sick leave. Contributions are generally based on the employee's actual earnings, including Statutory Sick Pay (SSP), unless the employment contract or pension scheme provides more generous terms.
Note: Always check the pension scheme rules alongside statutory requirements, as schemes may offer additional benefits beyond the legal minimum.