Q&As

Can an employee on variable pay participate in a salary sacrifice arrangement and how?

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Published on LexisPSL on 25/02/2020

The following Share Incentives Q&A provides comprehensive and up to date legal information covering:

  • Can an employee on variable pay participate in a salary sacrifice arrangement and how?

Can an employee on variable pay participate in a salary sacrifice arrangement and how?

In summary, a valid salary sacrifice arrangement (also sometimes known as an optional remuneration arrangement) involves:

  1. a legally-effective variation to an employee’s employment contract under which, on the true construction of the revised contract:

    1. the employee is entitled to less cash remuneration

    2. in exchange for a non-cash benefit, and

    3. the exchange was legally effective prior to the employee being entitled to payment

  2. a clear understanding between the parties as to the terms of the arrangements, in particular the employee, must fully understand the implications of what

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