What pay includes

Salary sacrifice arrangements

Salary sacrifice is where your employee agrees to give up some of their pay in exchange for a benefit. The benefit must be provided by you. A tax exemption exists for certain salary sacrifice arrangements.

An example of a salary sacrifice is where your employee gives up some of their pay for a travel pass.

This arrangement means that there will be a change to the terms and conditions of employment. Details of this change must be recorded in writing. The agreement cannot cover any period before it was put in place.

Your employee cannot:

  • exchange a qualifying benefit for cash
  • or
  • pass these benefits on to their family.

An employee can hold more than one benefit in a year where the conditions for each benefit are met.

Tax exemption

Only certain benefits qualify for a tax exemption. These are: