Where Do I Start With A Salary Sacrifice Scheme?

03 May 2023

Where Do I Start With A Salary Sacrifice Scheme?

As an employer, if you have found yourself in a situation where you are about to commit to a salary sacrifice scheme, you may have arrived at this point in a variety of ways. These could include:

  • You have been approached by some employees with a request to start a scheme
  • You may have previously offered other employee benefits and want to look at new ideas to refresh this initiative
  • You have been wanting to reward your employees for their productivity and loyalty
  • You have encountered a problem with morale and wish to implement some programmes to improve it.

There could be other reasons too, but fundamentally this is a significant shift in how your business operates, in terms of contracts, personnel issues and how the employer/employee relationship works, so you need to understand what you are walking into and how you should approach it.

What you need to understand about salary sacrifice schemes

Perhaps the two biggest things you need to appreciate when considering a salary sacrifice scheme, is that signing-up to the scheme needs to be completely optional and that it also needs to be open to all employees.

With a salary sacrifice car scheme, for example, there is a perception that vehicles sourced through the business, historically known as ‘company cars’, are for senior executives only and there is a sense of status and elitism about them. But it is important for your employees to understand that a salary sacrifice car scheme is open to everyone and all employees can benefit in the same way. This is how you can promote fairness and inclusivity, boost morale and make employees feel valued. And because the scheme is optional it is important that employees aren’t pressured into signing up for it.

What to look at first when introducing a salary sacrifice scheme

Once you have understood these two key factors and you are ready to introduce your workforce to the concept of salary sacrifice, it is then all about information and communication. You should initially introduce the idea of the scheme with an introductory written communication, and then invite all employees to an optional seminar or meeting where the scheme can be explained and discussed in an open forum. Maybe you could invite along some representatives from the company running the scheme to help you?

Along with this open forum it is important that employees are armed with information about the scheme which they can then go away and read in private and discuss with family. With the example of the salary sacrifice car scheme offered by Pink Salary Exchange, we can point employees towards pages on our website, such as:

  • How it works – a summary of the concept behind the scheme which repeats what has been discussed at your seminar but enables the employee to understand and think about it in their own time.
  • Features and benefits – an easily digestible way for the employee to understand how the scheme will affect them and what positive changes it could make to their lifestyle.
  • Help and advice – some optional further reading for employees who need more information to convince themselves on the suitability of the scheme. Here you have stats and comparison figures for other schemes and FAQs for elements of the scheme an employee might not be sure about.

Once the idea has been introduced and interest is being generated, it might be a good idea to follow-up these initial communications with further reading for those interested in the scheme. Here you can move on from the opening summary information and go into more detail about changes the scheme will bring. So for example with a salary sacrifice car scheme you can answer:

  • How the scheme affects an employee’s tax and national insurance
  • What this means for an employee’s contract of employment
  • What the employee is liable for and what their ongoing responsibilities are
  • The costs and practicalities of driving an electric vehicle or a hybrid vehicle.

How to sign-up for a salary sacrifice scheme

This secondary round of information is more dedicated to people who are definitely interested and helps them make a more rounded decision. After that, you can introduce the idea of signing-up for the scheme, what information is required and what the process involves. For the employer it is very straightforward, you simply:

  • Click on the ‘Apply Now’ button and supply some basic business information
  • Wait for our team to carry out some background checks to validate your business
  • Receive login details for our online management portal
  • Start to enrol employees so they can begin choosing a vehicle.

From the start to the end of this process need only take a couple of weeks, but once you are signed-up with Pink Salary Exchange you are ready to roll the scheme out in a matter of hours. However, we understand that salary sacrifice is a big change for a business and managing change is crucial in engaging a workforce correctly and experiencing the benefits you are wanting, so contact our team at Pink Salary Exchange and we can help you start the process of implementing salary sacrifice in your business.

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