Can rise in NMW/LW allow employer to remove salary sacrifice pension right

lancstulip

A requirement of my job is to live on site in accommodation provided by my employer and for which I pay rent. I recently discovered that due to a decision by my employers to raise service occupancy rents from April 2023 above the HMRC offset rate that this, together with the employers decision that all employees pension contributions should be treated as salary sacrifice have resulted in my pay being below NMW/LW since then.  Before this my pay was above NMW/LW. I first raised this with my employer informally 2 months ago but they did nothing. I was advised by ACAS that the next step was to use the company grievance procedure and had a meeting on 11th April. Now my employer has informed me that the salary sacrifice pension benefit will be withdrawn from April 2024 (rather than increase my pay so that it wouldn’t be the case). As this was a benefit which was offered as part of my employment contract and has been in place for over 18months can they just do this as they have only done this after I raised non payment of NMW/LW as an issue with them?

Ayr_Rage

This came up recently in another topic when the NMW was increased and a salary sacrifice scheme resulted in the same situation.

Firstly, your employer should have recognised what was happening when your pay fell below NMW.

Secondly, you bringing it to their attention has resulted in them correcting the situation.

You'll have to take further advice as to whether them removing the salary sacrifice method of pension contributions is legal.

Brie

As far as I'm aware it is legal to withdraw salary sacrifice for any benefit if maintaining it means you are being paid less than NMW.  

Marcon

lancstulip said:

A requirement of my job is to live on site in accommodation provided by my employer and for which I pay rent. I recently discovered that due to a decision by my employers to raise service occupancy rents from April 2023 above the HMRC offset rate that this, together with the employers decision that all employees pension contributions should be treated as salary sacrifice have resulted in my pay being below NMW/LW since then.  Before this my pay was above NMW/LW. I first raised this with my employer informally 2 months ago but they did nothing. I was advised by ACAS that the next step was to use the company grievance procedure and had a meeting on 11th April. Now my employer has informed me that the salary sacrifice pension benefit will be withdrawn from April 2024 (rather than increase my pay so that it wouldn’t be the case). As this was a benefit which was offered as part of my employment contract and has been in place for over 18months can they just do this as they have only done this after I raised non payment of NMW/LW as an issue with them?

Yes they can.

It's highly unlikely that you actually have a 'right' as your title suggests - but even if you did have some sort of contractual entitlement to pay contributions by salary sacrifice, the fact is that your employer would be breaking the law if they allowed you to drop below minimum wage. Obviously you'd prefer to be paid more (who wouldn't!), but it would be entirely reasonable for your employer to vary your contract, following the correct procedure, should a variation be necessary.

badmemory

I would be looking for another job they are such great employers.  Legally correct yes.  Other comments self censored.

Marcon

badmemory said:

I would be looking for another job they are such great employers.  Legally correct yes.  Other comments self censored.

Another job with accommodation...not that easy to find. Is it really worth having an tantrum and stomping off in a huff, unless of course you can find that elusive job with accommodation which also pays more...

EnPointe

Brie said:

As far as I'm aware it is legal to withdraw salary sacrifice for any benefit if maintaining it means you are being paid less than NMW.  

indeed it is 

and changing the pension  contributions to none salary  sacrifice  but still relief at source  is a way to avoid this 

in some organisations  whenre there are  things that can be paid for my  salary sacrifice you  sometimes find there is un unintentional 3 tier system 
1. those unable ot access Salary Sacrifice bur to NMW considerations 
2. those  able ot access  the ';shop floor'  targeted  benefits  of the scheme becasue  of service / skills/ role payment  taking their pay sufficiently above the NMW 
3. thr Managemanet /'Staff'    cadre who get access to  more by virtue of rnak or grade , even if there are shop floor  workers who earn more 

Hoenir

Seems perfectly logical. Why would the employer wished to be fined for something that can easily be avoided. There's no rights involved. Salary sacrifice is discretionary. 

Savvy_Sue

It's something I'd be discussing with my union, and if you're not in one you might want to consider joining, because being in employer supplied accommodation would make me feel quite vulnerable, and wanting to have someone on my side if there were any future problems. 

lancstulip

Thank you for your comments. 

Yes on the one hand the employer cannot continue to break the law however they caused the problem. Surely the issue of my being paid below NMW/LW for the past 12 months will still have to be addressed by them or is there a way for them wriggle out of that? 

In any case the accommodation offset difference still puts my pay below NMW/LW so I’m still below NMW/LW but now more inclined to just report it to HMRC. 

What’s really annoying is that we are constantly being sent company emails etc about their ‘staff benefit’ initiatives (buy extra holiday, salary sacrifice pension etc) to show us how much their staff are valued & appreciated. It certainly doesn’t feel like that when I am now (after 2 years of receiving these benefits) am being excluded from because my pay has been eroded to the point that it is only NMW.   Although I like my job since I don’t need the accommodation i am now seriously job hunting. 

If I’m only going to be paid NMW/LW then let it be for a job with a lot less responsibility than I currently have! 

Andy_L

lancstulip said:

Thank you for your comments. 

Yes on the one hand the employer cannot continue to break the law however they caused the problem. Surely the issue of my being paid below NMW/LW for the past 12 months will still have to be addressed by them or is there a way for them wriggle out of that? 

In any case the accommodation offset difference still puts my pay below NMW/LW so I’m still below NMW/LW but now more inclined to just report it to HMRC. 

What’s really annoying is that we are constantly being sent company emails etc about their ‘staff benefit’ initiatives (buy extra holiday, salary sacrifice pension etc) to show us how much their staff are valued & appreciated. It certainly doesn’t feel like that when I am now (after 2 years of receiving these benefits) am being excluded from because my pay has been eroded to the point that it is only NMW.   Although I like my job since I don’t need the accommodation i am now seriously job hunting. 

If I’m only going to be paid NMW/LW then let it be for a job with a lot less responsibility than I currently have! 

Not really. The government caused the problem by increasing NMW. That has "frustrated" the employment contract by making it impossible for the employer to continue with salary sacrifice.