Salary Sacrifice Arrangement

Employer: [Company Name] · Employee: [Name] · Benefit: [e.g. pension contribution, childcare vouchers, cycle-to-work scheme] · Effective Date: [Date]

1. Arrangement

Employee agrees to reduce their gross cash salary by [Amount/%] per [pay period], in exchange for Employer providing the non-cash benefit described above, valued at an equivalent amount.

2. Effect on Contractual Salary

This arrangement varies Employee's contractual cash salary to the new, reduced amount of [Amount], effective from the date above, for so long as this arrangement remains in place.

3. Tax and National Insurance / Payroll Tax Treatment

Both parties understand that [in the applicable jurisdiction], this salary reduction may reduce Employee's [income tax and National Insurance contributions/payroll tax], consistent with the specific benefit chosen and current tax rules for salary sacrifice arrangements.

4. Effect on Other Benefits

Employee acknowledges that a reduced contractual salary may affect: [statutory benefit calculations tied to salary — e.g. statutory sick pay, statutory maternity pay, pension contributions calculated on salary, mortgage/loan applications relying on stated salary]. Employee should consider these impacts before agreeing.

5. Opting Out

Employee may opt out of this arrangement with [Notice Period] notice, [or upon a lifestyle change event as permitted under applicable tax rules], returning to their original contractual salary.

6. Review

This arrangement will be reviewed [Annually], and either party may propose changes.

Employer: ______________________ Date: ____________ Employee: ______________________ Date: ____________

*This document is provided for informational and educational purposes only and does not constitute legal or tax advice. Salary sacrifice genuinely reduces an employee's contractual salary (not just their take-home pay) — this can lower calculations tied to that lower salary, like a future mortgage application or statutory benefit entitlements, so Section 4's disclosure matters and shouldn't be treated as boilerplate.*