Jurisdiction(s):
United Kingdom

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Key definition

Salary sacrifice definition

What does Salary sacrifice mean? Salary sacrifice describes a contractual change under which an employee agrees to give up part of their future cash pay in return for a non‑cash benefit, most commonly an increased employer pension contribution of equivalent value. It is a descriptive term rather than a statutory definition. In the UK, HMRC treats it under the optional remuneration arrangements regime; tax/NIC advantages have been curtailed for many benefits, but employer pension contributions via salary sacrifice remain generally tax‑ and NIC‑efficient. In Ireland, the concept is recognised in Revenue guidance; tax/PRSI/USC outcomes depend on specific statutory reliefs (for example, approved pension,...

Long-term sick leave: employer duty to continue benefits, incl salary sacrifice

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Published by a LexisNexis Employment expert

Q&As

For the purposes of this Q&A, we proceed on the basis that, by this stage, the employee’s salary has either been paused or reduced. A Contract of employment may set out express terms granting the employee a right to be paid, and to receive contractual benefits, during any spell of Sickness absence. In some situations there may even be an implied term requiring the employer to both pay and to provide contractual benefits while the employee is off sick. As regards express provisions, an employer is not obliged to accept any such express contractual terms. Where the employer does agree, the employment contract will usually specify how long any sick pay entitlement lasts, the rate at which sick pay will be paid, and whether the employee will continue to receive contractual benefits during a period of sickness absence. For instance, an employer might agree to pay sick pay at the full rate for a defined period of absence—perhaps the first three or six months of sickness absence—then at half rate for a further spell, and thereafter at a nil rate after that...

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Web page updated on 27/05/2026

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