NLW and salary sacrifice schemes: lobbying for change

Employers continue to face challenges in terms of the National Living Wage (NLW) and how this interacts with salary sacrifice and net deduction schemes across the NHS.

Salary sacrifice schemes make up a significant part of the total reward offer in the NHS. Employers have told us that many staff, particularly in the lower bands, are being prevented from accessing this crucial part of the reward offer. This is due to several factors including NLW rises and delayed pay awards. As a consequence, this has led to non-compliance with the NLW regulations and a series of penalties being placed on NHS organisations for breaching these. It is also having a significant impact on the morale and motivation of staff who are being denied or removed from these schemes.

We continue to represent employers by raising the issue on their behalf with government and wider policy makers and support a review of existing and future policy arrangements around the NLW. 

We need to establish how the interaction between salary sacrifice/net deduction and the NLW might be improved in the future to best protect and reward lower earning staff across the service. 

We have written to the Chief Secretary to the Treasury on three occasions this year, setting out our position on behalf of employers. A copy of all three letters can be accessed below.

Letter sent in May (PDF).

Letter sent in August (PDF).

Letter sent in November (PDF).

This is an important issue we will continue to raise and will keep employers updated on progress.