Salary sacrifice and the employee value proposition

Can a salary sacrifice arrangement be used by NHS organisations to recognise and reward staff, as set out in the NHS Long Term Workforce Plan, in order to encourage improved retention rates across the healthcare system?

10 August 2023

Focus on… The NHS Long Term Workforce Plan

The recently published NHS Long Term Workforce Plan sets out that staff should be recognised and rewarded, in order to encourage improved retention rates across the healthcare system.

The Plan states: “From 2023/24, it is proposed that NHS organisations work with system partners to develop a clear employee value proposition (EVP) and promote this across the workforce. This EVP would cover national and local benefits, including pensions, salary sacrifice schemes and local financial wellbeing support initiatives…”

But what is a salary sacrifice scheme, and how can it add to employee value proposition for NHS teams?

A salary sacrifice arrangement reduces an employee’s entitlement to cash pay, usually in return for a non-cash benefit.

When a salary sacrifice arrangement is in place, an employee will receive less cash income to cover the cost of the benefit being received – however, they save money overall as a result of paying less tax, National Insurance and Employee Pension Contributions on their take home pay.

For the staff member, this can help them to achieve personal goals, such as affording something they desire by spreading the cost. In the current cost of living crisis, this can make a huge difference to morale and staff wellbeing for individuals.

The employer also benefits from the use of salary sacrifice arrangements, with savings achieved through paying lower National Insurance contributions on the reduced employee wages.

The use of such schemes helps to develop an NHS organisation’s EVP by providing a benefit which directly aids retention and promotes both emotional and financial staff wellbeing.

What can be provided within salary sacrifice schemes?

Liaison OneCall offers tailored salary sacrifice schemes for NHS organisations, covering holidays, electric cars, and boilers and furniture for homes. Their HMRC-approved staff benefits save money for staff on NI and Pension contributions, and the organisation saves, on average, over 14% on their employer pension contributions.

Liaison OneCall Director, Graeme Mitchell, says: “It is great to see that salary sacrifice is identified in the NHS Long Term Workforce Plan as an effective tool for organisations to increase both recruitment and retention, and working with Liaison OneCall can assist them to develop their employee value proposition, whilst also rewarding their hardworking employees with opportunities to fund holidays and other family and personal needs in a secure manner.”

To find out more, please get in touch.

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