Edenred Salary Sacrifice Agreement

27 Nov Edenred Salary Sacrifice Agreement

Edenred Salary Sacrifice Agreement: A Comprehensive Guide for Employers and Employees

Edenred is a leading employee benefit provider, offering a range of solutions that help employers to motivate, engage and reward their employees. One such solution is the Edenred salary sacrifice agreement, which is becoming increasingly popular among UK employers and employees.

Salary sacrifice is a scheme that allows employees to give up part of their salary in return for non-cash benefits. This means that employees can receive tax and National Insurance (NI) savings on the sacrificed amount, while still benefiting from the chosen benefit. The Edenred salary sacrifice agreement is a way for employers to set up such a scheme for their employees, through Edenred’s online platform.

How does it work?

The process of setting up an Edenred salary sacrifice agreement is simple and straightforward. An employer can choose from a range of benefits offered by Edenred, such as childcare vouchers, cycle to work, and technology schemes. They can then set the parameters of the scheme, such as the amount to be sacrificed, the duration of the agreement, and the eligibility criteria for the employees.

Once the agreement is in place, the employee can opt-in to the scheme and agree to the salary sacrifice amount. This amount is then deducted from their gross salary before tax and NI contributions are calculated. The employee still receives the chosen benefit, but with the added benefit of tax and NI savings.

What are the benefits?

The Edenred salary sacrifice agreement offers benefits for both employers and employees.

For employers, the scheme can help to reduce their National Insurance contributions, as the amount sacrificed by employees does not count towards their NI liability. It can also help to increase employee motivation and engagement, as the added benefits can be a valuable perk for staff members.

For employees, the scheme can provide significant tax and NI savings. Depending on the amount sacrificed, employees can save up to £933 a year in tax and NI contributions. The salary sacrifice agreement can also be a useful way to manage the costs of certain benefits, such as childcare or travel expenses.

What are the limitations?

While the Edenred salary sacrifice agreement can be a valuable employee benefit, there are some limitations to consider. Firstly, it is important to ensure that the chosen benefit is of genuine interest to employees, as otherwise the scheme may not be effective or worthwhile. Secondly, the salary sacrifice amount must be agreed between the employer and employee, and cannot be imposed by the employer. Finally, the scheme may not be suitable for all employees, such as those on low incomes or those who have existing debt arrangements.

In summary, the Edenred salary sacrifice agreement can be an effective way to provide valuable benefits to employees. By choosing a range of benefits offered by Edenred, employers can set up a scheme that suits the needs and interests of their workforce. The added tax and NI savings can be a valuable incentive for employees, while employers can benefit from reduced National Insurance contributions and increased staff engagement. As with any employee benefit scheme, it is important to follow legal and regulatory requirements, and to ensure that the scheme is communicated effectively to employees.