What is the contractual agreement?

Contractual changes due to a salary sacrifice arrangement.

When an employee chooses to join their employer's salary sacrifice pension scheme, their contract of employment must be changed to reflect this. Reference to the implementation of the scheme could be attached to the employee’s contract via a letter or other relevant provision. 

An employer will require the employee's consent in order to make a deduction to their salary through salary sacrifice. If they enrol an employee but fail to obtain consent before implementing the scheme, they could be in breach of the contract of employment. Despite this, if the employee has been notified of the change, is provided with a deadline to opt-out, but continues to work without raising any concerns, they are considered to have legally opted into the scheme with consent. 

Those who do not wish to be a part of the scheme can opt out but may continue to make pension contributions through the normal method if their employer is still offering this as an option. The employer is not obliged to offer the choice of two schemes but may wish to do so in order to allow employees who are not eligible for the salary sacrifice scheme (those whose salary would fall below NMW due to any deduction) to continue making pension contributions.