What is the contractual agreement?

The tax-efficient way to help employees save for their future.

Salary Exchange is recognised by HM Revenue & Customs (HMRC). It is a contractual agreement between employee and employer that effectively varies the employee’s terms and conditions of employment, and this must be recorded by you as such.
There are various ways in which Salary Exchange can be implemented or offered. In all cases where the pension plan is being used to meet auto-enrolment rules, the employee should be given the option to decline Salary Exchange without excluding them from membership of the pension plan, or otherwise disadvantaging the employee.
Employees who decline Salary Exchange can revert to the normal way of making pension contributions called the Net Pay method at any time. Salary Exchange is the acceptance of a lower gross salary in return for an increased employer pension contribution and the Net Pay method is a contribution deducted directly from gross pay.