Rate of record
Salary sacrifice and the minimum wage
Salary sacrifice rearranges gross pay before tax. NMW is tested against the post-sacrifice figure. There is no carve-out for pension sacrifice.
Why this is an enforcement risk
A sacrifice scheme that drops post-sacrifice pay below the NMW floor is a breach for every pay reference period. HMRC has named multiple employers for it; the typical pattern is a benefits-platform default enrolment that included NMW-band workers without a hard opt-outgov.uk.
No pension carve-out
Auto-enrolment via deduction from net pay is fine (it does not reduce NMW pay). Pension sacrifice that reduces gross pay is not. The pension industry sometimes presents the two as interchangeable; for an NMW worker they are notgov.uk.
How to cap a scheme
- Exclude any worker whose post-sacrifice rate would fall below the band floor.
- Cap individual sacrifice percentages at the headroom available above the floor.
- Recalculate on every uprate (1 April) and on every band-change (birthday) event.
- Apply a salary-cap clause to the scheme rules so the system enforces it automatically.
Enforcement examples
Multiple DBT naming rounds carry sacrifice-related breaches: childcare voucher schemes (pre-2018 closure), cycle-to-work participants on the apprentice rate, retail private-medical voucher schemesgov.uk.