What factor related to statutory payments must be carefully weighed against the immediate cash benefit of salary sacrifice?
Answer
The impact on Average Weekly Earnings (AWE) used to calculate statutory pay like SMP or SSP
Statutory payments such as Statutory Maternity Pay or Statutory Sick Pay are calculated based on Average Weekly Earnings. If the sacrifice causes the AWE to drop below the Lower Earnings Limit for NI, it can negatively affect the level of statutory pay received.
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