An employee's eligibility for statutory payments, such as statutory maternity pay or statutory sick pay, is based on an employee's earnings for national insurance over a set period. As salary sacrifice reduces an employee's earnings for national insurance, an employee's eligibility and statutory rate may be impacted.

During statutory parental leaves (not including statutory sick leave), contributions are calculated as follows;

Employer contributions - Calculated based on pre-leave earnings.

Employee contributions - Calculated based on the contractual arrangement in place for the salary sacrifice agreement. If the employee is not in receipt of any pay that pension contributions can be deducted from (such as occupational or company maternity pay) the employer covers the cost of the employee contributions too.

Using maternity leave as an example, SMP can't be sacrificed. However, due to the contractual nature of a salary sacrifice, the liability for the employee's agreed sacrifice then becomes a liability of the employer. There are some exclusions to this but that would be rare and contractual.

This means that where a salary sacrifice arrangement has been put in place, the non-cash benefit that the employer has agreed to provide must continue to be provided throughout the full maternity leave. This applies only to the 26 weeks Ordinary Maternity Leave and 13 weeks of Additional Maternity leave; it does not include unpaid leave following this period.