Salary sacrifice (salary exchange) is when the employee reduces their gross salary and the employer pays the difference into their pension as an employer contribution.
Both sides save on National Insurance. The employee’s take-home pay may slightly increase.
For payroll: Set employee contribution to 0%, increase employer contribution to cover both. In the PAPDIS file, the full amount appears as employer contribution.
Important: Must be agreed in writing before the pay period it applies to. Retrospective sacrifice is not valid.