Additional Annual Leave (Salary Sacrifice) Scheme 2014 / 15

Additional Annual Leave (Salary Sacrifice) Scheme 2014 / 15 Page 1 of 16

Contents Section Page 1 Introduction & Purpose 3 2 Scope 3 3 Definitions 3 4 Responsibilities 3 5 Flowchart 4 6 Details of scheme 5 6 7 Scheme documents 6 8 Timescales 6 9 Applications for scheme 6 10 Approval process 7 11 Appeals against the decision 7 8 12 Implementation 8 13 Monitoring of the scheme 8 14 Renewal of the scheme 8 Key Facts 9 10 Changes to terms and conditions of employment 11 Opt-in / application form 12 13 Line manager approval / recommendation form 14 Director approval form 15 Application receipt form 16 Page 2 of 16

1. Introduction and Purpose The scheme was originally offered from 1 April 2012 and it has been agreed to renew it. The scheme enables employees to reduce their working hours and work more flexibly. It has the potential to: assist staff with their health and well-being by increasing their scope to determine their work/life balance; reduce the workforce budget; and ensure that key skills and knowledge are not lost to the Trust. Employees will commit to the scheme for a period of one year, from 1 April 2014 to 31 March 2015. The Trust is giving a commitment that if the employee is dismissed on the grounds of redundancy during this period, redundancy pay will be protected. There is no commitment from the Trust to approve an application in one year where it has been approved in a previous year(s). Any variation to contract of employment under the scheme will cease to apply when the particular scheme in question ends. (In very exceptional circumstances an application during the year may be considered. However, any such late application would need to be supported by the line manager prior to the form being submitted and the line manager would be required to seek the approval of the HR Director in writing prior to the process being commenced). 2. Scope The additional annual leave scheme ( the scheme ) applies to all employees except trainees, those whose temporary employment is due to last less than one year and anyone whose salary would be likely to fall below the national minimum wage or National Insurance (NI) lower earnings level as a result of participation in the scheme. 3. Definitions There are no terms relating to the policy which are believed to need defining. 4. Responsibilities The Board of Directors is accountable for: - commitment through endorsement of this policy - identification and allocation of any resources required for the policy The Chief Executive is accountable for: - ensuring the proper allocation of the policy through management arrangements Line Managers have responsibilities for: - ensuring they are conversant with the policy and that their staff are fully acquainted with it -ensuring fair consideration of all applications and communication of the outcome to the relevant parties as set out in the policy Staff are responsible for: - ensuring that they are fully acquainted with the policy and adhere to its terms -providing the necessary information to help enable a decision to be made Human Resources Department are responsible for: - advising staff and managers on the policy and associated procedures - monitoring the policy, as appropriate Page 3 of 16

5. Flowchart Employee completes additional annual leave option / application form Employee copies to Staff Benefits Co-Ordinator Line manager receives application and makes initial assessment. Can request be accommodated and create a cash saving for the service. Yes No / Unsure Pass request to Assistant Service Director or nominated representative for approval / sign off Meet with employee to discuss alternatives / solutions Confirm decision to line manager. Line manager informs employee of decision and completes contract change notification for HR/Payroll. Payroll confirm deduction to employee Process Complete Can the application be accommodated or an alternative be agreed after further discussion? Yes No Applicant can appeal to Service Director (or equivalent) or nominated representative) Service Director (or equivalent) or nominated representative accepts appeal. Service Director (or equivalent) or nominated representative rejects appeal Note For staff who also have a reporting line to a professional lead (e.g. psychologists and occupational therapists) there should be consultation with the relevant professional lead before determining whether to approve or not. Page 4 of 16

6. Details of scheme 1. The scheme is a salary sacrifice scheme and enables an employee, with the agreement of the Trust to change their contract of employment by reducing their gross pay and increasing their annual leave entitlement by a maximum of 30 days in any one annual leave year. 2. Entitlement to additional annual leave is not a right, but will be considered by the Trust in light of service needs and cost benefit to the Trust. The relevant line manager or nominated representative must agree that the employee can participate in the additional leave scheme. 3. Additional annual leave will only be agreed when the period of absence will not require cover to meet the needs of the service at any additional cost to the Trust 4. The scheme has the potential to reduce the employee s tax and National Insurance payments and to reduce the employer s liability for National Insurance by the use of a formal salary sacrifice arrangement which changes the employee s terms and conditions of employment. 5. Employees must be provided with the relevant communications before they formally enter into the arrangements. This will include the documents; Key Facts, Change In Terms and Conditions, and Opt-in documents. 6. The employee can take a maximum of thirty days (equivalent to 225 hours for a full-time employee) additional leave in any one leave year or pro-rata for a part-time employee who works for less than the equivalent of 5 days per week. 7. Reductions in salary will be calculated as full time salary multiplied by number of hours leave requested and divided by 1955. 8. The calculation of the salary reduction will be based on the employee s basic rate of pay as at 1 April 2014. 9. The corresponding salary reduction will be made by equal instalments during the leave year. 10. The employee must continue to earn over the lower earnings limit (LEL) for National Insurance Contributions and the prevailing rate of National Minimum Wage (NMW) after any reduction for additional annual leave and any other salary sacrifice arrangement which is already in existence. 11. If the employee s contractual earnings are more than the LEL then he/she can join the additional annual leave scheme but he/she is not allowed to take an amount of annual leave that would reduce his/her salary/wage below the lower earnings limit. For current rates, please see the HMRC website at this link www.hmrc.gov.uk. As the rates may change prior to April 2014 staff and managers will need to review any applications where the change in rates could impact on the employee s ability to join the scheme. 12. For current National Minimum Wage rates, please see the Directgov website at this link www.direct.gov.uk. 13. Pension contributions will be unaffected by the salary reduction and pensionable service will be deemed to be continuous. 14. The additional annual leave must be taken within the annual leave year for which the contract of employment was amended and the employee s gross basic salary reduced. There is, therefore, no scope to carry over more than 5 days annual leave, for which the normal rules will apply. Page 5 of 16

15. Once committed, the employee may only withdraw from the scheme during the agreed period in exceptional circumstances and with the agreement of their line manager and Human Resources. 16. A request for additional annual leave should include, as far as possible, details of when the leave is to be taken to maximise the efficiency of service delivery planning. 17. Any elements of variable pay are based on the pre-sacrifice level of pay. 18. Participation in the additional annual leave scheme for one year i.e. during the 2014/2015 leave year will not affect redundancy payments, at the Trust s discretion. 19. The employee will be required to sign a written agreement to the change to their contract of employment in advance of any salary reduction and before leave is taken. 20. Where the employee is unable to take their leave due to prolonged sickness, maternity leave or adoption leave, the circumstances will be considered on a case by case basis. 21. On termination of employment, reconciliation will be made of the employee s annual leave entitlement. The employee will be required to take any outstanding annual leave during their notice period. Only in exceptional circumstances will payment be made in lieu. If the employee has taken in excess of their proportionate annual leave in the leave year, he/she will be required to repay the equivalent salary through a deduction from their final salary. 7. Scheme documents The following scheme documents are attached: Additional annual leave salary sacrifice - key facts pages Additional annual leave salary sacrifice changes to terms and conditions of employment Additional annual leave salary sacrifice option / application form Together, these documents set out the agreement between the employer (Sheffield Health and Social Care NHS Foundation Trust) and the employee in respect of the additional annual leave salary sacrifice scheme 8. Timescales Employee applications 6 th January 2014 to 14 th February 2014 Management approval process 17 th February 2014 to 14 th March 2014 Notification to employee and Payroll by 21 st March 2014 9. Applications for scheme Employees are asked to submit applications to their line manager by the deadline of 14 th February 2014. The employee must apply in writing using the option / application form provided for this purpose. The application should indicate how and when the employee wishes to take the additional leave. This may impact on whether the line manager can agree to the request or not. An employee may withdraw his/her application during the process of application and authorisation. Once the application has been accepted and the salary sacrifice arrangement entered into, the employee can only withdraw in exceptional circumstances, with the approval of management and HR. The application should also be copied to the Staff Benefits Co-ordinator in HR as set out in the application form. This will enable the monitoring of applications to occur and to assess whether there are any teams / groups who are not able to take advantage of the Scheme. Page 6 of 16

10. Approval process The line manager will consider the application having regard to the following points: the burden of any cost for cover which may be incurred (cost for cover will usually lead to the request being denied.) the operational requirements of the service in which the post is based including planned structural changes any detrimental impact on the quality of service. The line manager may need to discuss an application with the employee before reaching his/her decision, as in some cases, an application may need to be amended. If there are competing requests, the team may be invited to put forward solutions as to how the requests can be accepted without compromising service delivery. The focus should always be on making the new arrangements work wherever possible. If necessary requests may need to be considered on a first come/first served basis so managers should ensure that they date stamp the receipt of any request. Where, however, there is a choice to make between someone who has previously participated in the scheme and someone who has not, then this should be taken into account when deciding, and, all other things being equal, preference should be given to the latter. When all matters have been considered, and it is agreed that an application is appropriate then a written recommendation to participate in the additional annual leave scheme should be passed to the relevant Assistant Service Director (or equivalent) or nominated representative for a final decision. For staff who also have a reporting line to a professional lead (e.g. psychologists and occupational therapists) there should be consultation with the relevant professional lead before determining whether to approve or not. The employee should be verbally notified of the decision as soon as possible after 14 th March 2014. If the application is approved the manager will notify Payroll as soon as possible and before 21 st March 2014. If the application is refused, the employee should be informed of the reasons for refusing the application, which should be based on a reasoned assessment. The reasons for refusal will be put in writing and will generally be one of the following: The burden of costs of any cover which was needed. The detrimental effect on the ability to meet service user needs. They are unable to re-organise the work amongst existing staff. They are unable to recruit additional staff. The detrimental effect on the quality of the service. The detrimental effect on performance. Planned organisational changes. If the application is rejected then a further application cannot be considered during the life of the particular scheme. 11. Appeals against the decision Employees must be given written reasons for the refusal of any application, if they request it. The employee may resort to the Grievance Procedure if they consider that a request to take part in the additional annual leave scheme has been unreasonably refused. Page 7 of 16

There is one right of appeal against your Manager s decision by referring this to the relevant Director (or equivalent). (in cases of requests from Assistant Service Directors then the initial consideration would be undertaken by the Director and any appeal would be to a nominated representative of the Trust of at least equivalent position who has not been involved in the consideration) 12. Implementation The line manager is responsible for informing Payroll to implement the payroll changes. A copy of the signed salary sacrifice option form should be sent to Payroll and a copy kept for retention on the employee s personal file, as this sets out the agreement to the contractual changes to the employee s terms and conditions. If approved, Payroll will confirm the payment to be deducted with the individual prior to commencing any deduction from salary. 13. Monitoring of the scheme The Trust will monitor successful and unsuccessful applications in terms of equalities information and financial savings and the results brought to the Joint Consultative Forum (JCF) for consideration. Where it is apparent from the applications submitted and reasons given for refusal that there are specific issues applying to a particular department / team which prevent the scheme from being capable of applying because of cover requirements then the Joint Consultative Forum will consider whether any variation to the operation of the scheme could be introduced to meet this situation. 14. Renewal of scheme The additional annual leave salary sacrifice arrangement is offered for the 2014-15 leave year and employees will commit to it for that period. The Trust may choose to offer the scheme again in subsequent leave years, in which case employees will be invited to re-apply. Page 8 of 16

Additional Annual Leave Salary Sacrifice Scheme Key Facts A new salary sacrifice scheme to give you the choice of additional holidays in the most cost effective way possible. How the additional annual leave salary sacrifice scheme works The additional annual leave salary sacrifice scheme ( the scheme ) allows you to take additional holidays under a salary sacrifice arrangement. For the period from 1 April 2014 to 31 March 2015 you can opt to take up to 30 additional days (225 hours for a full-time employee) holiday by sacrificing some of your basic salary. The reduction to your salary will be calculated as your full time equivalent salary multiplied by the number of additional hours leave you wish to take and divided by 1955. You will save tax and National Insurance Contributions (NIC) on the salary you sacrifice, as additional holidays do not attract income tax or NIC. Do I have to do anything to take part, for example, sign any forms? If you wish to take part in the scheme, you will need to complete and sign the attached Option form, stating how many additional days holidays you wish to take. This form will have to be approved by your line manager and your Assistant Service Director (or equivalent level of manager as appropriate) before the salary sacrifice arrangements can commence. Your manager will inform payroll if your application to take advantage of the scheme is approved. How long will the arrangement last? The scheme will commence from 1 April 2014 and initially last for 12 months. You will be able to choose up to 30 days additional days holiday for that period (in addition to your normal holiday entitlement under your existing contract of employment). As part of the arrangements you will also agree to a corresponding reduction in your base salary (i.e. your salary before taking into account any salary sacrifice reductions) of your full time equivalent salary multiplied by the number of additional hours leave you wish to take and divided by 1955. The reduction in your base salary will be spread equally over the 12 months pay period from 1 April 2014. If we offer the scheme again in the 2015-16 leave year, you will be invited to re-apply. If the Trust does not offer the scheme in subsequent years or if you choose not to participate in the scheme after the 12 month period your salary will revert to your prevailing level of higher salary (i.e. your rate of salary without the salary sacrifice in relation to additional holiday being applied). Can I change my mind? Once you have agreed to the salary sacrifice, you can only withdraw from the scheme in exceptional circumstances and with the agreement of your line manager and Human Resources. Will my payslip look any different? Yes, your payslip will look slightly different. Your base salary will be shown on your payslip together with the scheme salary sacrifice reduction (and any other salary sacrifice reductions e.g. child care vouchers). Will I get a new contract? No, you will not receive a new contract but there is a change to your terms and conditions under the scheme. Please read the attached changes to terms and conditions document for your revised terms and conditions. Page 9 of 16

Can anyone take part in the scheme? If your base salary is close to the National Minimum Wage (NMW) or the Lower Earnings Limit (LEL) and we believe that the salary sacrifice arrangements will reduce your salary below either the NMW or the LEL, you will not be able to participate in the scheme. In addition, if you are on a fixed term contract or temporary contract of less than one year, or a trainee you will not be able to take part in the scheme. I work part time can I take part in the scheme? If you work part time, you will still be eligible to participate in the scheme. The maximum number of additional days that you can take under the scheme will be pro-rated by reference to the number of days you work e.g. if you work 2 days per week then the maximum number of additional days will be pro-rated to 12 days (90 hours) per annum. What if my salary increases after April 2014? If your basic salary increases during the time you take part in the scheme, the way in which the salary sacrifice reduction is calculated will remain the same However, the salary sacrifice reduction will be based on your new increased base salary. What if I leave the Trust? In the event that you leave the Trust before 31 March 2015, your final month s salary will be adjusted to reflect the level of additional holiday taken compared with the overall level of reduction made in the period to the date of leaving. All final adjustments necessary will be accounted for in your final salary payment either as an additional payment (subject to tax and NIC) or as a net deduction from salary. Will participating in the scheme have any impact on any state benefits? Participating in the scheme will mean that your taxable and NI able pay will go down. This in turn may have an impact on some state benefits, although this will depend on your individual circumstances and may not be significant, and may even in some cases have a positive impact. If you are concerned about any potential impact on any state benefits you may wish to contact the Payroll Department in the first instance. The following state benefits may be impacted: State second pension (if you are in a contracted in pension arrangement ) Statutory maternity, paternity and adoption pay calculations Working tax credits/ child tax credits (under the scheme there should be no detrimental impact on your entitlement to tax credits and in certain circumstance may increase your entitlement to tax credits). Who to contact I hope this fact sheet has answered any questions you may have, if you have any further questions, please contact your line manager in the first instance who will liaise with the relevant HR Adviser, as appropriate. Page 10 of 16

Additional Annual Leave Salary Sacrifice Scheme Changes to Terms and Conditions of Employment Base Salary Under the additional annual leave salary sacrifice scheme ( the scheme ), your base salary is the amount referred to in your contract of employment or subsequent pay awards and promotions. Your base salary will be reduced by the following amount: your full time equivalent salary multiplied by the number of additional hours leave you wish to take and divided by 1955 This reduction will apply in equal amounts between 1 April 2014 and 31 March 2015. Reviews of your base salary will continue to be undertaken in line with your existing terms. Should your rate of pay change as a consequence of such a review, you will be advised of your revised rate of base salary. Base salary is your salary prior to any reductions in your basic salary under salary sacrifice arrangements. Adjusted Salary Will be your base salary after taking into account any reduction in base salary for the additional annual leave salary sacrifice scheme and any other salary sacrifice arrangements which you have entered into. Pensionable salary The scheme will not impact on the level of pension contributions and benefits which will continue to be referenced to base salary (not adjusted salary). Additional hours, unsocial hours, night rate, weekend rate and overtime: Will be calculated on your base salary. Holiday Pay: Any holiday pay on leaving (whether owed by you or the Trust) will be based on your base salary. Maternity Pay / Paternity Pay / Adoption Pay: In accordance with statutory requirements, Statutory Maternity Pay, Statutory Adoption Pay and Statutory Paternity Pay will be based on your adjusted salary. The Trust s occupational maternity, paternity, adoption and sick pay will continue to be based on your total base salary. Provided you continue to participate in the scheme you will sacrifice an amount equivalent to your current salary sacrifice reduction, provided that this does not reduce your adjusted salary below the relevant statutory amounts. Page 11 of 16

Additional Annual Leave Salary Sacrifice Scheme Application Form From 1 April 2014, the Trust are offering you the opportunity to increase your holiday entitlement by up to 30 days per annum (pro-rated if you are part-time) through the additional annual leave salary sacrifice scheme. How does it work? In addition to your normal leave entitlements, under the scheme you can increase your holiday entitlement by up to 30 extra days per holiday year by entering into a corresponding salary sacrifice arrangement. You will save tax and NIC on the salary you sacrifice as additional holidays do not attract tax or NIC. Under the scheme, you reduce your base salary by 1/1955 th of your full time equivalent salary for each additional hour of holiday you wish to take (up to a maximum of 225 hours or 30 days). The arrangement will run for a 12 month period, and at the end of that period you will be given the opportunity to re-apply to continue participation in the salary sacrifice arrangements for another 12 months (as long as the Trust considers it economically viable to do so). In order to take advantage of the scheme, you will need to complete the Opt-in section of this form and return it to your line manager by 14 th February 2014. You will need to carefully read the details of the scheme, the changes to terms and conditions and the Key Facts sheet, as these all form part of the salary sacrifice agreement. You will then need to agree to a change to your terms and conditions, by signing the declaration at the bottom of page 2 of this form. Opt-in Form for the Additional Annual Leave Salary Sacrifice Scheme Please complete all sections below, including how many extra hours you wish to take. 1. My Details Name: Job Title: Line Manager: Date: Work Base: Band: Director: Directorate: Email address: 2. Number of additional hours annual leave The number of additional hours annual leave I wish to take under the salary sacrifice arrangement outlined above are : Page 12 of 16

I understand that the maximum amount of additional leave I can take is 30 days or 225 hours if I am a full time/full year employee. This is pro-rated for part-timers i.e. if you only work 2 days per week you will be able to take up a maximum of 12 days or 15 hours per annum). I agree to sacrifice 1/1955 th of my full time equivalent base salary for each additional hour s holiday I have chosen from 1 April 2014. I understand that the total salary sacrifice will be spread equally, over the 12 month period from 1 April 2014 to 31 March 2015. I understand that participating in the scheme constitutes a change to my terms and condition of employment as detailed in the scheme documents. 3. How my additional annual leave will be used I wish to use my additional annual leave in the following way: (please indicate which option you wish to take and provide more detail below, if necessary). a) Add it to my basic annual leave entitlement and book time off using the usual processes b) Use it for a long holiday (please provide the start and finish dates below) c) Use it to work a 9-day fortnight (please indicate below which week-day you would like off, every 2 nd week) d) Use it to reduce my working week by half a day per week (please indicate below which half day you would like off per week) Further information I have read and understand the rules and procedures of the SHSC Additional Annual Leave Salary Sacrifice Scheme and make this request to change my contract of employment by sacrificing pay in order to increase my annual leave entitlement, under the terms of the scheme. Signature.. Print.... Date.... Please print and sign three copies of the completed additional annual leave salary sacrifice scheme opt-in form. Keep one copy for your records and return one to your line manager before 14 th February 2014 to apply to be included in the scheme arrangements. The final copy should be forwarded to: The Staff Benefits Co-ordinator, HR Department, Fulwood House, Old Fulwood Road, Sheffield, S10 3TH Page 13 of 16

Additional Annual Leave Salary Sacrifice Scheme Line Manager Approval / Recommendation Form The line manager is asked to complete either section A or B below: A. I approve the attached request under the additional annual leave salary sacrifice scheme and can confirm that temporary or agency cover will not be required to cover the absence. Signature.. Print.... Date.... B. I reject this request for the purchase of annual leave on the following grounds: Signature.. Print.... Date.... Please note that a copy of this form may be given to the employee, if they ask for written reasons for a rejection of their application and may be used as the basis of a grievance under the Trust s Grievance Procedure. Please print and sign two copies of the completed form. Keep one copy in the Employee s Personal File and return one to your Assistant Service Director (or equivalent) or nominated representative. n.b. The deadline for notifying the employee and Payroll is 21 st March 2014. Page 14 of 16

Additional Annual Leave Salary Sacrifice Scheme Approval Form from the Assistant Service Director (or equivalent) or nominated representative The Assistant Service Director (or equivalent) or nominated representative is asked to complete either section A, B or C below: A. I approve the attached request under the additional annual leave salary sacrifice scheme. Signature.. Print.... Date.... B. I support the line manager s recommendation to reject this request for the purchase of annual leave on the grounds specified by the line manager. Signature.. Print.... Date.... C. I do not support the line manager s recommendation. If you do not support the line manager s recommendation, you should discuss this with the line manager and set down your final decision below. The request is Rejected (please supply further details below) Approved Signature.. Print.... Date.... The grounds for rejecting the application are: Please note that a copy of this form may be given to the employee, if they ask for written reasons for a rejection of their application and may be used as the basis of a grievance under the Trust s Grievance Procedure. If approved, please print and sign four copies of the completed form. Send one copy of this form to Payroll and one to the Staff Benefits Co-ordinator in Human Resources at Fulwood House, S10 3TH. Payroll will confirm the payment to be deducted with the individual prior to commencing any deduction from salary. Also, please keep one copy for your records and return a copy to the line manager. n.b. The deadline for notifying the employee and Payroll is 21 st March 2014. Page 15 of 16

Additional Annual Leave Salary Sacrifice Scheme Application Receipt The line manager should complete this form and return it to the employee in order to confirm receipt of their application. The manager should keep a copy for his/her records. To: Name: Thank you for your request to take part in the additional annual leave salary sacrifice scheme. I shall consider your request and inform you of the outcome in due course. Signature.. Print.... Date.... Page 16 of 16