Asking an employer, or prospective employer about salary packaging will ensure you receive the best compensation package for your job. Salary packaging, also known as salary sacrificing, allows employees to customise their remuneration to maximize their take-home pay while minimising tax liability.
Here are some key steps and considerations for how to approach your employer to discuss salary packaging:
1. Research and Understand Salary Packaging:
Before approaching your employer, it’s essential to thoroughly research and understand salary packaging.
Understand the different components that can be included, such as superannuation, novated leasing, additional leave, or even income protection insurance. Learn about the tax implications and benefits of each element, so you can clearly articulate your preferences and the advantages while discussing with your employer.
2. Prepare Your Pitch:
Highlight how salary packaging can be mutually beneficial for both you and the company. Make it clear how it can enhance your job satisfaction and productivity while helping the company attract and retain top talent.
3. Pick the Right Time:
Choose the right time to discuss salary packaging with your employer. Avoid bringing up this topic during stressful periods or when the company is facing financial difficulties. Ideal moments include during performance reviews, when discussing job offers, or when you have demonstrated your value to the company. If you’re about to join a company, discuss when negotiating your remuneration.
4. Present the Benefits:
During the meeting, clearly outline the benefits of salary packaging to both you and your boss. Explain how it can increase your take-home pay by reducing taxable income, potentially leading to higher employee satisfaction and retention. Also, point out how it can help the company save on payroll tax and attract more talent.
5. Remain Open to Negotiation:
While you may have specific components of salary packaging in mind, be open to negotiation and compromise. Your employer may have limitations or preferences, so you should be open to negotiate and find a solution that works for both parties.
Understandably, your employer will have questions or concerns about salary packaging. Be prepared to address any tax implications, admin burden, or potential costs involved. Offer solutions or alternatives to mitigate these concerns and make the process smoother.
6. Prepare an Agreement:
If you and your employer reach an agreement, ensure that it is documented in writing and signed by both parties.
This document should outline the specific terms and conditions of the arrangement, including the components of your salary package and any changes to your employment contract. From there, ensure you stay informed regarding any changes to tax or employment legislation.
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