This is a massive one for me and one that I spend most of my professional career talking about!!!
When a member of staff goes off sick, there is an impact on productivity and in some cases other members of the team will need to step in to ensure things get done. But when a member of staff has a longer term condition the disruption to the business could be significant. The aim would be to get the employee fit and back to work as quickly as possible.
Waiting for appointments on the NHS could take up to 18 weeks and this is before you are even seen by a specialist, never mind being treated. The impact on business can be huge – so what can an employer do?
With the increasing pressure on and cut backs within the NHS, more and more people are turning to the private medical sector. Employers who are able are providing their employees with private medical insurance. This benefit makes staff feel valued, but also gets employees treated and back into the workplace as soon as reasonably practical. It is important that employees are supported while they are off, but equally, it is important to ensure the business is able to function efficiently with all staff performing at their optimum level.
There is a range of providers and group schemes work in several different ways. In some cases each employee will have their own policy, in some cases usually for larger companies, it is a group scheme and often with an individual employee’s medical history disregarded. In larger companies partners or families are often also insured for senior members of management, while in other companies some or all of the staff are able to pay for family members to be covered at the corporate discount rate.
Providing private medical insurance is a cost to your business, but it can also provide long term cost savings and be a way of protecting your business, keeping staff healthy and in work longer.
As I speak to my clients, I pick up on general trends. Sometimes it is based on stuff they have heard in the news, sometimes it is the fear of forthcoming legislation; but recently there is one trend which is repeated by almost all of my clients – pay increases! Staff are asking for them because the cost of living is on the increase, but companies can’t afford to give them as the economic future is so uncertain.
Going back five and even ten years, pay increases were generally given by small companies at about 5% and by large companies at 5 – 10% depending on the industry, company and individual performance. In these instances, the pay increase was above inflation and employees generally felt valued.
Today, with RPI at 5.4% and CPI at 5% these sorts of pay increases, if even possible, are barely covering Cost of Living increases. In many cases employees really do understand the pressure their management is under and would prefer to have a job with a low pay rather than no job at all, should the company go out of business. However, employees still need to be able to live: feed and cloth their families, put their children in childcare to enable them to work and to provide an adequate standard of living. As inflation increases and pay rises are not achievable, employers are having to look to alternative ways of motivating staff, ensuring they feel valued and remain engaged in the company, helping it to achieve its aims and objectives.
So, how are companies doing this? The answers vary based on size, industry and performance, but here are some ideas which can be adopted.
Communication and expectation setting
Talk to your staff. Be open and honest with them. If company performance is good, tell them, if it is bad – tell them. If you have to make changes to their compensation packages, tell them why and tell them when you will review the situation and what changes you need to see to provide a platform for restoration of their package. If there are decisions you are making to save costs, consult with staff – they may have useful insights and ideas. Try to put bad news with good news messages, but don’t lie and don’t ‘spin’ – you will loose their trust.
Good performance does not mean you have to give pay increases. If the performance is due to a one off successful sale or project, providing a one off bonus to show your appreciation is an ideal way to demonstrate how much you value staff. It won’t add to the long term fixed financial commitments of the company, but will enable a set amount of money to be shared among employees.
Access to voluntary benefits is another way of showing staff that you are thinking of them, even in these stretched times. The employer usually pays a small amount per person and this enables the employees to access all sorts of discounts making their existing pay packet go a bit further. Choosing the right benefits programme is important, but it can be a very cost effective way of rewarding staff.
Providing staff with extra time off can be another cost effective way of rewarding them. This may not work for every business and certainly won’t work if you have a workforce who are too busy to take the annual leave they normally have, but for many extra time off goes a long way.
Getting reward right is hard at the best of times. Getting it right in the current economic climate is even harder.
What has your experience been with recent pay reviews? What alternative approaches have you adopted?
Childcare vouchers are a Government initiative aimed at helping working parents with children up to the age of 15.
Each parent can receive up to £243 per month in childcare vouchers from their employer and this is free from tax and National Insurance.
Most childcare vouchers are provided through salary sacrifice, which means parents receive their vouchers instead of part of their salary.
Currently, basic rate tax payers can save up to £903 per year and top end tax payers could save up to £1487 a year.
In April the law changes and although basic rate taxpayers can still save just over £900, higher rate tax payers will only be able to save up to £610 per year and top end tax payers £590 per year.
Employers also benefit from offering childcare vouchers to employees as they do not pay National Insurance contributions on the sacrificed element of salary, this could be up to £373 per member per year.
When taking childcare vouchers, employees must be left with more than the National Minimum Wage after their salary sacrifice. If families receive tax credits, it is also important to ensure that these are not affected.
Vouchers can be used to pay for childcare in nurseries, after school clubs, holiday clubs and Ofsted registered child minders and parents can receive vouchers electronically or in paper format.
For more information about employee pay and benefits or setting up a childcare voucher scheme for your employees, contact Donna at DOHR on 01923 504100 or by email at firstname.lastname@example.org
Personnel Today has reported that a European court ruling means employers may be forced to pay millions in unpaid VAT for salary sacrifice voucher schemes.
For a number of years now the Government have offered a number of schemes to encourage employers to provide employees with tax advantageous benefits. Some of the most common include: Child care vouchers, bikes for work, pension contributions and retail vouchers.
Employers use salary sacrifice as part of their total reward package for employees and it helps with attraction and retention of staff.
Today, it appears that employers may now be liable for up to four years worth of VAT on the value of retail vouchers.
Does your company offer vouchers under a salary sacrifice scheme?
What would it cost your business if you do become liable for four years worth of VAT on this value?
What would the impact be on your business?
At DOHR we work with employers to introduce cost effective benefits schemes which incentivise employees and save the company some money. We’ll be watching this space with interest.
If I told you that as an employer you could make a financial saving by offering your employees something that many of them would really value, would you want to hear more?
Well, by introducing childcare vouchers and offering them to all your employees through a tax efficient salary sacrifice scheme, you could do just that.
Employees can opt for up to £243 per month in childcare vouchers instead of £243 of their salary – they sacrifice money for vouchers. As a result employees pay no tax or NI on this money and the employer pays no NI.
The vouchers can then be used to pay nurseries, after school clubs, summer schemes and other recognised childcare providers.
Unfortunately, they can not yet be used to pay relatives (such as grandparents) who care for your children while you are at work, but the Government are thinking about it – slowly!
Childcare voucher schemes can be introduced in conjunction with other benefits or in isolation. They must be offered to everyone to be eligible for their tax free status and certain contractual changes are required, but savings can be made even if only one employee takes up the benefit.
It’s in the news on a daily basis at the moment. The proposal to give agency workers the same rights as permanent workers. Good idea? Well, as with everything else in life, that depends on which side of the fence you analyse the situation from…….
The agency worker plays many different roles within organisations including:
At the moment, agency workers are paid by their agency and the agency invoices the company for a service. The agencies tend to fix the rate depending on the skills, experience and the nature of the role to be performed. The agency also charge a % fee on top of the hourly rate that the agency worker gets. Part of this fee is to provide sickness and holiday pay to the agency worker.
Under the proposal, after 12 weeks working for a single employer, the agency workers will be entitled to the same pay and benefits as the permanent members of staff. I believe that in some cases this is absolutely right. In the case of a recent client, one secretary had been an agency secretary for the client for 10 years – without a break. She was not entitled to the same holidays, pension, notice periods etc. For 10 + years of loyalty….. that is just not right! It also costs the company a fortune in agency fees – where is the business sense in that?
For a short period of sickness or holiday cover, I fully accept that it is more practical to use an agency worker, but on long term assignments agency workers are not the solution. Recruit employees on fixed term contracts if necessary, move them around as they are needed within the business, multi-skill the workforce to reduce costs and improve motivation – think laterally and respect the human resources which are fundamental to the business success.
If an organisation does use agency workers, the model needs to be changed. Agency workers need to work for one agency and be employed by that agency. If they want to work for another agency they should resign, just like an employee would have to do from their job if they want to work elsewhere. The agency should commit to certain levels of work, pay and benefits in line with an industry standard. The like for like comparison should be with other agency workers operating in the same environment, not with permanent members of staff at the client organisation.
It is not just a piece of legislation which is needed, it is a change in attitude and buying behaviour of organisations and the supplier behaviour of agencies.
29% of companies do not have a reward strategy (Personnel Management, 1 May 2008). Can this really be true? Do you know that l think it probably is. Companies spend anything from 10% to 90% of their turnover on their employees and have no plan for doing so, no idea if they are spending their money in the most cost effective way and no idea if the money spent on compensation and benefits is actually helping their business to succeed.
So what is a reward strategy and how can a company get one?
Like a business strategy, a reward strategy sets out what the business is aiming to achieve and how it intends to achieve it. In this case, the focus is on reward. How can we structure our pay so that it supports our business goals? Do we incentivise individuals or teams? Do we reward performance on an ongoing basis or just once a year with an annual bonus? Do the benefits we offer support our ethical beliefs and our company culture?
A reward strategy sets out the basis on which spend decisions are made. It provides a frame of reference and clear parameters which all transparent and communicated so that employees know what is expected of them and what they receive in return to thank them for the contribution they make to the success of the business.