Archive for the ‘Employment Law’ Category
Give your employees a pay rise at no cost to you. Here’s how!
With the Eurozone in continued crisis, more cuts on the way and talk of a triple dip recession; keeping the lid on business 
finances is vital. But how does that affect your employees?
In many businesses April is pay review time. How will your employees feel if their take-home pay is falling in real terms? It seems that all but the top performers and job hoppers have seen their spending power fall in recent years with little prospect of recovery.
Fed up employees impact on your bottom line. Whether it is failing to come to work with their A-game, distracting others with their tales of woe or the simple act of quitting to go to a better paid job, they can undermine productivity and stop your business reaching its potential.
So its a delicate balance, as always, between payroll and profit and loss. However, if you’re looking to reward your employees there is another way. Employee benefits are a great way of putting money in your employee’s pockets without increasing your costs. In some instances it can actually end up saving you money.
Perhaps the best route to achieving this is through salary sacrifice – something many overlook. Both the employer and employee can benefit in the form of NI savings and/or reduced tax. Here’s a quick run through of how it works.
- Decide which benefits you want to offer your employees. These can be childcare vouchers, pension contributions, medical cash plan, cycle to work schemes, cars, laptops or wider benefits.
- Find a benefits platform to administrate your scheme. This part will cost you but don’t worry their fees will normally come out of the money you’ve saved in National Insurance and tax.
- Offer your employees the chance to voluntarily reduce their salary by the value of the benefits they want. These are then paid directly by the employer.
The recent changes to Child Benefit for higher earners means that some of your affected employees could end up getting some of their Child Benefit back if they use salary sacrifice.
As with any benefit, salary sacrifice needs careful explanation and communication to your employees. They will need to think about the impact of giving up salary in favour of benefits. In some instances they’ll need to get financial advice.
Sounds a good deal doesn’t it. Now if only you could find a company that’s interested in your business, can help you deal with all this, select a provider, source the benefits, communicate with your staff and give financial advice to your employees. The great news, if your reading this, is that you already have. 44 Financial have many years of experience of working with businesses like yours to install salary sacrifice schemes.
If you want one of our consultants to contact you simply click here.
Steve Clark
Royal Mail happy with 16% opt-out
Royal Mail has confirmed only a 16 per cent of it’s 15,000 weekly paid employees chose to opt-out of workplace pension provision. This is lower than Royal Mail thought they’d get but higher than some companies who have already gone through the process.
Only recently we commented on Asda’s announcement that they had achieved an 8% opt-out rate. You can read more here. The opt-out rates in these larger employers is much lower than many industry commentators had anticipated. Some commentators had anticipated 20%-30% opt-outs.
Some interesting feedback from Asda was that the average age of those opting out was 47. It looks like there may be a core of people who are die hard non-savers who will still opt-out. Getting these individuals to save may prove to be a challenge only achievable by the removal of the opt-out.
Our view is that as the staging dates apply to employers with less employees we’ll see the opt-out rate increase. Smaller employers are unlikely to be able to afford the kind of communications exercise that the Royal Mail and Asda undertook.
It’s all fascinating in a kind of nerdy way! Watch this space.
Early feedback from NEST CEO on new pension rules
Speaking at the Institute of Directors Conference recently , Tim Jones, CEO of NEST said:
‘From our experience with employers, it is clear that they need to give themselves as much time as possible to get ready. We recommend up to 18 months and advise they pull together a team from across the organisation who can help meet their duties.’
NEST is working with over 300 employers, with 100 of these being large employers in the first stages of implementing automatic enrolment. These include household names such as BBC, BT, McDonalds, NPower, Iceland and Travelodge, and employers from a wide range of sectors, such as Barchester Healthcare, Compass Group and Mitchells and Butlers.
Tim also announced four more names of employers to have chosen NEST for their automatic enrolment duties, namely: Balfour Beatty, Four Seasons Health Care, Spirit Pub Company and The Open University.
Reflecting further on lessons learnt so far, Tim drew attention to the need for employers to make sure they work with their payroll providers and in-house teams to get the ‘right data in the right format’.
Comment from 44 Financial:
It’s clear that to successfully deliver a compliant auto-enrolment project medium size employers will need between 12 and 18 months. If you have a staging date in 2014 you need to have started the project by now.
Salary Sacrifice–Minimum Time?
We’ve been getting a number of questions from our clients regarding the minimum amount of time that a salary sacrifice agreement must be in place for.
This has come into sharper focus when looking at the new pension rules from October 2012 that will mean that employers have to automatically enrol employees into a workplace pension. Well those all round good eggs at HM Revenue & Customs have kindly produced an FAQ on the subject.
You can read the document here in all it’s glory.
The interesting part is when they discuss the new rules. HMRC says:
“Consequently, it is not necessary to stipulate a period for which the arrangement must be entered into or to set out "lifestyle changes" in relation to salary sacrifice for the workplace pension scheme.”
That’s good news for employers who have often struggled to define “lifestyle changes” to their employees. It also helps to reassure employers that they won’t be liable for a tax bill if the employee opts out of salary sacrifice.
It’s worth remembering that salary sacrifice needs to be established carefully and is a balance between changing your employees contracts and altering your benefit contributions. As always, it’s worth making sure that you get some advice when setting up a new arrangement.
Steve Clark
Sickness & Holidays–ECJ Clarity
We’ve written loads in the past about what holidays an employee is entitled to when they are off sick. Although there has been some cases – mainly in overseas courts or the Employment Tribunal – it’s all been a bit zig-zag in terms of making progress.
Worry no longer – we appear to have some clarity from our old friends the judges at the European Court of Justice (ECJ). They have ruled that if an employee is ill while on annual leave they have the right to reclaim additional paid leave of the same duration at a later date. This applies regardless of when their ill-health commenced.
As the ECJ put it : "The purpose of entitlement to paid annual leave is to enable the worker to rest and enjoy a period of relaxation and leisure.
The purpose of entitlement to sick leave is different, since it enables a worker to recover from an illness that has caused him or her to be unfit for work.
“The point at which the temporary incapacity arose is irrelevant. Consequently, a worker is entitled to take paid annual leave which coincides with a period of sick leave at a later point in time, irrespective of the point at which the incapacity for work arose."
The ECJ ruling is binding across all members of the EU. The UK government has said that the ruling will apply in the UK from October 2012.
So there you go – we got there in the end!