So here’s a (good) problem that has emerged from the enormous changes in work practices since the Covid pandemic hit.
Employers previously were able to recruit and retain by creating a superior working environment – modern buildings, flash corner offices for executives, free food or at least a great staff restaurant and pool tables, tables tennis or whatever kept the staff amused all played an important part in overall reward packages. But now none of these seem so important… Because of social distancing requirements, coming to the office is well down the priority list of employees, who have taken positively in many cases to the flexibility and time saving opportunities afforded by remote working.
Employers have raced to develop positive remote working policies and environments for their people. As they probably will enjoy significant cost savings in the future through a lower requirement for office space, there is now an opportunity to look elsewhere in order to attract and recruit people. This is where a superior employee benefits package comes in.
There are a number of key benefits that employers can offer in order to minimise the tax liabilities of their employees, provide benefits which might ordinarily be considered prudent by any responsible employer and also demonstrate tangibly to employees how highly they are valued by their employer.
The provision of group risk benefits such as life assurance and income protection will offer a cost-effective solution for the provision of benefits that employees would otherwise need to arrange for themselves on an individual basis. It will also promote goodwill within the company in situations which would otherwise result in potential financial hardship for employees.
For senior employees, an employer sponsored Executive Pension can create an extremely flexible and cost-efficient retirement vehicle. However, the employer is required to make a “meaningful contribution” to the arrangement. This can be taken to mean:
- At least 10% of the ordinary annual contribution to the scheme, excluding AVCs, or
- The costs involved in setting up, ongoing operating costs and the cost of any death in service benefits.
Employee Equity Participation
Giving employees a “stake” in the future success of the business is a great incentive for staff, encouraging them to commit to the business for the long-term. However there are many ways of structuring this, and we will look at this area in more detail in future posts. There are some immediate potential benefits.
- Rewarding key employees with equity in the company should provide a focus on increasing the value of the company and promote an inclusive culture within the business with more of a sense of career rather than a job.
- Although tax benefits have been cut back with the removal of approved share options schemes at the end of 2010, marginal tax incentives are still available to employers and employees especially in respect of restricted shares which may be subject to tax abatement.
We’ve only touched on how employees might be rewarded better in the new world, nothing will beat sitting down with someone who is fully versed in this space. We are fortunate at Global Wealth to have deep experience in helping employers create the optimal reward environment for their people.
Would you like to find out more about how Global Wealth assists and guides companies to attract and retain the very best people in their sector?