Government phase out childcare vouchers from 2011

October 23rd, 2009

The end of childcare as we know it?

The end of childcare as we know it?

The new plans
Prime Minister, Gordon Brown announced plans to phase out tax and national insurance contribution exemptions for childcare vouchers in his keynote speech to the Labour Party Conference in Brighton, instead offering free childcare for 250,000 two-year-olds.

Given there are over 732,000 two-year-olds in the UK, the offer of 250,000 free childcare places does very little to encourage highly skilled mothers back into work after childbirth, which ultimately damages the UK economy and extends the gender pay gap.

Employers introducing the scheme after April 2011 will not be able to apply the current tax and NIC exemptions. Under current salary sacrifice arrangements, childcare vouchers can be redeemed for government-approved childcare, which can result in savings of up to £904 for a basic rate taxpayer and £1,195 for a higher rate taxpayer (saving on both income tax and NIC) and employers saving NIC at 12.8%.

Childcare Vouchers are not just for under 5s - they can be used to pay for all types of registered childcare for children aged up to 16, including childminders, nurseries, nannies, play schemes, crèches, before and after school clubs and even holiday schemes.

The good news
An employer may introduce a childcare voucher scheme at any point between now and April 2011, and an employee may choose to receive childcare vouchers at any point between now and April 2011 to enjoy the exemptions until 2015. Therefore, the first change is 18 months away, and the main change is over 5 years away.

With over 35,000 employers providing childcare vouchers, the proposed changes have caused public outrage, resulting in over 52,000 people having currently signed the official Downing Street petition. Despite this public backlash, Gordon Brown stood firm on his plans to axe tax and NIC relief on childcare in a recent Q&A session with Mumsnet (16 October 2009). Gladly, Brown did also reiterate that the current system would remain until 2015, asserting, “Firstly, no one who is currently using the scheme will be affected in the next 5 years, so please don’t worry about any sudden changes.”

With savings over the next five years of up to £5,975 for every higher rate taxpayer and up to £1,865 for the organisation per employee who joins the scheme*, organisations who have not yet implemented the scheme should consider introducing it before it is too late. Given current pay freezes and reduced reward budgets, employees will appreciate any savings their company can make for them. Besides, it is usually the case that the savings in NIC made by the employer can fund the scheme, often with residual savings remaining.

*Savings are in absolute terms and do not take account of future
changes in National Insurance Contribution rates.

http://petitions.number10.gov.uk/keepvouchers/
Further details to come following the Pre-Budget Report…

If you have a young family you should also consider family income protection or a family health plan.

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MacLeod Review – Key enablers of engagement

October 23rd, 2009

We summarise below the key enablers of engagement as documented in the Macleod Review, combining this with Drewberry research into engagement factors we summarise key actions in implementing engagement and winning performance.

LEADERSHIP provides a strong strategic narrative which has widespread ownership and commitment from managers and employees at all levels.

Drewberry Stance: For staff to be engaged it is vital that they understand the overall direction and strategy of their organisation, clear and regular communication is therefore imperative.

ENGAGING MANAGERS are at the heart of an organisations culture– they facilitate and empower rather than control or restrict their staff; they treat their staff with appreciation and respect and show commitment to developing, increasing and rewarding the capabilities of those they manage.

Drewberry Stance: When properly conducted and analysed, employee opinion surveys and focus groups can uncover key employee / manager dynamics and provide clear direction for organisations wishing to strengthen employee engagement.

VOICE An effective and empowered employee voice – employees’ views are sought out; they are listened to and see that their opinions count and make a difference.

Drewberry Stance: Although the act of running an employee opinion survey can promote engagement in its own right, organisations must be prepared to initiate real and visible changes to maximise benefits.

INTEGRITY Behaviour throughout the organisation is consistent with stated values, leading to trust and a sense of integrity.

Drewberry Stance: Maintaining integrity also requires that the organisations internal and external branding are consistent, these values should be communicated clearly and consistently, and devolve from the ethos of treating your employees like you would your customers.

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Video | Engagement Eddy vs Demotivated Dave

October 8th, 2009

The factors of employee engagement in this video are backed up by research conducted by the Drewberry Research Team. Are these the only 3 things that we need to focus on….no. But, the 3 tiers are the foundations and if we can get those right, we are on the way to truly engaged employees.

Imagine the situation at your organisation, what other factors do you think are important?

Feel free to post your comments.

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Drewberry | Top 5 Tips - Reducing Group Risk Premiums

October 8th, 2009
Tip 1 . Negotiate hard for better rates with providers
With providers fighting for your business it truly is a buyers market, so take advantage. Being smart and negotiating with providers will see considerable savings being made.

Tip 2 . Reduce income protection payment term 
Few employees now expect a job for life so why provide income protection until retirement. Reducing the payment term to 3 or 5 years could easily see the premium drop by 30%. You also have the option of including a lump sum payment at the end of this period if the person is unlikely to return to work.

Tip 3 . Reduce income protection payment level
Income protection payment levels will vary anywhere from 40% up to 80% of salary, reducing the payment level will reduce the premium in line with the reduction in cover. Our research shows income protection is one of the least understood benefits although will often make-up a considerable proportion of your benefit spend.

Tip 4 . Increase income protection deferred period
A deferred period will range from 13 weeks up to 52 weeks, the longer you set the deferred period the cheaper your premiums. Often, if you make the insurer aware there is a potential claim on the horizon, you can pro-actively work together to help the employee back to work before a claim has even arisen.

Tip 5 . Reduce life assurance and critical illness sum assured
Both Critical Illness Cover and Life Assurance are costed on a multiple of salary basis and thus there is an opportunity to reduce the sum assured in turn reducing your premiums.

“Rebroking is one of the first cost-saving exercises that can be carried out and, with the market fiercely competitive, it is a way for you to save significant amounts.”
Sam Barrett, Employee Benefits Magazine (July 2009)

Please be aware where promises are made on benefits, an employee consultation is required to make any changes. Although it is a difficult step to take, employees are more receptive to this given current circumstance, especially when it is a case of taking a cut in benefits rather than losing their job.

If you need some specific advice, we are always happy to have a chat around your needs, email us at enquiries@drewberryltd.com or call us on +44 (0) 20 7193 6683.

Drewberry Ltd is an Appointed Representative of Chase Templeton Ltd which is authorised and regulated by the FSA | Firm Reference Number 311612.

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Drewberry | Top 5 Tips – Reducing Group Healthcare Premiums

October 8th, 2009
Tip 1 . Apply an excess
Applying an excess shifts some of the financial burden from the employer to the employee. Implementing an excess of £100 per employee can reduce private medical insurance (PMI) premiums by as much as 7%.

Tip 2 . Exclude expensive hospitals
Many insurers have pre-arranged rates with hospitals. Excluding London and Premier hospitals can reduce PMI premiums by as much as 15%.

Tip 3 . Exclude pre-existing medical conditions
Asking insurers to underwrite the scheme, thereby excluding pre-existing medical conditions, can reduce private medical insurance premiums by as much as 40%.

Tip 4 . Remove benefit for family
Removing private medical cover for the family of employees can reduce premiums by as much as 40%.

Tip 5 . Cover essential treatments only
Switching to a policy that covers only medical conditions that prevent employees from carrying out their normal working duties could reduce private medical insurance premiums by as much as 50%.

“Rebroking benefits or reviewing the basis on which they are offered can bring significant savings for organisations”.
Debbie Lovewell, Deputy Editor, Employee Benefits Magazine (October 2009)

Please be aware where promises are made on benefits, an employee consultation is required to make any changes. Although it is a difficult step to take, employees are more receptive to this given current circumstance, especially when it is a case of taking a cut in benefits rather than losing their job.

If you need some specific advice, we are always happy to have a chat around your needs, email us at enquiries@drewberryltd.com or call us on +44 (0) 20 7193 6683.

Drewberry Ltd is an Appointed Representative of Chase Templeton Ltd which is authorised and regulated by the FSA | Firm Reference Number 311612.

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Drewberry | Top Tips - Reduce Reward Spend Whilst Maintaining Engagement Levels

October 8th, 2009

The power of employee engagement
For those still unconvinced, research shows that employee engagement increases organisational performance in terms of Employee Turnover (Corporate Leadership Council (2004)), Staff Absenteeism (Gallup (2003)), Customer Service (CIPD (2006)), Innovation (Gallup (2007)) and Profitability (Gallup (2006), Standard Chartered Bank (2007)).

Don’t waste hard work
Reduced HR budgets at many organisations pose a real risk of undoing a lot of hard work spent nurturing employee engagement. If one views reward spend as a ‘hygiene’ factor (Hertzberg (2003)), then reducing reward spend (by cutting private medical insurance, for example) can have a significant drag on engagement levels. If cuts in reward spend are perceived as unfair or handled badly they can be a serious demotivator (MacLoed Review (2009)).

Luckily, all is not lost. Some organisations have managed to cut reward spend and actually increase employee engagement!

Tip 1 . Utilise Employee Feedback
Information from the last employee opinion survey can be used to uncover which benefits employees’ value least (or in some cases hardly even realised they had in the first place!).


Tip 2 .  Communicate Effectively
For communication to promote engagement it must be clear, consistent and honest.

Period of Change: Making employees fully aware of the changes that are taking place is key in maintaining a strong employee/employer relationship. Employees are likely to be more receptive to the change if it is made clear that the reduction in benefit provision is an alternative to the loss of their job.

Post Change: Ensuring employees have a clear understanding of the benefit provision they receive can significantly enhance their perceived value, total reward statements often being a useful tool.

Case Study: City & Guilds
Presented at the Employee Benefits Live conference, the use of an effective communication strategy allowed City & Guilds to make a significant reduction to their employee benefits scheme whilst actually increasing Pay & Benefits satisfaction by 13% and employee engagement by 3%.

City & Guilds communication strategy included internal announcements, intranet notices, line manager briefings and face-to-face briefings (including Q&A).  Most notably, the marketing of the children’s toy ‘Mr Potato Head’ as a way to explain flexible benefits was most ingenious (and effective).

This success led Chris Coyne, Head of Reward at City & Guilds, to assert that “Grade A communication of a Grade B benefit is better than Grade B communication of a Grade A benefit”.

The City & Guilds example demonstrates the importance of utilising employee opinion and implementing an effective communication strategy in order to promote employee engagement and maximise reward ROI.

If you need some specific advice, we are always happy to have a chat around your needs, email us at enquiries@drewberryltd.com or call us on +44 (0) 20 7193 6683.

Drewberry Ltd is an Appointed Representative of Chase Templeton Ltd which is authorised and regulated by the FSA | Firm Reference Number 311612.

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total reward statements hit spot

September 24th, 2009
Total Reward Statements magnify reward spend

Total Reward Statements magnify reward spend

Total Reward Statements prove extremely popular with employees, according to research by GfK NOP for Reward & Benefits Today.  The poll of 500 full-time employees working for organisations employing more than 100 staff found that 70 per cent viewed the statements as either useful or very useful, with only 9 per cent saying they were not very useful.  The study also indicated that only 54 per cent of employers were utilising the clear popularity of issuing total reward statements.

The results of this informative research provide a clear avenue for many organisations in the UK to increase the efficiency of their reward spend, especially given the recent finding by Drewberry that 76 per cent of HR Directors (from a survey of over 150 respondents)  believed that their staff did not understand the true value of their total reward package.  This picture is consistent with the US story, where it is commonly estimated that employees
underestimate the value of their benefits by up to 25 per cent.

If you would like a quick chat to discuss your employee communications strategy please call us on +44 (0) 20 7193 6683 or email enquiries@drewberryltd.com.

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voluntary benefits, help save your employees money

September 14th, 2009

Employees can make significant savings through a Voluntary Benefits Scheme

Employees can make significant savings through a Voluntary Benefits Scheme

There has been an upsurge in the number of organisations seeking to provide their employees with a spread of voluntary benefits. With such a focus on saving money, organisations are going that extra length to help employees make savings on their everyday costs of living. A voluntary benefits platform or discounted shopping portal provides employees with discounts on a vast range of products from your everyday groceries to big electrical purchases and holidays.

For an average family, assuming they utilise the discounts available for their groceries, a family holiday and 2-3 electrical purchases, in a year that family could quite easily see themselves saving over £1,000. With the purchasing power required to obtain these discounts and the almost endless range that could be made available, it can be difficult for an SME to provide to their employees. Getting hold of the discounts is difficult enough let alone administering the scheme.

In any voluntary benefits scheme whether managed in-house or by an external third-party, it is so vital to make sure the discounts are true. There is nothing worse than losing employee trust in the scheme. All discounts must be true discounts, if an employee can easily find better discounts online with a simple search they lose all trust in your product and it is a very steep hill to climb to try and get them back onside. Implemented correctly and with the MI that is now available, a voluntary benefits scheme can make for a very powerful tool in upping staff engagement and morale, especially given current times.

As always, communication is vital. For the scheme to be a success, clear communication of the product, the discounts available and how they work are key. Continually updating employees on the newest discounts available, providing examples of the savings that can be made and even incentivising employees to perform with vouchers which are redeemable through the portal can really make the scheme an integral part of your organisation.

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i love my job, i don’t love my job

September 10th, 2009

There are many pieces in the puzzle to employee engagement

There are many pieces in the puzzle to employee engagement

There are many reasons why an employee may be unhappy at work but unsurprisingly there are few things that help fuel that disgruntled employee more than others, here is the pick of the bunch.

I have an opinion but nobody cares
Being excluded from decision-making opportunities, especially ones that directly impact the individual, is a major gripe among employees. Employees at all levels want to feel important and there is no better way to burst this balloon than to treat them as a small cog in a much greater machine. The employees that are going to make your organisation a success are the same employees that want to contribute with ideas that improve and streamline the work process, so why not let them. Many feel rather than management utilising their knowledge of the day-to-day workings of the organisation to help drive success they are often left out of the picture and dictated to by management from afar.

There is always going to be the odd bad apple in the cart but the majority are good apples, and these employees are interested in knowing about new products, new customers, and the ups and downs your organisation faces. It is clear that there is often a misconception in organisations that employees have to get what they want to be happy. From our experience we have found employees to be realistic, they know they can’t control everything about their work life but they do want to feel like they can have some legitimate input in order to not feel powerless and resentful.

Where am I going?
Employees need a sense of purpose. For the good apple in the cart job satisfaction is influenced by job expectations, if the employee does not know what those expectations are or where they lead them to it can be a real moral-killer. People are not inspired by a job for the jobs sake they are inspired by knowing how their work is contributing to building something bigger than themselves. Employees who know hoe there job relates to the greater success of the organisation have a greater bond with the organisation and it’s successes as it is an extension of themselves

I love my supervisor!
We have all heard it, employees don’t leave organisations, they leave bad supervisors. The relationship that an employee has with their direct supervisor is one of, if not the single most important factor in employee retention. When an employee feels there is very little importance placed on them from their supervisor, no respect, no recognition, the whole job experience suffers.

It goes without saying that employees can’t stand working for a supervisor who does not know how to treat people. Employee engagement should be at the heart of any good supervisors philosophy. Not listening to their employees opinion, failing to set clear expectations, giving little or no feedback on performance, and taking credit for the hard work of others are some of the all to common traits twisting the knife in the engagement of employees.

Teachers Pet
Just like teachers or parents, supervisors and managers tend to play favorites, and it’s not hurt the employee who seems invisible while others have praise heaped upon them. Employees hate favouritism, especially if the favouritism has no link to the performance.

Opportunities for promotion, pay increases, choice job assignments, and bonuses are all common catalysts for the allegation of favouritism. Add poor supervision and a lack of clear communication and you will have some disgruntled employees to deal with.

Drilling home messages of engagement at all levels, can go great lengths in helping to put these common problems to bed. It is not rocket science, it all boils down to people regardless of seniority or position wanting to be treated as an individual, being respected and recognised as an individual, surely everyone has that right, don’t they?

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communication, are employees too often overlooked?

September 8th, 2009

Your employees are your best advocates.

Your employees are your best advocates.

We all recognise the importance of clear communication with our customers and prospects. So why is the asset closest to home often overlooked, employees tending to be an afterthought in the organisations communication strategy. Let’s assume it’s because you know employees receive ye old faithful company newsletter and thus they should know what is going on.

Getting employees on board with the right messages is so important. They are the best advocates for your organisation and as individuals are a great communication tool. What better place to get a reference than from someone who knows the organisation from the inside-out. Your employees comments and viewpoints regarding your organisation have a significant amount of credibility with the ‘outside world’.

Understanding how valuable your employees are as a communication tool and their credibility with the ‘outside world’, it is vital to ensure they are clearly informed of the goals, direction and performance of your organisation . It’s a win-win, not only will it help with their advocacy for your organisation, it will also help them align their efforts with your organisations goals and objectives. Uninformed employees can lack a connection with the organisation, feeling unappreciated and lacking motivation where informed employees are productive and singing your praises.

You should take a strategic approach to employee communication. Determine your employees opinion of your organisation and their knowledge of your key messages. Then identify the most important messages you feel employees need to know, both to ensure their top performance and to ensure you have the best ambassadors for your organisation. Prioritise the areas of most importance and develop strategies where you’d like to have most impact. Finally, it is then vital to continually monitor and measure your results to make sure your goals are in focus.

Remember, engagement is a two-way process.

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