All wrapped up and nowhere to

christmas is a great time to show appreciation for your staff by buying them gifts or offering benefits, but it poses a problem for registered social landlords. Under part 1 of schedule 1 to the Housing Act 1996, RSLs that are industrial and provident societies or non-charitable companies may not offer payments or benefits unless they fall within a permitted exception. What constitutes an exception is regulated by the Housing Corporation.

So how can RSLs avoid the pitfalls? What bonuses and presents could employees expect to find in their stockings? And looking to new year resolutions, is paying board members a realistic option for RSLs?

An employee of any type of RSL could expect to get a present or bonus up to the value of £300, provided that they have not received any other material benefits (other than food, drink and entertainment) during the course of the year. That sum – £300 – is the total for all material benefits that they may receive annually.

The Christmas party budget should be based on the assumption of no more than £50 per person (provided they are not getting more than £250 worth of free food, drink or entertainment in a year). These limits apply to board members, employees and any person who has been a board member or employee during the previous 12 months.

A report on this expenditure must be made to the board each year.

Good Practice Note 3, issued by the Housing Corporation in September 2002, explains how the Housing Corporation deals with schedule 1. In addition to general guidance, the corporation can issue special determinations to cover individual cases. Previously, these have been granted retrospectively but Note 3 specifically excludes this possibility. It states that any breach of schedule 1 must be reported to the corporation, which will have discretion on how it is dealt with.

So an RSL that exceeds the limits set out above, and decides to allow £50.15p for each guest at its Christmas party, would need to contact the Housing Corporation immediately and could not rely on getting a retrospective determination.

So what about those new year resolutions? The Housing Corporation has wide powers to deal with schedule 1 infringements. In extreme cases, it can order recovery of money that has been misspent. For example, a board chairman who was a solicitor and gave paid advice to the association through his firm was directed to pay back the money.

Any RSL that wants to spend more than £50 on each guest at its Christmas party needs to contact the Housing Corporation before the festivities start

Under current corporation guidance (at the moment applicable to industrial and provident and non-charitable RSLs), any board member without a contract of employment with the society or company can receive remuneration of up to £20,000 a year.

To offer payments, you must prove through reports and consultation with the Housing Corporation that board performance could be improved in terms of skills and retention. However, payment could leave many board members in a worse position than before as tenant and other board members may lose their entitlement to housing benefit and become liable to income tax.

Trouble with paying board members

The Housing Corporation issued a report on payments to board members at the end of last month. It found the following areas of concern: where an association pays more than the recommended amount; where a board member is on several boards within the same group so the possibility of double counting exists; and, most importantly, where an association wants to back-date the payments. An association would need to make a very strong business case for this last to be allowed.

In the case of charitable RSLs (which are not industrial and provident societies and fall under Charity Commission regulation) the situation is even more complicated. They are left with a blizzard of conflicting duties based on the fact that they need to work in the best interests of their charity but must also care for their employees. They must adhere to stringent accounting regulations ensuring that none of the money that is donated to them is used improperly.

As for remuneration, the principle that trustees (board members) of a charity must not profit from their position has long been held, so Christmas presents are very rare.

All RSLs face a difficult balancing exercise between public accountability and showing appreciation to their staff. Every RSL must endeavour to reach a sensible conclusion as it is important that the sector attracts and retains the best possible people. It is all about ensuring that the business of the RSL is run as effectively as possible while maintaining the high standards of probity that are so essential for its continuing success.