Benefits break

It is easy to be seen to respond to the Government’s drive for UK firms to raise productivity and competitiveness – that is precisely what firms are continuously striving to do. It is not quite so easy to find money for the employee benefits needed to retain good staff.

It’s not hard to see the sense in taking good care of your workforce – your employees are your most valuable asset. Looking after their health and job security is the best way to maximise attendance, performance and loyalty.

In the electrical industry, where staff levels are dictated by order books, firms must remain flexible because they can’t afford to maintain high staff levels when the work isn’t there. As a result many operatives move to follow the work available and it’s difficult for them to maintain a consistent level of benefits.

There is a solution to this problem. This is available to JIB members in the electrical industry: the Combined Benefits Credit Scheme. The scheme has operated since the Inland Revenue introduced a special arrangement for the construction industry to allow employers to tackle the difficulties associated with holiday pay for an itinerant workforce. Today it represents a low-cost way for employers to provide a high level of welfare benefits to employees.

The ECIBA

The scheme has two elements: holiday pay and welfare benefits. A vital component of the Revenue’s arrangement is to waive National Insurance (NI) on holiday pay. This is channelled through a designated third party, which is represented in this sector by the Combined Benefits Credit Scheme and administered by the Electrical Contracting Industry Benefits Agency (ECIBA).

One of problems employers faced in the past was giving holiday pay to operatives who have earned their entitlement while working for previous employers. Under the Combined Benefits Credit Scheme, holiday pay is lodged at set periods throughout the year. The contributions will be paid to the member employing the operative at payout time or directly to the operative if they are unemployed.

Savings of around £300 a year per employee can be made this way. For a large firm, the total annual savings will be well into six figures.

The basic scheme is based on 22 days leave a year. It can be extended to include operatives on different pay rates. A top-up facility is available to add eight public holidays to the cover. It’s also possible to extend the cover to all members of a firm’s staff. The money saved in NI contributions is then used to offset the cost of the welfare elements of the scheme, providing a comprehensive benefits package to employees.

Seeing the benefits

The package includes private medical treatment, health screening, sick pay, death benefit cover, accidental death benefit and permanent and total disability benefit.

The cost to the employer is £11.50 per person, per week, which is just under £600 a year. By offsetting NI savings of around £300 a year against this cost, employers could effectively be securing a high-level benefits package for an employee for under £300 a year.

The benefits package is so good that some JIB members are prepared to take advantage of it without any NI reclaim. To do this though is missing an opportunity, as companies can effectively save half the cost of the package through NI holiday pay reclaim. Thirty days leave, after all, equates to around 11% of the annual wage bill and with employer NI rates continuing to rise, potential savings are large.

The holiday pay element of the scheme is simple to operate and flexible to fit the industry characteristics. It can also help companies avoid cashflow problems at payout times.

The scheme’s reporting needs can be fed into a company’s accounting system or completed manually. ECIBA is looking for members to start piloting a new electronic returns system.

ECIBA provides participating firms with regular updates on their contributions. Operatives covered by the scheme also have the security of being able to contact ECIBA at any time to check the status of a benefit or their holiday pay contributions.

Firms can choose to pay a bulk amount rather than account separately for each employee’s holidays. Where there are few staff changes, ECIBA allows exceptions-only reporting, so a firm need only submit forms when changes occur.

When you’ve built up a skilled workforce you want to be sure of its loyalty and commitment. Using JIB’s Combined Benefit Credit Scheme, a firm can provide a level of benefits usually only available to top executives, at a very economic cost. Even in a firm where staff levels ebb and flow with the level of work, this scheme can be used to retain and nurture a core workforce of highly skilled operatives.

Martyn Burnley is general manager with the ECIBA.