I must admit to being slightly intrigued by the ongoing media-storm over bonuses in the UK.
The conversation appears to now be moving to a much wider piste, particularly after Ed Miliband seemed to suggest that all bonuses in the UK should go, with a bonus only being paid in exceptional circumstances.
Miliband’s suggestion is surely wide of the mark, as most UK employees only expect to receive a bonus on achievement of specified goals. His suggestion is also a very long way from the starting position of clipping the wings of the highly paid bankers.
But let’s just assume, for the sake of this post, that the UK begins to increasingly adopt the wider salary and benefits approach (or ‘compensation’ as the americans do insist on calling it).
In this scenario, we may well find that employers are more willing to embrace employee benefits as part of the wider remuneration package, and for a much larger percentage of the workforce.
Ultimately, this would be extremely good news for employees, employers and even the UK more generally for a number of reasons.
For starters, many employee benefits are either free of taxation, or have tax advantages, which are not available under either salary or bonus payments. This could therefore be beneficial for both employer and employee.
Just as importantly, this would create a wider usage of employee benefits across the working population. This would have the potential to significantly reduce both the savings and protection gap in the UK, thus improving the well-being of employees and their families.
Which in turn would reduce sickness absence and the reliance on the welfare state.
So, in the long run, a move away from bonuses could be a potential win-win for all concerned perhaps?
Best regards
Steve
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