Today is my birthday and it got me thinking about what can employers do for their staff on their birthdays.
Some things are simple, obvious and don’t cost anything but mean a lot to your employee. There are other things you can do which don’t cost much and have a really positive effect.
Put it in writing.
Go old school and write a card and put it in the mail. People still like getting cards, and getting one from a senior person in the company lets them know they are appreciated. I’ve done this when I’ve been running teams that are spread across the country who I didn’t get to see everyday and staff would then contact me to say thanks – it’s a great way of keeping engaged with your teams.
Just buy a pack of cards at the start of the year and enter their birthdays in your diary. It’s as easy as that.
You could send an email as well or instead of a card – the effect is the same.
Go say “Hi”
If the member of staff works on the same site as you, make a point of going to see them to say happy birthday and talk about what they’re doing. Your employee will feel great and you’ll help generate a positive atmosphere and boost morale.
Give them the day off
There’s no additional cash outlay in doing this and there’s no tax or national insurance consequences to worry about so this can be a real low cost way of rewarding your employees. Of course you lose a bit of productivity on the day that the employee isn’t there, but the goodwill that the extra day’s leave generates should outweigh that in the long run.
And then when they come back to work make sure you go say “hi” and find out what they did on their day off.
Buy a gift
It doesn’t have to be big but it will make your employee feel appreciated.
Of course at this point the tax man starts to take an interest.
It’s easier if you are self-employed and have a few staff – HMRC lets you give birthday and wedding gifts without you having to report or pay tax on them.
It’s a bit more complicated if you operate through a limited company. HMRC is comfortable if you give a trivial (their word) gift in recognition of a particular event and isn’t a reward for their services. A trivial gift would be some flowers or a bottle of wine, but doesn’t extend to a hamper or a box of wine.
If the gift is non-trivial then generally you will have to report the gift to HMRC on a P11D and there will be Class 1 National Insurance to pay.
Give them a voucher
Often employers give their employees vouchers to spend at a particular retailer.
As should be expected, the tax man will want his slice and the voucher will have to be recorded on a P11D (or P9D) and Class 1 National Insurance will have to be paid. HMRC will also seek to tax the employee on the benefit reported on the P11D.
Give your employee some cash
Extra cash is always welcomed by staff, but if you do this, make sure you let the staff member know that they will have to pay tax and national insurance on it. Don’t lose all that goodwill you’ve created by giving the cash in the first place when the employee gets his payslip at the end of the month and discovers the amount of tax and national insurance he’s had deducted that month has gone up.
The above is only intended as a brief outline of possible tax consequences of giving your employee a bit extra for their birthday. Before taking any action an employer should check the detail with their accountant or HMRC.
There are ways to reduce the tax burden on your employee so they get the full value of any “present” from their employer, such as PAYE Settlement Agreements.