20th August 2015
Steve Herbert, head of benefits strategy at Jelf Employee Benefits and Mindful Money columnist, takes a look at the controversial issue…
In July, I publicly stated my considered view of the employee benefits legislative landscape at the end of the government’s term in 2020.
In shortened form, my summary was as follows:
– More employer costs
– Fewer tax reliefs
– More employer duties
I appreciate that the above is probably a pretty bleak picture for the many UK employers who are already struggling to deliver on new pension costs and duties imposed as a direct result of auto-enrolment and pension freedoms. Change in the pension space is of course set to continue with new governance requirements set to be imposed – presumably once the regulators can work out what the best governance practices actually are in the new and fast changing pension landscape.
Yet there is no reason to assume that the additional duties will stop with pensions. There are plenty of other areas where the government may look to move the onus of responsibility to employers. And one such example may already be waiting in the wings for its full debut.
Cast your mind back to the 2015 General Election manifesto promises. Amidst all the usual posturing on taxation, the economy, and the NHS was one smaller item that could cost UK employers a packet – whilst adding to administration and communication duties also. And surprisingly that topic is part of the Prime Ministers’ nebulous and ongoing Big Society project.
So what is the promise, and will it happen?
Tucked away on page 45 of the Conservative manifesto document was this key line of text;
“Give those employed by a big company and the public sector a new workplace entitlement to volunteering leave for three days a year on full pay”
Now as policy commitment go, this is one that does seem to lack some serious thought. For instance, it is difficult to see how the cash-constrained employers in the public sector can easily deliver on such a promise.
Let’s take the National Health Service as an example. The NHS is one of the largest employers in the world, and facing an ongoing funding crisis for the foreseeable future. So is it really acceptable to ask the service to find extra money to support three days additional paid absence for every employee, every year?
Yet this is not only a public sector problem. It is generally accepted that absence is one of the largest costs of employment in the UK. Employers work hard at managing absence – and reducing the level of such absence by an average of a day a year is seen as both a major success and significant cost saving. Yet at a stroke this promise threatens to push the cost of absence up by three days across the entire workforce for all larger employers.
And the costs would probably not stop there. Employers would have to communicate this change and entitlement, update handbooks and intranet, record the absence, police the intended leave to ensure that it qualifies for full pay, and of course ensure adequate cover for the absent employee. These additional costs could also soon add up to a tidy sum for most organisations.
But am I being unduly negative regarding a well-intentioned idea? Do employers perhaps welcome this move?
Jelf Employee Benefits findings suggest not. We asked 223 employers their views on this subject, and (unsurprisingly) more than 60% were opposed to this idea. Our findings also suggested that those in agreement with the proposals (27%) were likely to be organisations which already offer paid volunteering leave for some or all staff, so presumably would be much less exposed to additional cost and administration burdens.
Yet this could all be academic – surely such a challenging idea will be kicked into the long grass and quietly forgotten now? The lack of a mention in the Queen’s speech suggested that it might, but the minister for civil society has subsequently confirmed that the government intends to continue with this proposal. Time will tell, but if this goes ahead it could be yet another unwelcome and expensive intervention from the legislators into the world of employee benefits.
Despite the above comments, I do in fact support the idea of employer sponsored volunteering. When done well this can be beneficial to both parties, and such a policy is often a very well received employee benefit. Yet supporting volunteering should perhaps remain just that – a voluntary act by both employers and employees to improve UK society, and not an expensive government dictate which employers may struggle to deliver.