Printable View
Gave a member of staff a very chunky bonus which they gave elected to put into a pension
Very happy for them to have earned the bonus and that they are able to do a sensible thing with it
However they have now said that we should give them the NI part of the NI that won’t be incurred by the employer.
What do people think about that request ?
Sent from my iPhone using TZ-UK mobile app
Sounds extremely ungrateful to me. Particularly as it something the employer would be paying rather than them.
That was my thought.Quote:
Originally Posted by Gav
But having been an employer for 25 years I acknowledge that I have forgotten what it feels like to be an employee so was just wondering if I was being harsh thinking of the ingratitude
Sent from my iPhone using TZ-UK mobile app
I’m PAYE and would never expect someone to be so grasping/entitled
I suppose it depends on the level of generosity of the bonus, if you gave minimum amount then the employee might be a bit peeved that their hard work is not being recognised so want the NI added, if on the other hand you have been generous then yes it is ungrateful and could well damage their career but some people cant look past their own nose when money is concerned.
Interesting point, I salary sacrifice into my pension and my employer pays the NI element in also.
However my bonus goes into my pension to manage my tax, and that part doesn’t have the NI element added to it.
They are certainly not shy in coming forwards there, not sure I will be having that conversation with my employer, although there would be no flexibility given they are a global corporate giant!
I wouldn’t say the employee is being ungrateful - just financially astute. They will have probably read it on a financial forum or newspaper article, or heard it on the television from someone like Martin Lewis, encouraging employees to speak to their employer about the NI saving and ask if they are happy to give them that element as effectively it’s nil cost to the business. Of course it depends on how they asked you I guess?
As someone who has set up a number of group personal pensions in the past for businesses (especially when it was optionally, but due to become mandatory), I used to suggest the employer utilising the NI saving as a suggestion for various reasons - as I said earlier, nil cost for one, employer could kind badge it up as a small pay rise and could if anything may make the employee more loyal to the business. From memory I’d say about 1/3rd or slightly more employers agreed.
I think it's okay to ask, if done in the right way.
I suspect they have come across as a bit entitled hence you posting here. How do you manage their standard pension contributions. Do that.
Sent from my M2101K6G using Tapatalk
Don't ask, don't get and their understanding may be based on the employer being willing to pay the higher gross amount if not paid into the pension (assuming I've understood the process correctly and the employer benefits from the employee's choice to pay it into a pension).
He benefits from not paying NI on the bonus as it’s paid into the pension before tax and NI are paid. You save NI too but that’s nothing to do with him. A firm polite no with a chuckle thrown in for a nice try.
You don't ask, you don't get.
Perfectly reasonable request IMO, and the kind of stuff that keeps employees loyal at no extra cost to the employer.
Before my wife retired recently all staff had negotiated employer NI savings contributions into their pension.
Sent from my SM-A536B using Tapatalk
A typical conservative (non political) view of the employer/employee relationship.Employees should know their place at all times.Quote:
Originally Posted by RustyBin5
Sent from my SM-A536B using Tapatalk
If you would’ve paid employer’s NI on the bonus it seems fair request for them to ask. As others have mentioned though, the manner in which they asked, does show you something of the character of the person involved for your own reference.
Perfectly reasonable request if asked in the right way.
I’d have suggested the employers NI saving was split 50/50
The bonus amount was the bonus amount so the employer’s NI liability (or otherwise) is entirely the employer’s concern and not the employee’s. If the bonus had been subject to employer’s NI, would the employee have offered to pay that?Quote:
Originally Posted by RustyBin5
I assume contractually the employee’s entitlement is to the bonus and that alone.
Agree with this. My employer won't add their NICs but that's because its an international company and they need to be seen as treating staff in different countries equally.Quote:
Originally Posted by xxnick1975
Assume you may be running an SME sized business given they have asked that question.
I agree with above in that it does depend how it was asked.
An alternative view, especially if you are an SME size, someone with that knowledge may be someone who is intelligent and thoughtful and someone the business may want to retain as they are thinking outside the box when doing their job too you would like to think. Therefore you may want to offer some level of flexibility although the request is unusual. You know the person involved best and how they may react to a negative response, how good they are at their job, how crucial to the business they are, etc so that will also go a long way to answering the question. Not that anyone should be treated differently of course.
Having said all that, if I had been asked this at work, I would probably consider all of the above and then say no regardless!
It (NI savings) is at the discretion of the employer.
In our case we pass the savings on to the employee - so their salary sacrifice is maximised & their pension is boosted.
It’s a simple, (no cost to the business) method to help employees.
Why not ?… it’s an employee benefit that’s a good way to retain good employees for zero additional cost to the business.
z
Emoloyers can do as they please but there are various upfront and ongoing legal/HMRC obligations to be observed in operating salary sacrifice so it’s not cost-free. The employee saves EE’s NI and the employer saves ER’s NI. What benefits the company ultimately helps the bottom line which should matter to the employees and their continuing employment!Quote:
Originally Posted by zelig
Will it be going into their pension via Salary Sacrifice? Sort of implied but not explicit in the OP. If it's not via Salary Sacrifice, nobody gets any NI tax benefit.
You've got to really squint at it to make it a 'zero additional cost to the business' situation. If it's in the employees interest to put the money in their pension then that's what they'll do, handing them the companies NI saving is quite literally a cost that would otherwise not be incurred. The only way it could be a genuine 'zero additional cost to the business' situation would be if the employees decision to contribute that portion of their earnings to pension was dependant on whether they received the extra employers-NI uplift on it.Quote:
Originally Posted by zelig
Not saying it's not a nice benefit to offer the employee and if an employer is willing to do it that's great, but then credit where it's due as it's not zero cost to them.
Yes. That is precisely what we do.Quote:
Originally Posted by M1011
Hence, my original comment re: zero cost.
z
First part of my comment was to the OP clarifying their scenario RE salary sacrifice.Quote:
Originally Posted by zelig
In your scenario, regardless of Salary Sacrifice it is still not zero cost to the company to give up their NI benefit, it’s literally a cost, unless the niche scenario occurs where an employee only puts the money in their pension directly due to the availability of the additional NI refund.
That's what we do.Quote:
Originally Posted by M1011
We had the choice to pocket the NI reduction or pass it on to the employee.
We chose the latter.
z
My previous Employer split the difference and added 50% of the NI element on top of my bonus so everyone was a winner.
I’d just say it’s already in the bonus and that I’m surprised you have asked!
I’d politely say no and reconsider any future bonuses
Hopefully, I never work for you!Quote:
Originally Posted by Balance wheel
I don’t like your attitude, your fired in all seriousness I don’t hire anyone only subbies so your safeQuote:
Originally Posted by noTAGlove
Haha. If you can arrange redundo from my employer, I'm definitely game.Quote:
Originally Posted by Balance wheel
Yes I understand the function, to clarify my point is that the employer incurs a cost by offering that money to the employee as the status quo would see it in the companies pocket. So it's admirable, but not zero cost, and that's an important distinction to be mindful of for folk requesting that employers-NI to top up their pension. The only scenario in which it's truly zero cost is the niche scenario described previously.Quote:
Originally Posted by zelig
Nothing niche about salary sacrifice, whether salary or bonus.Quote:
Originally Posted by M1011
From HMRC's point of view it is all earned income and can be sacrificed accordingly.
What? That's not remotely the point I'm making..Quote:
Originally Posted by noTAGlove
The point I'm making is the only niche scenario where it's zero cost to the business to hand over the employers NI is in the scenario where an employee would only make the pension contribution IF the employer NI is offered, and without the employer NI being offered they would opt to not contribute those funds to their pension. In that scenario, they're either paying the employer NI to HMRC or the employee, so it's genuinely zero cost.
In the much more likely scenario where the employee is going to make the pension contribution either way (which is the case per the OP it would appear), it's evidently not zero cost to the company to hand over extra equivalent to an employer NI tax charge that they're no long actually incurring. They're literally making a payment that had no legal obligation to make. A nice thing to do, but it's unrealistic to describe it as zero cost.
Probably goes without saying, but this is unrelated to employees NI reduction which automatically benefits the employee when using salary sacrifice.
I hope that's clarified my point.