The answer is that they’re both not just for Christmas!
In Ireland over the last 15 years, rewarding employees has become a once-per year activity for many companies. This trend has been largely driven by the Small Benefit Scheme, which allows a single non-cash reward to be earned tax-free per year. So many companies are using this scheme to issue a tax-free gift card to staff for Christmas.
To me, this approach is starting to get a bit stale. Here’s why-
1. The Salary Effect
If you reward people with the same amount at the same time every year, the reward ceases to be a “reward”, and starts to be viewed as part of the salary package. It becomes more expected than appreciated, and therefore looses its effect.
2. Eaten Turkey is Soon Forgotten
Because the tax year-end coincides with the Christmas season, vouchers given out in the Christmas rush tend to be spent in the local supermarket on food & drink. And so the reward is often completely forgotten about by the New Year - not much bang for the buck it costs.
3. Double or Quits
Since the Small Benefit limit was increased to €500 (up from €250) in 2015, the potential cost for the company has doubled. Whereas €250 per employee was regarded as a decent, but not excessive, end of year thank you, €500 per employee puts the reward budget in a whole other bracket. While some companies forego the maximum tax-saving by rewarding less than the new €500 limit, many companies are now looking for ways to use the scheme more productively.
4. The Reward Effect
As everyone who deals with bonuses knows, if an employee receives a €1000 bonus at the beginning of the year, they’ll typically experience a three to four-week lift in energy and engagement – then it’s gone. If the same employee receives some well-deserved recognition together with a much smaller reward, that can actually have the same impact.
In short, my argument is that like pets, Employees Rewards are not just for Christmas. If the end-of-year reward budget was split into monthly awards and distributed through peer or manager recognition, imagine the potential year-long benefit in terms of motivation, engagement, and performance. And for the same cost!
Ah, I hear you say, but we want to avail of the Small Benefit tax-scheme, and if we split up the €500 into smaller rewards, we’ll lose the tax relief, right! Not necessarily.
Allgo has a Revenue-approved Points System that allows companies to recognise and reward employees throughout the year, and still qualify for the €500 tax-relief. Employers can award points to their employees throughout the year, and at year end, the employees can redeem them for non-cash rewards.
Instead of a giving a one-off reward for retrospective performance, a proactive incentive & reward programme can be run throughout the year. The programme can incorporate one-of more elements such as Company Financial Performance, Employee Performance Recognition, KPI-based Bonuses, Service Awards, Referral Programmes, Employees of the Month, Manager-Nominated Rewards, Peer Rewards to name but a few.
How it works is that the points are accumulated by employees from January to December and their balance is kept on the Allgo points platform. The employee cannot derive any benefit from these accumulated points until 1st December or 1st January. A branded reward website keeps employees up-to-date on their accumulated points.
The company can decide to either –
a) limit the number of points an employee can earn in a year to €500 worth, OR
b) limit the amount of points an employee can spend, and pay any excess through payroll.
Allgo broadcasts a monthly branded eZine updates to all employees on their earned points, and employees can check their points balances at anytime on the branded reward website.
At year end, employees are notified to login into the reward website to redeem their points for different gift cards or products from Allgo’s Reward Catalogue (eg gift cards for Dunnes Stores, Arnotts, Brown Thomas, Irish Hotels Federation, DID Electrical etc) OR the points can be automatically converted into a multi-retailer voucher like AllGifts Corporate Voucher or Allgo Rewards Gift Card.
As well as enjoying the same tax-free status, ongoing staff reward programmes have the advantage of being more engaging and impactful than a single one-off reward in December.
Why limit the reward boost you can get to once a year, when you can spread the benefits throughout the whole year?
If you would like to talk to Allgo about putting in place a year-round tax-efficient employee reward & recognition programme, please don't hesitate to contact us today
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