Hunts Cider can be found nestled in the rolling hills of the South Devon countryside, with its 18 acres of apple trees and over 200 years…
The food and drink sector has been hit hard over the last year by the Covid-19 pandemic yet has bounced back with resilience despite all that has been thrown at it. During the pandemic, there has been an increase in the number of start-up businesses within the sector and this in turn is expected to create thousands of new jobs.
As a tax specialist in Employment Tax, my focus has always been on employees and how you retain, retrain, reward, recruit and make redundancies. The right employees with the right skills can enhance the customer experience and drive customers towards wanting to return. Unfortunately, redundancies can’t be ignored and are part of the employee life cycle, however the first three R’s focus on how to avoid the last. Meanwhile, if you can recruit, it means your business is potentially growing.
Let’s now consider the magic R’s.
The key to any business is retaining employees – the longer an employee stays, they become critical to your business. The right employees know your business and your customers, and you can rely on them. Not everyone is looking for more money, as nice as that is. Employees need to know they are appreciated, communicated with, respected and are given the right work-life balance. Have all this in place and employees will stay with you. As the employer, you need to be a great leader and understand their needs.
I said that salary is not always the driver; employers pay the National Living Wage (which increased from 1 April 2021 and now applies to everyone over the age of 23). Many employers are now paying much more than the Living Wage, as they know their employees deserve a fair wage.
Another reason is that good employees are now in demand. The number of job adverts I am currently seeing in the sector grows week on week for staff at all levels. It is now even more important to retain those employees who make your business what it is and will support you in developing and growing. You need to engage with them, especially younger employees who might be the real key to unlocking future growth.
In retaining staff, be aware of changing an employee to someone who is self-employed, as there is significant tax risk in doing this or when recruiting.
Part of retaining staff is making sure they have the right skills to undertake the work. The right people, with the right skills, in the right place and at the right time are essentials. The Kickstarter programme has helped with upskilling new employees and tapping into the apprenticeship levy provides monetary support for delivering training to all staff, even those who have been with you a while.
Giving your employees the right skills helps with their retention, as you allow them to develop and do their job well and to learn new skills and grow. Investment in an employee’s learning shows that you are investing in their future.
In an employee’s hierarchy of needs, rewards are perhaps not as high as many first think, although they can add the most in costs for an employer. Is it all about the money, especially after a pandemic? For some it will continue to be, but for many not.
Employees’ needs are often met in other ways that tap into their basic psychological and self-fulfilment needs. The basic need that money provides is essential, but working in a great environment, feeling appreciated and being allowed to fulfil their potential are also important needs to meet if you want to retain and retrain people.
You may want to consider flexible benefit schemes for employees in the long term, which provide your employees with what they want and maybe not what you think they want. You may be prepared to offer them shares, either direct or more likely share options, so that they can be rewarded when the business grows. Not everything you provide will have a tax and National Insurance liability, and it is worth exploring and taking advice on what is good to provide and the most tax efficient way to do this.
As your business grows post Covid-19, recruitment may be necessary as you need to attract new talent. The post Covid-19 market will be different to last year and you need to set your business apart from everyone else; what will make an employee want to join your business? Employees are in demand across the whole region and further afield, especially those with experience in the sector or transferable skills. You may be able to match salaries, meaning paying more than previously, but you need to look at what else you are able to offer and how you make yourself the go-to employer.
The one we do not want to discuss is redundancy and for a business that is growing and needs stability this is not a good option. Redundancy and the process and payments that go with it are complicated and this is an area where technical advice should be sought. It might be that the way you have always calculated redundancy has changed and is no longer correct from a tax and National Insurance perspective.
If you have any queries on any of these issues, please do not hesitate to get in touch.