Chapter 23 - Remuneration

Abstract

This chapter presents some tips and suggestions for the directors of a company to deal with various remuneration-related issues. Remuneration planning is an important tool in attracting and retaining high-quality staff and a number of benefits can be offered at little or no cost to the employer. Wider issues such as working patterns, training and development and career progression can be equally important to attract many employees. Other instruments such as bonus schemes or share incentive schemes can be used to help reward and retain key members of staff. Schemes that give each employee a degree of flexibility over the benefits they receive are particularly helpful to couples where both partners work and might otherwise be offered similar benefits. Employee share schemes must meet certain conditions in order to be approved by the HRMC, and Employer's National Insurance Contributions are also payable on gains made by directors and employees on the exercise of share options under unapproved schemes. The FRS 20 and IFRS 2 Share-based Payment generally require an appropriate expense to be recognized in the profit and loss account in the period in which the related services are received and certain companies are allowed to purchase their own shares and hold them in treasury, and then sell them or transfer them to an employee share scheme. Company car schemes have generally become less popular as a result of recent changes to the taxation system for this particular form of benefit and Employer's National Insurance Contributions are also payable on car and fuel benefits paid to directors and higher paid employees.