CIPD: Linking pay to performance could benefit employees and save tax

Date: 17th August 2010

Small businesses could save tax and benefit their employees by linking wages to performance, it has been suggested.

According to Charles Cotton, performance and reward advisor for the Chartered Institute of Personnel and Development (CIPD), there is a strong demand among employees for performance-related pay.

He advises that there are a number of ways businesses can do this, some of which may bring tax benefits.

"Obviously there is a desire for employees to share in the success of their organisation, but this can be done in a number of ways; one is by owning the organisation, either by having income in shares or perhaps being allowed to buy shares at a discount - and there are a number of tax advantage schemes that allow that," he said.

The recently released Global Workforce Index from Kelly Services found that 53 per cent of UK workers believe they would be more productive if they were able to share in profits or have an ownership stake in their employer's business.

Posted by Anthony Burns