UK: Delivering The Right Package

Last Updated: 17 November 2011
Article by David Ellis

How do you retain and incentivise short-term employees? How do you secure the loyalty of the people vital to your continued growth? And how can you tie your wage bill more closely to your profits? These are some of the main employment issues facing the licensed trade. David Ellis, employment solutions partner at BDO Stoy Hayward, has some answers.

There is a lot of part-time working in the licensed trade, but what really distinguishes the sector is its short-term employee population. People don't tend to stay in one job very long – they move on or they are poached by other chains. After all, this is a very visible sector – you can walk into another pub and compare notes with your opposite number. Because of the transience of a large part of the workforce, businesses in the licensed trade need to adopt an original approach to retaining and incentivising short-term employees. But they also need to find ways of securing the loyalty of people higher up the organisation whose long-term contribution is vital.

At the same time, the sector has significant fixed costs but highly volatile profits – a spell of poor weather can wreak havoc. How can you make your wage bill flex with your profits? Although this is a fairly traditional industry, it has a lot to gain from embracing modern ways of paying people – and here are possible solutions to the three key issues:

Incentives For Short-Term Employees

Working in the licensed trade offers a particular lifestyle and often attracts a certain kind of person – so you need to provide a benefits package that appeals specifically to them. "Traditional benefits such as pensions and medical insurance are unlikely to fit the bill – people want something more immediate and tangible," says BDO Stoy Hayward partner David Ellis. "A modern package that sends the right message could include a choice of flexible benefits such as additional holiday days, discounted gym membership or vouchers for a popular national retail chain – not forgetting in-house discounts."

Ideally, you should be looking at schemes that offer attractive benefits while saving money for your business. More and more businesses are introducing salary sacrifice schemes to provide employees with items such as home computers, mobile phones and bicycles cheaply. "The tax breaks on such items make the schemes attractive to both employer and employee alike," says David. "For example, offering a scheme that allows a 33 per cent saving on employees mobile phone bills would be popular as virtually all employees will have one, and, importantly, there are no employer's national insurance contributions (NICs) to pay on the part of the salary used. Where a benefit is free of both income tax and employer's NICs, you're onto a winner."

An Equity Share To Secure Long-Term Commitment

For those people on whom the long-term success of the business depends, your must-keep employees, you might want to go further and offer them an equity share. The key is to do it as tax efficiently as possible and that means using an approved share option scheme. The two most common are the enterprise management incentive (EMI) scheme, available to businesses with gross assets up to Ł30m and the company share option plan (CSOP), available irrespective of your size. Both schemes enable you to restrict who you give share options to – so you can focus on those employees with the potential to play a significant role in the company's growth.

These schemes are a vehicle for giving employees the option to buy shares at a predetermined preferential price at some point in the future. There is usually no income tax or NICs to pay when the options are exercised. Although the employee must pay capital gains tax (CGT) on the profit when he or she sells the shares, taper relief means CGT could be as low as 10 per cent just two years after grant. Importantly, the company is entitled to a statutory corporation tax deduction on the profit when the employee exercises.

David adds: "As a way of encouraging employees to stick around, you could grant share options with some kind of time-based vesting – or state that they can only be exercised if the employee's business unit, or the company as a whole, achieves specified targets."

Relating Pay To Profits

For both short and long-term employees, you could consider some kind of profit-related pay mechanism, where the benefit comes out of additional revenue. This could go some way to balancing out your revenue and costs. For short-term staff, such a payment is likely to be linked to a specific promotion in their own outlet; for example, successfully meeting targets for additional food sales. For people higher up the organisation, the payment might be linked to performance by their region or business unit, or the business as a whole. But David adds: "If such a scheme is to be an effective incentive, it is vital that the employees concerned can see how their individual contribution can make a difference to the target that has been set – otherwise they are unlikely to get behind it."

An annual bonus plan where a portion of salary is dependent on performance, by the individual and/or the business, can take significant pressure off the wage bill. But it is difficult to move to such a model overnight. Why should people buy into a scheme if all they can see is the potential for their salary to fall? Instead of inspiring loyalty, it could well have the opposite effect. "One possibility is to introduce a bonus element in lieu of salary increases," says David, "thereby eliminating any additional cost to the business while limiting any negative sentiment." A short-term employee population and potentially volatile profits are inescapable characteristics of the licensed trade. But there is certainly scope for structuring remuneration in a way that is advantageous to your business financially – while also giving you the edge in the recruitment and retention stakes.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.