With the grim petrol price increase prediction of over R3,00 per litre for June 2022, employees are feeling the pinch where disposable cash is rapidly dwindling and are doing everything in their power to try keep their heads above water.
Employers are feeling the ultimate pressure with the conundrum of how to remunerate employees more effectively to not only retain but also to attract talent into their workforce during these tough times.
Below are 3 key considerations that employers should consider, in adopting leading remuneration practices in the market:
1. CTC with Flexible Benefits Remuneration Structure
· This leading practice allows employees to adjust their selections whereby flexible benefits are offered in the employer’s remuneration structure, whilst maintain the same cost for the employer.
· Where increases are at a minimum and cost of living is soaring this structure also allows employees to elect more cash less benefits or vice versa to suit their personal and financial requirements.
2. Analysis of Benefit Offerings
· Remunerating employees to include certain non-cash benefits is only truly effective where these are valued.
· It is now crucial that employers re-assess and analyse their benefit offerings to ascertain the following:
o Whether money is being poured down the drain with benefits employees do not value; and
o Whether the benefits being offered are aligned to market best practice and industry norms or are just a nice to have.
3. Best price for Benefits
· Employers should consider the costs of these benefits and the timing is riper than ever to now obtain competitive quotes for their benefit offerings.
· Where employers can obtain lower rates for their benefits, these savings may be passed on to employees in a cost to company structure thereby increasing their cash portion.
With pressures mounting all round and the constant battle of trying to stretch the Rand to go further, there is no better time for Employers to have a pro-active approach to their remuneration and benefits.
With careful planning and adopting some of the above strategies, employers should both be able to control their employee costs whilst compensating employees in a favourable manner to assist in their cash flow.
Employers should act now in assisting their employees as much as possible, whose disposable income has been severely impacted due to the constant rising costs of their basic needs in the form of petrol, electricity and food versus a year ago.
Written by Tanya Tosen, Tax and Remuneration Specialist at Tax Consulting SA