The Institute of Sales Promotion is campaigning against Government proposals, which it claims could destroy the 3bn incentives industry and cost more than 3,000 jobs.
The Government is proposing to make non-cash incentive schemes for employees, like Luncheon Vouchers and Air Miles, liable to national insurance for the first time.
But the ISP says the Government proposals, which could be introduced by April next year, amount to a serious attack on jobs across the incentive industry and its associated sectors.
Randle Stonier, ISP director of member services and group managing director of incentive specialist Motivforce, says: “It could act as a catalyst to an inflationary wages spiral and have a demotivating effect on millions of employees by removing a motivational mechanism designed to stimulate performance.”
The Government is understood to be proposing the amendments to the Contributions & Benefits Act of 1992 to stop employers from topping up basic wages with retail vouchers or other incentive schemes, so avoiding tax and national insurance.
Questions were asked in the House of Commons about the “Asda Case”, when it emerged that some companies were paying staff half their wages in Asda vouchers.
But Randle says it could sound the death knell for schemes like Luncheon Vouchers, pointing out that the lower paid will be penalised even though the aim is to protect them.
Luncheon Vouchers director of public affairs Steven Stanbury says: “Luncheon Vouchers are an employee benefit given on top of salaries and we believe they have been inadvertently caught up in the process of National Insurance avoidance. These proposals could affect Luncheon Vouchers quite seriously.”
A Department of Social Security spokeswoman says: “All responses are being considered. Anyone who is concerned or has a view on non-cash incentives has been invited to respond to a consultation paper.”