Employers should consider better use of pension to help Brexit-caused labour drop
It is commonly recognised within the Hospitality and Leisure Sector that Brexit will lead to a shortage of labour supply.
Although the Government is beginning to suggest that the process for EU migrants to legalise their stay in the UK will be straightforward and cost no more than obtaining a passport, it is still uncertain times, and a number of EU migrant workers are already leaving the UK.
What can be done then to manage this significant drop in labour resource? In short as an employer you need to hold on to what you have and be the go to employment destination for new recruits.
Brand profile helps, good pay, decent training and progression. A key employee benefit that could be a game changer is a better pension.
What type of pension benefits are your employee/workers getting access to and are they enough? Defined benefit schemes (final salary) are dying out. Defined contribution schemes place the risk on the employee/worker and require a contribution commitment. Does auto-enrolment fix this and if so is it right for the zero hours workers?
Three areas to think about are:
- Zero hours workers. This is a controversial but common worker type in the Hospitality and Leisure Sector. Even when offered the choice to go on to a fixed hours contract, some zero hour workers do not want to do so as they want the flexibility. How then can you make this worker type more loyal to you and less controversial? Generally these types of worker will have no pension savings vehicle in place. The auto-enrolment provisions that were brought in to create employee pensions for all may not be fit for purpose for this group either.
- Better use of salary sacrifice. Salary sacrifice is still available for pension contributions. Using it effectively means the employer can gift back some or all of the employer NI contributions to the employee’s pension contribution, thereby giving them access to more benefit, and making a better pension scheme more affordable.
- Defined contributions are not the only option. Pension schemes do not have to be either final salary or defined contribution. A middle ground exists such as career average schemes for example, which are more affordable and share the risk between employer and employee more evenly.