Total bonus payments across the UK economy totalled £38.6 billion between May 2012 and April 2013, up 4% year-on-year, according to research by the Office for National Statistics (ONS).
But employers delayed paying £1.7 billion of this total to help employees take advantage of the change to top-rate tax, which fell from 50% to 45% from 6 April 2013.
This resulted in total bonus payments received between April 2012 and March 2013 totalling £36.9 million, according to the ONS’ Average weekly earnings, bonus payments in Great Britain report, publsihed in August.
The research also showed that employees in the finance and insurance sector continue to receive the highest bonuses, with an average bonus of £11,900 per employee.
Joris Wonders, director of the UK reward practice at Towers Watson, said: “When designed and implemented effectively, short-term variable pay can be an effective way for employers to incentivise employees.
“However, when employers pay out bonuses regardless of individual or financial performance, the rewards can be perceived as an entitlement, rather than an incentive, and lose their value as an employee motivator.”
The return of big bonuses shows Britain is booming for the super-rich. While ordinary people suffer the longest wage squeeze in over a century, those at the top have seen bonuses rise by a stonking four per cent.
Not content with giving the super-rich a tax cut, the Chancellor has also showered them with an extra gift worth tens of millions of pounds, courtesy of the taxpayer, by giving them plenty of notice to defer their bonuses and avoid the 50p tax rate.
The shape of Britain’s recovery looks increasingly like one where the same old elites hog the gains, while ordinary workers are expected to take declining living standards on the chin.
The average UK bonus announced today represents about 5% of the average UK salary. However, an integrated employee benefits package can add around 20-40% to the average salary.
Staff will understandably always welcome a cash reward for their hard work. But savvy employees increasingly value the long-term financial security offered by a comprehensive benefits package that meets their needs today. This would include perks like medical insurance or income protection, which pays a regular monthly income to staff if they are off sick for more than six months.
For employers, employee benefits packages can also be a real competitive edge in the war for talent. At a time when bonuses are showing minimal growth and a pension package is no longer distinctive thanks to auto-enrolment, a well-thought out package can help differentiate forward-thinking firms to attract the best staff.