GNER is launching a holiday pay fund scheme that will produce national insurance savings for both the rail operator and staff, having first had to obtain clearance from the Department for Transport.
GNER joins a growing list of companies signing up to such schemes, although the rules behind them are currently under review by HM Revenue & Customs. The rail firm was due to implement its plan on July 1.
John Hayhurst, manager, HR services for GNER, said: “I think we are the first train operator to look at it. It is going to [save the company] several hundred thousand pounds over the course of the year.”
Because GNER is subject to a government rail management contract it had to get clearance from the Department for Transport before implementing the scheme and as that franchise is now being re-let, it also had to put a break clause in the agreement with the firm managing the holiday pay fund. The holiday pay fund legislation, introduced for the construction industry, states that no Class 1 national insurance contributions are payable on holiday pay taken from a holiday fund. “I don’t know how long it is going to last. At some point the Chancellor is likely to can it, perhaps at the next Budget. But we have a window of opportunity which we can enjoy while it lasts,” added Hayhurst.