As most people know all too well maintaining levels of employee engagement and motivation is crucial in ensuring an efficient working environment… However, it is not always easy to achieve!

Increased motivation is linked to heightened levels of creativity and productivity in the workplace. Employee engagement is very important and treating employees in a proper manner as well as respecting human dignity is cardinal in encouraging morale and contentment in the working environment.

There are many factors involved in preserving employee engagement and motivation – factors such as the employee’s involvement in challenging tasks, accomplishing something that has value/meaning, personal progression and development, learning new skills like teamwork or independence and many more.

Employees are motivated to do better and work harder when they are satisfied in their roles. When they feel as though their career will benefit they will go that extra mile for their employer. Also, when an employee has job security and a basic income that satisfies their financial needs they will be motivated in the tasks/projects that they are working on.

Of course individuals will be influenced by varying issues and, therefore, motivated by different factors. However, being asked to do menial tasks day in day out – no matter who you are – is not likely to encourage a motivated employee and, in fact, is likely to promote a negative atmosphere.

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Naturally, basic pay is a motivator – people obviously need to be able to cover their monthly out-goings – and if the basic salary is too low then it can actually have a de-motivating influence. However, money is far from the only thing that motivates employees to work hard… some people are more concerned with getting great work experience than being able to save for a luxury holiday or a new car. Some employees are forward-thinking and see industry-related experience as a way to develop their career. The “overall package” is examined and can be motivational as a whole with a lighter emphasis on salary alone. Similarly, a company with a glowing reputation, or a company with a great brand name or with international links, is likely to attract more interest from prospective employees irrespective of whether the basic pay is below the industry standard or not. If the job is exciting or seen as meaningful then the employee will be less concerned with basic pay. Similarly, if the role offers a bright future for the employee in the way of promotional opportunities or networking links, for instance, this will surpass basic pay in terms of motivation or pull.


Below are examples of some of the different incentives and benefits that employers should pay attention to and consider in an effort to motivate employees:

  • Job location or commute is important – whether the place of work is easily accessible and the costs, time and effort etc. associated with the commute.
  • Hours of work – how long the employee is supposed to spend in working mode and whether flexi-time or flexibility in location (working from home, for instance) is an option.
  • The allocation of annual leave and other similar policies (payment during sick leave/ maternity leave etc.)
  • Whether there is a bonus scheme in place and what that bonus might be – for instance, what target the employee has to achieve in order to be eligible for the bonus.
  • Pension benefits – these days employees are very concerned with their future financial outlook especially if they cannot save much now.
  • Use of a company car is a motivating factor for some as it can save the employee a great deal in terms of fuel, insurance and tax (on top of the cost of the vehicle itself!)
  • Smaller incentives like parking, health insurance, on-site childcare, a canteen and accommodation are all motivating factors for employees.

Employers offer a range of benefits similar to those listed above. It is essential for employers to remember that most of the benefits discussed (which are typically provided in addition to an employee’s salary) are subject to income tax. For clarity on this employers should seek advice from the Revenue Commissioners who are responsible for the collection of such taxes on behalf of the Government.

A benefit-in-kind is a benefit that an employee receives that cannot be converted into cash (but has a cash value). A loan given at a special rate would be an example of this as would a company vehicle.

The other category of employee benefit incorporates items like vouchers, holidays, payment of an employee’s bills and prizes etc.

All employees who earn in excess of €1,905 per annum must pay tax on the value of benefits and benefits-in-kind.

Taxation of benefits is dependent on the value of the benefit. For instance if an employer provides you with a holiday voucher to the value of €1,000 this is considered €1,000 in additional income for tax purposes and is taxed accordingly.

The rules applying to benefits-in-kind are slightly different – this taxation varies. Generally, the value of the benefit-in-kind is the cost to the employer of providing the benefit less any contribution made by the employee.

It should be noted that special rules apply to the following benefits-in-kind:

  • A car or other motor vehicle (An employee can reduce the amount of benefit-in-kind assessed on a car if they incur a certain amount of mileage for business purposes. The benefit-in-kind can be further reduced if an employee contributes to insurance costs, motor tax and petrol).
  • A loan provided by the employer (this is usually at a special rate)
  • Provision of living accommodation

Benefits that are exempt from tax or can be received tax efficiently are inclusive of but not limited to the following items:

  • Provision of bus/train passes
  • Bicycle and safety equipment under the Cycle to Work Scheme
  • Reimbursement of expenses necessarily incurred in the course of employment
  • Lump sum and certain redundancy payments
  • Working clothes
  • Non-cash personal gifts not related to employment
  • Employer’s contribution to statutory or revenue approved pension schemes.

It is essential to check with the Revenue Commissioners if you are unsure of how to treat any benefit.

If an employer provides a benefit worth less than €250, PAYE and PRSI need not be applied to that benefit. Only one such benefit can be awarded to an employee within a tax year. Where a benefit exceeds €250 in value, the full value of the benefit will be subject to PAYE and PRSI deductions.

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