Buyer’s guide: Motivation vouchers

The development of e-voucher systems is giving employers a new plank to their motivation strategy, says Nick Golding

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Motivation vouchers have managed to withstand the winds of change hardly changing their appearance since they were introduced into the UK in the 1970’s.

That is until the last couple of years, during which this cloud of inactivity appears to have lifted, and motivation vouchers have been thrust into the 21st-century with the help of some forward-thinking technology.

Firstly came the introduction of electronic gift cards and online voucher systems. Many providers have now built on the technology behind these, to launch pre-paid debit cards. P&MM, Grass Roots and the Intuitive Group are some to have done so.

These cards can be loaded with credit, which employees can then spend at outlets that accept payment by the provider’s chosen network such as Visa or Maestro.

The past twelve months have also seen other developments in the marketplace giving the benefit a far slicker and more up-to-date look than its original paper format.

One such device is a voucher tracking system, which allows employers funding a scheme to monitor the journey of vouchers from the day they are awarded to staff.

Such a tool can provide employers with an insight into their employees’ spending habits, which can prove useful when looking at developing future motivation schemes. Richard Lee, business development manager at P&MM, explains: "This is raw data that the industry has never been privy to in the past. You can pinpoint the actual voucher that motivates your staff. You can watch people spend their vouchers in Marks & Spencer, and then ping them a quick email if there is a sale there a week later."

Other providers are using sophisticated ways of alerting employees when their cards have been topped up with credit, in order to make the whole process between the time employers offer the reward and employees spending their vouchers much smoother. Graham Povey, managing director at Capital Incentives and Motivation, explains: "We now text people when they have been rewarded with credit to their card. They can then go and spend the money that very same day."

Admin savings

Using online or electronic products can also help employers to cut down on costs such as postage when providing vouchers to staff. According to Lee, an organisation spending £1m per year on vouchers can cut postal costs by £40,000 over the same period by using an electronic version.

Fewer administrative staff will also be needed to provide this type of scheme, which can result in further savings.

Tracy Aslam, head of incentive business at Kingfisher Gift Vouchers, explains: "The new online programmes mean that it costs organisations virtually nothing [as] it is all operated through an intranet link."

Yet, while the rise of electronic vouchers continues to gather pace, providers are not abandoning paper vouchers just yet and are still maintaining a strong presence in this part of the market.

Clare Rutherford, business incentives manger at House of Fraser Business Incentives, which only provides paper vouchers, says: "We have noticed the increasing popularity of the electronic gift card over the past 12 months but, at the moment, we don’t see it as really affecting the paper voucher market yet."

The trade body, the Voucher Association, agrees that, although electronic vouchers are likely to become prevalent in the long term, for now the paper version remains the dominant product. Andrew Johnson, director general at the Voucher Association, says: "There has been a huge number of electronic cards come into the market, and next year there will be many more, but the paper voucher is still undoubtedly the stronger of the two."

Age laws

One obstacle which providers have faced in the past year is the impact of age discrimination regulations, which came into effect in October. The new rules dictate that it is unlawful to reward employees for long service of five years or more, simply because if an employer is rewarding 15 years’ service, for example, it is far more likely that an older employee will have completed this than a younger member of staff.

With vouchers often being used by employers looking to reward long service, these laws could have an impact on the market as a whole.

Yet providers are not convinced this is a problem. Many believe that by justifying schemes as recognition of loyalty, employers should be safe from being termed discriminatory. "We don’t see any issues with age discrimination whatsoever, as long as it is looked upon as recognition rather than as a long-service award," explains Lee.

Public sector potential

Although providers are counting on rules stating that discrimination will not occur if organisations can manage to prove that they are rewarding staff for reasons such as loyalty or motivation as opposed to long service, the absence of any case law to date means it remains a grey area.

Looking to the future, the transition towards electronic vouchers is expected to soldier on over the next 12 months.

Several other changes to the industry are also expected to take hold.

Some providers are viewing the public sector as a fresh hunting ground, despite a number of organisations in this area already offering motivation vouchers to employees. They believe that the public sector still remains vastly undernourished when it comes to using motivation vouchers for reward and recognition schemes.

A number of single-store suppliers are also expected to enter the market, as many popular large retailers do not currently supply vouchers as corporate gifts.

Julia Rosehill, sales director at The Voucher Shop, says: "Some of the large retailers are still not set up for B2B vouchers. Habitat and Ikea are two examples. This is a large gap in the market as employers still cannot buy in bulk from these retailers."


What are the costs involved?
Depending ont he number being purchased at one time, employers can expect to receive discounts of between 5% and 10% on the face value of motivation vouchers.

What are the legal implications?
There are no direct legal implications associated with motivation vouchers. However, new age discrimination rules introduced in October now deem the rewarding of long service of five yars or more discriminatory unless justified, so employers should ensure that they are able to provide adequate justification for using vouchers in this way.

What are the tax issues?
Motivational vouchers are a benefit in kind so are liable for National Insurance and tax.


What are motivation vouchers?
Moitviation vouchers are either eelectronic cards of paper-based certificates with a money value that employers can offer to staff as a toll to motivate an incentivise. Electronic products allow employers to load money on to card or into an online account. Employees can then redeem the value online or in stores depending on the type of voucher or card.

What are the origins of motivation vouchers?
This voucher was created with the specific aim of motivation employees as an alternative to offering cash, They were introduced in the UK in the early 1970s.

Where can employers get more information and advice on motivation vouchers?
The Vouchers Association is the trade body for motivation vouchers (visit or call 0870 2416445). It can provide employers with information about the different types of vouchers and providers in the market.