'Wages explosion' fear as profit tax relief goes
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by Karen Miles • Union leaders are forecasting a "wages explosion" from drivers following the Government's decision to scrap tax relief on profit-related pay in last week's Budget.
Thousands of drivers will lose around .C40 a month after Chancellor Kenneth Clarke's announced he is to phase out income tax relief on profit-related earnings over the next three to four years.
Many of the largest transport companies will be hit hard by the change—NFC's employees have recently switched over to a profit-related pay plan, joining others such as TNT and White Arrow Express.
The drivers at several oil companies, including BP and Conoco, are also covered by schemes.
Danny Bryan, national officer at the Transport and General Workers Union, says: "Some of the big operators have managed to shave millions of pounds from their pay bills by boasting their employees' pay with tax relief and then offering lower pay settlements as a result. They are going to be looking at a wages explosion in the next few years to compensate for the loss of tax relief."
NFC's scheme, which was introduced at the beginning of the year, adds around .C8 a week to the wage packets of its 26,000 UK workers.
Malcolm Greenslade, NFC's director of organisation development, says he is disappointed with the Government's decision and is presently considering when to scrap the scheme before the 1999 deadline.
Profit-related pay is currently free of income tax in any year up to either £4,000 or 20% of an employee's pay, whichever is lowest. Between 1 January 1998 and 31 December 1998 the ceiling will be reduced to £2,000 and then until 31 December 1999 it will fall to £1,000. After that there will be no relief.