Suggestion scheme

Recruiting employees is always something of a problem. Not only that it can prove expensive once the commission charges of employment agencies are paid.

Last year in an attempt to adopt a more “organic” growth model one of my clients introduced an incentive scheme. This works on the basis that their present employees know others in the same profession but who are working for other firms.

The client pays a “finder’s fee” to an employee who suggests a name for a vacancy and they go on to interview and employee that person. They pay £500 when the employee is taken on and a further £500 when the new employee has remained in the post for a year. These payments have been subject to tax and National Insurance under PAYE.

I have just been wondering whether these payments may fall within the exemption for suggestion schemes.

Query...