Chapter Four

MORE INCOME FROM YOUR EMPLOYMENT

It is easy to say how much you earn, you may think: either the amount shown in your contract of employment (your gross wage) or the amount you take home (your net wage). Not so.

HOW MUCH DO YOU REALLY EARN?

A colleague, usually male, may earn the same as you on paper, perhaps even less, but receive considerably more. How can this be?

He may have a salary package. In other words, he works for a wage just like you, but he is allowed a car, perks like an expense account, a pension.

Take Jane, who earns £9,000 a year and does the same job as Bill, who only earns £8,000. Both travels around on business but Bill has a company car, while Jane just gets petrol money.

To make life easy, suppose the PAYE deductions are 10 percent of the gross wage. Therefore, Jane takes home £8,100 (£9,000 - £900) and Bill takes home £7,200 (£8,000 - £800).

This makes a difference of £900 between them (£8,100 - £7,200). Could Jane buy or hire a car, insure it, service it, pay for petrol and oil, perhaps even pay to have it cleaned and garage it for £900 a year? Of course not. So, though on paper Jane is higher-paid, in fact Bill earns a lot more. And he pays less tax too.

Besides, the employer may be much better off paying Bill this way. Why? Remember those employer's National Insurance contributions? They are based on wages; so the lower your wages, the less the employer has to pay. Also, the employer still owns the car; Bill is less likely to change jobs if he has to leave it behind.

So why does Jane not get similar treatment? Perhaps it never occurred to her to ask. Perhaps she never looked beyond her wage packet. Her boss will be surprised, and impressed, when she does ask. He never thought women were interested in perks. Men are the serious earners. Women are only after 'pin money' in his experience. Now he must think again.

Big public employers must treat all employees as laid down in the agreed manuals. Otherwise, the unions, who have spent years fighting to get these agreements, would soon complain. Even so, this does not always happen automatically. You may still have to make a claim, and this means reading the manual first. You have to know your rights before you can exercise them.

Small employers, by and large, can come to any agreement they like with each employee individually. If you work for one of these, it is up to you to try and improve your position. In Jane's case, she would be better off asking to reduce her salary in return for a car.

There are all sorts of perks an employer can provide from luncheon vouchers to business suits; from pension schemes and private medical cover to a subsidized canteen or the chance to buy company products cut-price; from an entertainment allowance or contributions towards your home telephone bills to a season ticket or an interest-free loan towards one.

Remember what we said at the outset? Money is much more than the cash in your pocket.

Here are two more very valuable perks that may appeal to you. Banks and building societies make house-purchase loans to employees at ridiculously low rates of interest. Travel agency staff can roam the world for a few quid.

Most of these perks are taxable if your earn more than a certain amount. In this case, your employer must inform the Inland Revenue about them on a form called P11D. Don't let that put you off, because the tax comes to far less than the benefit to you.

For instance, suppose your employer provides you with a suit that cost £200. You pay tax as though your extra income had been the value of a second-hand suit. And what is a second-hand suit worth? Can you sell it, even?

You will hear lots of company directors moan about the tax on company cars. Just try suggesting to them they give up their cars and pay themselves extra salary instead to buy and run similar cars. They will soon change the subject. They know, despite the tax, that they are on to a winner.

EARNING MORE: PAY, PERKS AND BENEFITS

How can you persuade your boss to provide perks, pay you more or improve your conditions?

If you work for a large organisation, the union does all the bargaining for you, whether you belong to it or not. If you work for a small concern, you stand alone. Let's first consider women who work for large employers.

Your starting point is to find out what the union has already negotiated for you. You should find this in staff manuals. Alternatively, union officials should know. You also need to know how what they have achieved compares with the legal minimum you are entitled to, if there is one: for instance, the length and amount of maternity leave and how long your job is kept open for you, or help with child care.

Next, are you actually getting it in practice? Sometimes, perks and entitlements are left to people to claim, according to grade, not handed out automatically. No claim, no perk. Sometimes, benefits agreed at national level get 'overlooked' or plain forgotten at local level, especially if it is an item in which the boss or union official is not interested.

Finally, find out what improvements the union is currently trying to obtain. A male-dominated union may be quite uninterested in asking for benefits which would make life easier for its female members, even though employers might be willing to grant them because they would cost little or nothing. Here, a determined group of women acting together can make an impact.

How you work is more important to women than to men. Men have the happy knack of combining work and play. A man can be drinking at a bar and at the same time, collecting a valuable client for his firm, or solving a problem with a colleague. He can be getting a new contact with inside information while they scrub off the mud together after the rugby match.

For women, outside activities - collecting the children, going to the hairdresser - are usually an intrusion not an extension of work. So arrangements like working flexible hours ('flexitime') or being able to share jobs prove particularly worthwhile.

With flexitime, there is a core time when you must be present. Say, 9.30 to 12 and 2 to 4.30, Monday to Friday. Other than that, provided you complete the agreed hours in the week, you can do them when you like. With some schemes you can accumulate hours to earn days off. The choice to start late or finish early to fit in with family commitments, or for a disabled person to avoid the peak-time crush, can be a big bonus, even if it does not put a penny extra in your pocket.

Women who work for large organisations can often benefit from opportunities which no small employer can give. Like the chance of a sabbatical - this is unpaid time off, usually a year, with your job kept open for you. People use it to update or broaden their skills, perhaps on a training course, in another country or working for another organisation altogether.  Then there are exchange schemes.  A teacher may work in Canada for a year while her place is taken by the Canadian teacher she replaces.

Alternatively, there may be the chance to work in your home. There is all the difference in the world between an underpaid out-worker struggling to keep up amid domestic chores and a skilled worker operating  a computer terminal in the spare bedroom linked into the employer's computer system.

This has only become possible within the last few years. The advantages are clear: saved travelling time and costs to the employee, saved office space to the employer. Disadvantages that American males, the pioneers in this field, complain of include loneliness, fear of getting out of touch and, greatest of all, fear of being overlooked for promotion. Also, you would expect extra salary for the perks you are missing out on: heating and lighting paid for while you work, perhaps a subsidised canteen, luncheon vouchers, free coffee.

The woman who works for a small concern has more scope to improve her salary and perks because she is a 'one-off'. The boss is not restricted to national agreements. The thing to remember is to look at your ideas from the boss's point of view, and with real figures.

As the saying goes: use soft words and hard arguments.

With many jobs, like accountancy, you record your time regularly to charge it to the right client. The number of hours you work multiplied by the amount your work is charged at gives you the total you earned for the firm last year. It is always a good starting point if you can remind the boss just how valuable an employee you are. Of course, they know this already, but may wish to play down the fact.

For every idea you raise, point out the advantages and the money saved for the firm.

Jane might say, ' I would like a company car, like Bill and I would be willing to accept a lower salary in exchange. This would save you National Insurance contributions and the petrol money you pay me. Of course, the cost of the car and all the running expenses and the hire purchase interest are legitimate business expenses. So they reduce the tax the firm pays on its profits. Then there is the VAT on the cost of the car which you can claim back, as a business. I as an individual, can't.'

She should produce figures to show how much buying and running the car would cost. A show-room can tell her the price and hire-purchase details. Or the garage's internet site. She can work out how much she spends running her present car. When she hands a copy of all this to her boss, the battle is half won.

Don't rely on your memory. Scribble a few notes of all the points you want to raise and take a pen to note anything else the boss might ask you to find out.

Never raise your voice and never act aggressively - if you do, you have lost. You need your boss's help. He may have to persuade his superiors. Sit diagonally, not four-square in your chair. Use the we-are-all-in-this-together approach not the hammer-and-tongs approach.

There are other little ways in which you can get the boss to spend money on you besides your salary and perks. Perhaps you would like more training. Remind your boss that such expenses are tax-deductible and the firm benefits when its employees keep up to date. Be as specific as you can. Find out who runs what courses and get their brochure. (The internet is a boon here too.) Many organisations offer a pleasant day in a smart hotel with lunch thrown in. There is tax-relief too for in-house courses (run in your own offices) and even for training videos you can hire. John Cleese of Monty Python fame is just one of many comedians who have produced training videos which are fun as well as informative.

Being passed over for additional training is an easy way for women to fall behind their male counterparts. Stay on the look-out to take advantage of what is available. Even if your employer is unwilling to sponsor you for long-term training or release you during working hours, he may be content to pay for evening classes or correspondence tuition. This, with increased use of  audiovisual, telephone and on-line techniques, is fast proving the easiest way for busy executives to learn. If possible, aim for a course giving a recognised qualification. This way, your new skills will be easier to sell to other potential employers.

Books and other training materials are also tax-deductible, and there is no rule that the books have to stay in the office. Perhaps there is some equipment that would enable you to do a better job, or an exhibition where it might be demonstrated.

Even an electric fan or air purifier or ioniser for the summer will be tax-deductible. Does the office need brightening up? How about a contract to provide flowers for the reception area: after all, you benefit if you work there. Someone has to take the flowers home at the weekend - why not you?

Many firms run incentive schemes or reward good ideas. Perhaps you should suggest it if yours does not. By and large, any money or goods you receive as a reward are tax-free. It is up to the firm to decide how much their business has benefitted before they pay out.

Similarly, the Inland Revenue accept that it can be a legitimate business expense for employers to provide taxis for late-night staff. Perhaps your boss is not aware of this.

These are just a few ideas. Perhaps your employer will reject every single one. Even if he does, he will end the meeting with a very different idea of you. You will have shown yourself to be imaginative and dynamic, someone who thinks about the job and the good of the firm.

Always be specific. It is much easier to sell an idea when it is clear in your own mind. If you cannot write it down beforehand, you certainly cannot spout it face to face.

This chapter has told you how to get maximum income from your employment. There is one more organisation you may not have thought of. It pays out money which is as good as income every day of the week, and you don't even have to work for it: the welfare state. Are you receiving all you are entitled to?

The best book I know for explaining what benefits are available, to whom and for what is Tolley's Social Security and State Benefits.* I don't claim it is easy reading. But it is better than the DSS's own pamphlets, which always send you chasing off after umpteen other pamphlets. The people who write Tolley's guide deserve a medal - if they are not in strait-jackets!

One other earnings-related source of income or capital which is more common than people suppose comes from an insurance claim. Have you been involved in an accident which impaired your earning capacity or prospects? Did you claim? Is it too late? Only a solicitor or the Citizen's Advice Bureau can tell you for sure.

A couple of letters is one thing. A full-blown legal case is another. Although lawyers are now free to represent you on a no win/ no fee basis, this has not proved the bonanza it seemed to be. Lawyers select the cast-iron cases first and some settle for small amounts to get their share quickly.

Finally, if you think working for others is a mug's game and anyone with an ounce of initiative wants to work for themselves then off you dash to the next chapter.

But you are not quite correct. Some of the most successful people run their businesses through a limited company. They act as directors and company directors are employees. So they still need to refer to this chapter afterwards.

*Tolley's address http://www.lexisnexis.co.uk

You can buy the book from

Tottel Publishing Maxwelton House 41-43 Boltro Road Haywards Heath West Sussex RH16 1BJ Telephone: +44 (0)1444 416119

If you don't want to buy the book, ask your local library to get it, but it must be the latest edition, because the rules change every year.

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