Perspectives, Trends & News

6 reasons why digital gift cards are a better reward than a pay rise

on Mon Jul 07 2023
  • Market Insights

With the cost of living continuing to rise and wages failing to keep pace, many employees and employers may be considering gift cards to reward performance or tenure. Although almost everyone can use a little extra cash, there are actually a number of sound reasons why physical gift cards or digital gift cards are a better choice. Here we look at six advantages a digital reward has over a few dollars in the monthly paycheck.

1. Digital rewards aren't taxed

In most circumstances, a digital reward card given to an employee in recognition of service or performance that goes the extra mile isn't subject to taxation. This means the employee receives the full value of the reward, maximising the benefits they can obtain from it. For the majority of employees, a pay rise results in additional taxation - for some unlucky individuals, even a modest pay rise may push them into the next tax bracket, ultimately meaning they receive no tangible reward for their hard work and exceptional effort.

2. An immediate, notable reward

For the vast majority of employers, particularly in today's economic climate, it's just not financially possible to offer even an outstanding employee anything more than a modest raise. This may result in an extra few dollars each month but is unlikely to make a noticeable difference to an individual's quality of life. In addition, outgoings tend to expand in line with income. This means that an employer may choose to increase an employee's salary, but the employee doesn't feel the benefits of the increase, as the extra dollars swiftly get absorbed in household expenditure. In contrast, a reward card is a tangible gift that's viewed differently from extra dollars. When an employee chooses their reward from the wide range available to gift card holders, they're receiving a clearly identifiable 'added extra'.

3. Reward cards are unaffected by wage rules and regulations

Many industries are governed by strict regulations regarding the level of pay workers can expect to receive. In addition, it's often impossible to raise the pay of an outstanding employee, as it would potentially constitute grounds for other workers to complain that they had been treated unfairly. For employers in these industries, the inability to differentiate pay between employees of a similar grade presents a problem - how best to reward excellent performance or commitment to the company, when a bonus or pay rise isn't permissible?

In these circumstances, digital reward cards are the perfect solution. They're not viewed by ATO as part of a salary, so fall outside the scope of wage agreements or similar restrictions. If you're looking for a way to reward employees that stand out for the right reasons but are in an environment where cash rewards are prohibited or would be contentious, reward cards are the way to go.

4. A personalised approach

It's an old saying that, when it comes to giving a gift, it's the thought that counts. This is as true in the workplace as it is in private life. Studies show that it's not necessarily the size of the reward that employees value, it's the fact that their work and/or positive attitude has been noticed - they have been singled out from the rest due to their hard work and dedication. Being treated as an individual, rather than another number on the corporate payroll, is very important to all of us.

A reward card is an ideal gift for employees - not only is it a gift that shows their good work or other outstanding qualities have been recognised and celebrated, but it's a gift that can be tailored to their personal interests and tastes. Although some employers choose to reward their employees with predetermined gifts (a watch, for example), there's no guarantee that an employee will want it! Few people want a gift they won't use or that they don't like. Reward cards allow employees to choose their own gift from an extremely wide range (literally thousands) of different options. Cash is always welcome, but it's not a personal reward that recognises the unique contribution an employee has made to the organisation.

5. A cause for celebration

If an employee has delivered exceptional work, employers will want to publicise the fact. Many employers hold some sort of event where those receiving a reward are named and celebrated. Whilst it's permissible to publicise the fact that an employee has received a gift (such as a physical gift card) in recognition of their dedication, it's certainly not permissible to publicise other forms of recognition, especially a pay rise. Obviously, employers would hope that other employees, spurred on by seeing their colleagues rewarded, will be inclined to up their game. As pay rises are confidential, employees are likely unaware that great performance is rewarded.

In contrast, gift card rewards can be publicised widely, providing an incentive to other employees as well as a clear signal to potential employees and the company's wider audience that the organisation is one that values and rewards good performance and/or talent.

6. High-quality gifts

In days gone by, inferior corporate gifts were a source of amusement to employees. Many people can remember (or may even have been presented with) a corporate gift to reward performance that was tacky, poorly constructed and entirely unsuitable for the recipient. No contemporary employer wants to waste money purchasing tat to gift employees who don't want it. Gift cards give access to big brands and well-known retailers with a national (or international) presence. When an employee cashes in their gift card, they can use it to purchase a high-calibre gift that's exactly what they're looking for.

From ensuring ATO don't get hold of a reward intended to directly benefit the employee, to allowing employees the freedom to choose a premium gift that's tailored to their personal tastes, there are numerous reasons why a digital gift card (or physical gift card) is a fantastic way of celebrating success.

Get in touch with the team at True Rewards to discover more about the benefits of digital reward cards.