Legal advice

Terms and Conditions Careful consideration should be given to any Terms and Conditions, or policies which relate to provision of benefits. Legal advice should be sought regarding any changes required. The introduction of a flex scheme will give Fortis Bank the ability not only to influence cultural change but also to instigate any changes that are required to Terms and Conditions as part of the whole package. The benefits of flex to individual employees should, if carefully designed and communicated, outweigh any negative sentiment to changes in Terms and Conditions.

It is strongly recommended that time be taken to consider all policies, procedures and Terms and Conditions of employment prior to the introduction and implementation of flex. Legal advice should be obtained prior to any changes in employees’ Terms and Conditions. Fixed Percentage Funding Launching flexible benefits will give Fortis Bank the option of changing the way they fund benefits. Traditionally, benefits are funded in full (based on specific rules) and as such costs fluctuate in line with the charges made by suppliers.

A number of benefits are claims rated and as such a doubling of costs in any twelve month period is a real possibility. Flexible benefits can be used as a mechanism to change from the traditional route to a regime where the Bank’s contribution is equal to a fixed percentage of salary. By structuring benefit funding in this way Fortis Bank is not exposed to fluctuating benefit costs and as such exerts more control over its spend. Financial Considerations

• Careful financial modelling is required to ensure that the introduction of Flexible Benefits does not give rise to any significant unexpected windfalls or losses to existing employees. • Introducing flexibility can give rise to risk selection against the risk benefit providers, which if not managed can result in significant increases in the costs of these benefits. • One of the main features of a flex system is the reduced annual cost due to a simplified administration procedure.

The Flex system will allow a self service approach to the ongoing administration Conclusion • Existing benefits can be included within a Flex scheme allowing employees to replicate these under Flex and not be any worse off. • Flex can be implemented with little adverse impact on administration. It is likely that Flex will help to streamline administration and procedures. • By combining a level of flexibility with the provision of core benefits, Flex can provide individual responsibility whilst protecting employees and their dependants from unwise decisions.

• Flex can aid employee retention by providing employees with individual input into the design of their benefit package and an understanding of their total remuneration. In particular, additional benefits requested may be provided at group discounted rates. • Flex can be used to assist in the recruitment of new employees by facilitating the communication of the benefits package offered by Fortis Bank and differentiating them from their competitors. Recommendations Fortis Bank has an excellent case for introducing flexible benefits to the business.

As discussed the Bank will make a lot of saving via the salary sacrifice schemes which could be used to offset the cost of running/introducing flex and any short fall can be utilised for other HR initiatives. Flex will also useful tool for moving the focus from pay and bonuses to benefits as employees are able to visualise their total remuneration. Pension The pension scheme contributions should be incorporated in the flex arrangement through ‘salary sacrifice’ as employer and employee will save on TAX and NI on monthly deductions