Reference no: EM133162111
Applicable VLO's for This Week's Case Study
Apply the concepts of human resource management and organizational behaviour to establish and maintain effective working relationships.
This Week's Detailed Case Study Information
You are working at "The Blue Night" eatery as the human resource manager. Since it is a small business, and they do not have enough resources to hire an HR team, you are responsible of all the HR functions on your own. Sometimes it is challenging to perform all the HR functions on your own, but your college degree prepared you well to cope with these challenges.
Recently the finance manager met with "The Blue Night" owner, and they discussed strategies to improve compensation. The finance manager proposed a strategy to improve compensation, without affecting the bottom line. The strategy involves paying out cash tips on tax-free basis to the employees. The finance manager cited, that deducting income tax from tips is not appropriate, and since tips are paid as cash anyways, these tips won't show in the financial statements. Also, the finance manager cited that it is the employee's responsibility to declare cash earnings, and not the business. The owner, agreed, and was happy about it.
Next day the owner called you to discuss this strategy. When you heard about it, you weren't sure how to implement it. But you agreed with the owner, that it requires some research prior to implementation. After finishing the call, you wrote down the strategy and started analyzing it. Since you are the HR manager, you are responsible for payroll and income taxes. You decided to analyze this strategy and get back to the owner as soon as possible.
Deliverables, Format and Marking Scheme for This Week's Case Study
Evaluation:
- State what constitutes taxable income to employees
- Who is responsible for remitting taxes on Tips, the business or the employee?
- Explain whether the business should employ the suggested strategy.
Note: assume any missing information. Clearly state your assumptions in your submissions. Summarize your finding.