Posted by Jane on Apr 10, 2019
Once seen as a way of rewarding staff or, going further back, as dutiful provisions by paternal employers, employee benefits are widely varied and can make a big difference in retaining the services of key people.
Put simply, employee benefits are non-cash rewards, the classic example being the company car or maybe, flexible working arrangements. Though in the past they were primarily a retention tool, benefits are now increasingly individualised, part of a wider reward package from which employees identify those that meet their needs. The main types of benefit are:
- Pensions – workplace pensions have always been a popular benefit, though they are becoming even more widespread due to the legal requirement for automatic enrolment.
- Holidays and time off – almost all employees are entitled to a minimum 5.6 weeks of paid time off each year, though many employers offer more than this; similarly, there are numerous other statutory entitlements to time off, including maternity, paternity and adoption leave.
- Welfare-related – these are focused on supporting the welfare of employees and include occupational sick pay, private medical insurance, critical illness insurance, dental insurance, eye care vouchers, flu jabs, gym (on-site, subsidised or discounted membership), and even death in service/life assurance.
- Cars – whether it’s a company car or an allowance towards one, the vehicle has long been a popular benefit; though they do attract tax, the level depending on C02 emissions.
And then there’s a wide of other benefits, such as the subsidised staff canteen, on-site childcare, and getting more Google, nap rooms, fun rooms and on-site cinemas.
Well, that’s up to you and will depend on various factors, not least what can you afford and what your employees want (if it doesn’t make a difference to them, it’s not much of a benefit). It’s tempting to stick to cash/money compensation, but one way in which an employer can make a difference is by being a bulk buyer of whatever it is; meaning you’ll get a better deal than individual members of staff on their own.
One option is to offer a voluntary benefits plan, a list of goods and services from which employees can pick and choose. In this kind of scheme, employees are paying for their selection from their post-tax income, the advantage being that the rates are discounted.
Alternatively, some employers offer a flexible benefit scheme in which employees can exercise some choice over the blend of cash and benefits in their total reward package. The advantage is the level of control available to employees, and that the cost of benefits in a flexible scheme is covered by the employer.
For more information, try the CIPD’s flexible and voluntary benefits factsheet, which is available to non-members who register on the CIPD site.
Finally, remember that certain benefits – e.g. the company car, private health insurance, travel expenses, or childcare – attract tax and reporting requirements, which may influence what you, as an employer, prefer to offer your people.
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