What are they?
‘Employee benefits’ are the non-cash items provided by an employer as part of the remuneration package offered to their employees; the employee benefits’ package covering everything except the employee’s wages or salary, commission and bonus.
Although there’s a statutory requirement to provide some of these benefits, such as holiday entitlement and, more recently, inclusion in a workplace pension scheme, many others are provided at the employer’s discretion. They’re ‘optional extras’ and can be presented as a standard package to all employees, varied across different roles and pay grades or provided as a unique package for an individual employee. Typical employee benefits include:
Annual leave and time off
As an employer you are legally obliged to offer a statutory level of paid holiday entitlement based on the length of time an employee is contracted to work during the year; typically 28 days for a full-time employee. Many employers include public and bank holidays within the statutory allowance but others are more generous and exclude them. Other employers provide more than the statutory requirement often through a length-of-service scheme. There are also statutory entitlements to other types of time off, maternity and paternity leave for example, which may also be increased as you, the employer, deems necessary.
Membership of a company or workplace pension scheme has long been a popular employee benefit particularly with large companies and public bodies, the latter sometimes using it to compensate workers in lieu of pay increases. On 1 October 2012, legislation introduced automatic enrolment, the statutory requirement making it compulsory for employers to include most workers in a workplace pension scheme.
Healthcare and health risk benefits
Most full-time employees will qualify for Statutory Sick Pay which, at around £90 per week, is only just ‘better than nothing’. As an employer, you are free to offer your employees membership of an occupational sick pay scheme which may, if you choose, be sufficiently generous to pay their salary or wages in full for a period of time. In addition, you may also choose to offer other benefits such as private medical insurance, critical illness and dental insurance to either protect an employee’s welfare or ‘compensate’ them for health issues that may arise, possibly extending this to cover the employee’s family.
Company cars and car allowances
Many organisations provide a company car either because it’s required to do the job or to recognise an employee’s status. To overcome the hassle of being responsible for a fleet of vehicles, some employers prefer to pay a cash allowance to employees to assist with the purchase of a vehicle or compensate them with a mileage allowance if they use their own.
You are free to offer your employees whatever you like if you think it will differentiate your remuneration package and attract and retain the staff you want. Apart from those listed above, others include: childcare benefits such as childcare vouchers or workplace crèches; flexitime; cigarette breaks; free or subsidised staff canteens; on-site car parking; gym membership; subsidised or free travel; dress-down days; homeworking; cycle-to-work scheme loans; time-off for sabbaticals; season ticket loans and discounts against your products and services.
This provides the opportunity for an employee to offset part of the cash element of their remuneration against a specific non-cash alternative and is frequently associated with pension schemes. In this example, an employee ‘sacrifices’ part of the wages or salary in return for an equivalent contribution to their pension pot. Employees save on income tax, in fact it may move them into a lower tax band, and both you and your employee save on National Insurance contributions.
Cash or benefits?
Rather than offer cash and a benefits’ package, some employers prefer to provide extra cash that allows individual employees to buy the benefits that best meet their individual needs at any time during their employment. Often referred to as ‘clean pay’, it’s a concept that’s seen as being fair-minded but does have drawbacks, for example, does the employee research and engage the benefit during work or personal time?
Voluntary and flexible benefits
Other employers offer access to a voluntary benefits plan that allows employees to buy third-party goods and services at a discounted rate from their post-tax income. In this case the employer researches and uses their purchasing power to make the benefit available; the employee decides whether or not they want to buy it. Alternatively, employers can offer a flexible benefit scheme giving employees the choice over the mix of cash and benefits they receive.
How can One Financial Solutions help you?
One Financial Solutions is here to help you. As a firm of independent financial advisers we can provide impartial advice and help you design and build an employee benefits’ package with a competitive edge.
We’ll help plan your strategy, recommend the best product for your sector from across the whole of the financial services market and help build and develop the package you need. If you have an employee benefits’ package we’ll review it and recommend any changes that may be needed. We can provide an annual review to ensure your employee benefits’ package is competitive within your industry, grows in value as your employees grow in your employment and stays within your budget.
So, if you’re looking for help with any aspect of your employee benefits’ package, please call us on 020 3714 9565 or ask us to call you by sending an email to email@example.com.