The way that employees evaluate companies has changed. Instead of focusing solely on salary, they look at the bigger picture, and if that picture includes an appealing employee benefits package.
In this blog, we look at the type of benefits that are typically on offer and evaluate the biggest advantages they bring to a business.
What are employee benefits?
Employee benefits are non-monetary provisions offered by a business as part of an employment package.
Common Types of Employee Benefits
Benefits that provide for old age – most commonly known as a pension. In Defined Contribution Pensions, employees and employers contribute a set amount each month. A competitive employer contribution is highly desirable to employees.
Benefits that provide for illness or injury – A rigorous category of employee benefit that gives employees assurance, benefits in this section include:
- Sick Pay – Offering benefit above and beyond Statutory Sick Pay (SSP), some employers choose to offer occupational sick pay, which covers employees for longer periods of time.
- Group Income Protection – when an employer pays a percentage of an employee’s salary each month if they are unable to work due to long term illness or injury. This benefit is rolled out via payroll so all appropriate tax and national insurance contributions are taken care of.
- Group Private Medical Insurance – offers the employees paid private medical treatment rather than using the NHS.
- Dental & Optical – Dental insurance helps to cover the cost of routine and major treatments via both the NHS and private routes (depending on the level of cover chosen). Optical insurance covers tend to include routine eye tests, glasses and contact lenses, however surgical treatment for sight loss i.e. cataracts would not be covered on an optical plan, and would tend be covered on a medical insurance plan instead. Permanent sight loss as a result of an accident would be covered under personal accident insurance.
- Group Critical Illness Insurance – a tax-free lump sum is provided to an employee in the event they are diagnosed with a specific medical condition.
- Health Cash Plans – Dental and optical cash back is also available via a Health Cash Plan – these offer a pre-determined level of money back (depending on the level of cover chosen) for treatment such as routine dental and optical treatment, physiotherapy and health assessments as well as the option to claim excess amounts back paid on a members PMI policy
Benefits that provide for death – better known as death in service or Group Life Assurance. This is a type of life insurance that pays an employee’s dependents a tax-free lump sum upon death.
Benefits that save money – a category with looser definitions that can provide a range of incentives and perks, these can include Car Allowance, Flexible Working Options, Childcare Vouchers, Gym and Wellbeing memberships, Interest-free travel loans.
Employee Assistance Programmes (EAP) – EAP’s are employee benefit services designed to help employees (and their immediate family members) deal with emotional and personal problems such as issues like alcohol or substance abuse, bereavement, child or elder care commitments, career concerns, relationship challenges, financial or legal problems or any other life challenges that might adversely impact their overall work performance, health and wellbeing.
An EAP generally includes support and advice helplines, short-term counselling, and referral services for employees – wherever they are in the world. Where appropriate counselling services can be face to face sessions or if you would rather not “sit on the couch” you can seek advice via video link or a confidential telephone service with most providers offering a 24/7 service.
Keeping up with modern times, most EAP products now also include an app as well as downloadable information and online resources offering expert help and advice as and when you need it. Some even offer perks and savings such as online cashback, in-store and online coupons and lifestyle offers and discounts.
What are the benefits to employers?
It might seem like employee benefits offer big rewards to employees without the employer themselves getting much in return, but this isn’t the case. The 3 benefits explained below show employers can gain a lot by offering a desirable benefits package.
To help attract and keep top talent
Simply put, if you aren’t offering a competitive benefit package, you can be sure that your competition is. Both existing and prospective employees will be motivated by the range of benefits on offer. Research from Glassdoor even found that a staggering 79 per cent of employees would prefer new or additional benefits to a salary increase.
A healthy & happy workforce
Human beings are happier when they are healthy. And a happy workforce is a higher performing workforce. Studies by the University of Warwick found that happiness made people 12% more productive. By offering employees access to private medical, it takes them away from the unpredictability of a strained NHS, allowing them to deal with medical problems quicker and more efficiently.
Lower Salary Expenditure
Salary is no longer the “be all and end all” for employees. Glassdoor’s research found that up to 90% of workers aged 35 and under prefer benefits to a pay rise, 84% of employees aged 36-44 and 70% of employees aged 45-54 feel the same. Does this mean you can get away with low pay? No, of course not. It just means that you do not need to pay above market rate to attract top talent and can invest this money into other areas of the business. Sure, the benefits on offer will result in expenditure to the business, but businesses can deduct employee benefits costs from their tax liability leading to some tax advantages.
How We Can Help You with Your Employee Benefit Offering
We specialise in Group Health Insurance, Group Income Protection, Group Life Assurance and Group Pensions Schemes. Our Financial Services Director Simon Claxton has over 38 years’ experience in the industry and has recently been awarded Protection Adviser of the Year by 2Plan. If you think we can help you develop an employee benefits package for your business please get in touch.