Tony Granger highlights an important issue for employers.
This article examines the core employee benefits that a business should have; some are mandatory, such as workplace pensions, others voluntary and depend on the objectives of the business.
Objectives and first steps
The first step in the process is to determine what the objectives of the business are in respect of its employees. Are employee benefits an incentive to work harder, or are they part and parcel of remuneration?
Some business owners believe that salary is enough, and that the employee can make his own arrangements where benefits are concerned. Others are of the view that a happy and contented workforce, motivated to work in the best interests of the employer, will be better for the business. They value human capital and are prepared to assist employees wherever possible.
Current industry focus is on employee wellbeing, both mental and financial, and work-life balance. Employees with financial and mental stress are not wholly committed to the employer as their private situations take precedence. A caring employer will be aware that financial education, financial and medical advice or stress-related helplines can be a great help as an employee benefit. The employer generally wishes to reduce absenteeism, create settled conditions of employment, and to have a happy and contented workforce that will add to business value and profit improvement.
Costs to the employer
Employee benefit provision does come at a cost. However, group protection schemes are relatively inexpensive, as are the provision of many other benefits, such as EAP (employee assistance programmes); some benefits are free – such as discounts arranged on purchasing household items and white goods, and gym memberships.
If a benefit is not used, it is merely a cost to the business. Corporate gym membership is a prime example. The initial take-up may be huge, but over time fewer people use it. What then do employees really want, and how can their employers assist them? The average employee will probably have a spouse or partner, children (whether young or adults), a mortgage, debt and other liabilities, and not much in the way of savings.
Employee priorities
Their main priorities are: paying the mortgage or rent; protecting themselves and their families in the event of death; critical illness and disability; income protection; servicing debt (such as HP on motor vehicles, paying alimony to a divorced spouse, etc.); being medically ‘safe’ and healthy; reducing taxation; funding for retirement; saving for holidays; having savings plans; and above all, where possible, increasing net disposable income. As circumstances change, so will their priorities.
Knowing employees’ objectives will enable the employer to design and implement a meaningful employee benefit program.
Core employee benefits
These could be:
- Pension funding – it is mandatory in 2019/20 for the employer to contribute a minimum of 3% and the employee 5% of gross salary to a work-place pension scheme.
- Protection benefits – group scheme life assurance, critical illness cover (pays out on diagnosis of a dread disease); income protection and disability benefits. The larger the group, the cheaper the cover per head. May include spouse, partner, children cover.
- Employer subsidised mortgage arrangements – the employer pays all or part of the employee’s mortgage; also plans to help those get on to the housing ladder.
- EAP program to support mental health at work; counselling.
- Financial education.
- Tax-efficient SAYE (save as you earn) schemes.
- Travel assistance – season ticket, workplace cycle schemes, etc.
Non-core but ‘nice to have’ schemes
There are over 60 different employee benefits available. These include company cars (could be core depending on the job); medical aid, dental and benefits schemes (to supplement the NHS); workplace childcare or paying for childcare; paying for school and university fees; gym membership; work-based massage therapy; discount and free offer schemes, amongst them.
