Why all businesses should have an Employee Benefits Scheme
Skill shortages and a competitive recruitment market are damaging business growth prospects and the cost of replacing staff, training new employees and the collateral loss of intellectual capital is very high.
With ever more employees moving from large multi nationals or public sector employers and moving into the medium and small to medium size employer market they increasingly expect similar benefits to those they enjoyed working for the multi national.
An Employee Benefits Scheme can enable your business to stay ahead of the pack and be able to recruit and most importantly retain quality people, ensuring a happy work place and increasing profits.
The Chartered Institute of Personnel and Development reported in its 2015 Resourcing and Talent Planning Survey that recruiting a new employee carries a cost of between £2,000 and £7,250 depending on seniority of employee.
What benefits are included in a typical Scheme?
The main and arguably most valuable benefits from an employee perspective include:-
- Pension scheme with a matching employer contribution
- Life assurance as a multiple of salary
- Critical illness cover either as a multiple of salary or fixed lump sum
- Income Protection insurance to provide a replacement income in the event of being unable to work due to accident or illness
- Private Health Insurance usually for your senior staff to ensure they can receive prompt private treatment and return to work as soon as possible in the event of a health issue
- Healthcare Cashplan for your less senior employees, offering a range of financial assistance for items such as dental treatment, eye tests and chiropractor treatments
- Childcare Vouchers to assist your employees who need day care for their children whilst they are working
Some other benefits that can be included
- Cycle to work scheme allows employees to choose a brand new bike and take advantage of tax and national insurance breaks by using salary exchange
- Employee Assistance Programme is a scheme which provides support to your employees whenever they need it at work or at home. It offers a listening ear and access to trained counsellors who can assess their situation and offer support
- Give as you earn allows your employees to give to charities of their choice directly from their salary in a tax efficient manner. You as their employer also save national insurance on these donations
- Holiday trading gives your employees the opportunity to buy or sell holiday and to spread the cost over 12 months. You benefit from national insurance savings as well.
- Online shopping is an easy way to engage your employees in the Benefits Scheme with a huge range of retailers offering discounts on shopping
Providing a Scheme will come at a cost but can you afford not to?
The Recruitment and Employment Confederation (REC) reported that the number of areas in the UK economy facing skills shortages rose from just 9 in 2013 to 43 as 2014 drew to a close. With unemployment remaining at a low level and political uncertainty following the EU Referendum this situation is unlikely to improve in the short term.
In 2014 a survey carried out by US insurance giant Met Life found that employees in the UK were most motivated unsurprisingly by increased pay which is a rather blunt and expensive instrument for an employer to use. The second most motivating factor for an employee was the provision of an improved Benefits Scheme package.
Schemes can be tailored to your budget and we can work with you to select the most impactful scheme within your budget.
Can I offset some the the costs of an Employee Benefits Scheme?
The answer is yes, almost certainly you will be able to gain a number of reliefs/savings depending on the type of benefits included.
Possible reliefs/savings include:-
- National Insurance savings through salary exchange benefits such as childcare vouchers and give as you earn
- Corporation Tax relief against alowable business expenses
- Employees buying extra holiday
- Having an organised and monitored scheme that is well presented will reduce time spent by your HR Department or Office Manager releasing their time to spend on other business needs
Other savings that are less obvious include:-
- Our service ensuring that your various benefits are reviewed and re-brokered to ensure the most competitive terms are achieved
- Improving staff engagement – engaged staff work harder and are more productive
- Employees value the benefits – if you present the benefits in a simple yet attractive manner via a modern online platform employees will understand and feel the benefits resulting in you getting a good return on your investment
- Online shopping benefit – it has been shown that 40% of users repeatedly use this service saving on average £1,000 per annum from their net pay. For you to provide a basic rate tax paying employee with a pay rise of this amount would cost you £1,300 per annum which for someone on £20,000 would equate to a pay rise of 6.5%!
I’ve heard about Flexible Benefits; what are they?
If you really want to go to town with your benefits package you can offer Flexible Benefits which involves giving your staff their own budget and allowing them freedom to choose which benefits they wish to purchase. This type of package might be described as the Rolls Royce version of the Employee Benefits Scheme packages and as well as being a significant cost will also result in greater administrative support.
If you are not feeling that generous then you can still offer your employees the chance to voluntarily pay for extra benefits out of their pay e.g. those with young families may wish to purchase extra life cover.
Making it easy for your employees will reap rewards in increased productivity and loyalty.
Let’s talk about how we can devise a scheme for you
We know, there is no ‘one size fits all’ solution and each company has differing needs. We also know that different generations think differently and have different demands and aspirations. Your employee benefit scheme should be adaptable and relevant to your business to achieve maximum impact and return on investment.
We have considerable experience in advising how to build a bespoke employee benefits scheme that would suit your business’s needs. Give us a call or drop us an email today.