What are Employee Benefits?

Employee Benefits can be broadly defined as – Any benefit you receive from working for a company that wouldn’t have been available to the same level, or for the same cost, if purchased individually.

It almost sounds too simple right?

Let’s break down what some of the context and variables may be.

Expectations and regulations - The things you shouldn’t shout about!

There are certain minimum requirements that each workplace should provide. Things such as water, warmth, and tools to perform your trade are part of regulations. A good guide for these minimum requirements can be found in Workplace health, safety, and welfare act 1992.

There is no legal obligation to provide things such as tea or coffee, and we’ve encountered companies that do not provide these benefits, or have promoted these in their Benefits Booklet as employee benefits. Looking at the definition of what an employee benefit is, tea or coffee may technically pass as one, but it’s not a great look to shout about them as being a benefit of working for your company. These are the bare minimum things a company can do to make the workplace an inviting place to be.

Once you’ve got over the bare minimum, there are other expectancies such as minimum holiday allowance, and workplace pensions. Many new organisations fall foul of workplace pension legislation where penalties can be applied for non-compliance. If you are concerned that your company might be among these, please get in touch with us.

Core Benefits – Moving towards an employer of choice

Core Benefits are employee benefits that the company is fully funding on your behalf, and where there are no associated costs to the employee.

These are often known as the more traditional foundational benefits such as Group Life Assurance or Group Income Protection. Companies can also look to pay a higher employer pension contribution to their employees than is legally required, and this also falls into the core benefit category.

Companies may also include benefits such as Group Medical Insurance or Group Critical Illness in their core benefits package. This is fine to do, but there is a slight grey area as these can be seen as voluntary benefits because although the company pays fully for the employee to receive them, they are deemed to be a taxable benefit (also known as a benefit in kind) and therefore has a tax implication to the employee. Because of this, technically employees should not automatically be enrolled because there is a direct cost to them.

Away from the more traditional benefits mentioned above, there are also several Employee Benefits where companies can be providing a range of fully funded things such as reward and recognition schemes, health and wellbeing support and learning and development platforms.

Voluntary Benefits – The forgotten oasis

Small Medium companies (SME’s) are often stuck in the uncomfortable middle ground of providing the bare minimum but not feeling they can afford to provide employee benefits to their employees. This poses a missed opportunity for many companies. They could be providing very valuable benefits to their employees voluntarily, but are unaware of these possibilities.

Voluntary Benefits are employee benefits where an employee needs to join or select. Voluntary Benefits fall into a few camps:

Fully paid by the employer – (for example Group Medical insurance) but there is a tax implication to the employee, hence the employee must join. As stated earlier, some companies may choose to communicate this as a core benefit.

Part funded by the employer – This may be supporting the employee to purchase a benefit in a more cost-effective way. Part funded benefits include things like healthcare cash plans and gym flex.

Fully paid by employee with distinct benefits – For example, salary sacrifice benefits are a fantastic way to provide a selection of benefits to employees, that they can purchase in a tax efficient way. This creates savings for the employees. Good examples of salary sacrifice benefits include employee pension contributions, Electric Car schemes, Give as You Earn and Technology purchase schemes.

Voluntary benefits are a great opportunity that all companies should consider. They come at little or no cost to implement but can be proudly promoted as part of an Employee Benefits Package. The only drawbacks to consider will be the administrative responsibilities and the level of engagement from employees. If employees are not engaging in the benefits, it could be that they’re not attractive, not suitable for the demographic of employees or, they are not being communicated to employees very well.

Engaging Employee Benefits

At Bigmore Benefits we believe that most companies can, and should, be providing some kind of employee benefits package. There are a few important considerations regarding this.

Firstly, you should design an employee benefits package that meets your budgetary considerations. It should also be targeted in a way that will add real value for your employees. Bigmore Benefits often say ‘it’s not just what you give, but also how it’s perceived.’ We have seen modest employee benefit packages that are greatly valued by the employees. This is because they are targeted to the employee’s needs, and communicated clearly.

Bigmore Benefit have a bespoke Employee Benefits Design Framework we call The Four P’s and this covers all the factors companies should consider when embarking on designing a benefits package.

Once you have designed a great benefits package it’s then essential that it’s communicated clearly to employees. If you are looking for some tips on how to communicate your benefits package, we have a guide that can help.

Overall, the most important element when it comes to communicating your package is Employee Engagement. This is a key factor in helping employees value the employee benefits package they are receiving from their employer.

Article by Dave Sykes
Director, Bigmore Benefits