What are employee benefits?
Employee benefits are additional perks, incentives and benefits that companies offer to their employees in addition to their salary. Learn what employee benefits are, some examples, and how to choose them in our article.
Employee benefits are additional perks, incentives and benefits that companies offer to their employees in addition to their salary. The range of benefits varies from insurance coverage, such as health insurance, to things such as car allowances or additional paid leave.
Employee benefits can offer many benefits to any UK business. It may help improve the wellbeing of employees and their families, attract talented staff, and retain their most valuable employees.
If you’re asking the question what are employee benefits? We’ve covered the key points you need to understand to make your next steps.
Examples of employee benefits
In order to help understand what is meant by employee benefits, we first need to look at some examples of what is on offer. As we’ve stated, these can vary and need to be considered based on the type of business you run and what your employees will value the most. Here are some common examples that may be available to you:
- Business health insurance - Employees can access private health services and treatments under a policy paid by the employer.
- Healthcare trusts - These are an alternative way for businesses to pay for business health insurance. Trusts cover the payments made for employees to receive private healthcare and wellbeing benefits.
- Employee health assessments - Help your employees understand their health and lifestyle habits. They’ll receive detailed reports about any risks and support on healthier steps they can take.
- Business health cash plans - Cover a wide range of employee medical needs, such as dental, optical and health subscriptions up to certain limits.
- Occupational health services - Review the overall health of your workforce, including their physical and mental wellbeing and provide ongoing supportive services.
- Business dental insurance - Cover your employees for private dental services and treatments under a single policy.
- Group critical illness - Cover your entire workforce or a group of employees for the diagnosis of critical illness conditions. They’ll receive a lump sum if they make a claim.
- Group income protection - If your employees aren’t able to work because of injury or illness, income protection aims to support them financially.
- Group life assurance - Life assurance covers your employees and their family members if a member of your staff passes away while employed by you.
- Additional paid leave - Offer employees holiday entitlement above the legal limit, or consider schemes where staff can purchase more time off.
- Pension contributions - Providing a high level of pension contributions can benefit employees who are conscious of their retirement.
- Flexible working - While flexible working has become more common, offering flexibility over where employees work can be considered an employee benefit.
- Company car - Provide your staff with a car or allowance towards purchasing a vehicle.
How can employee benefits help your business?
Employee benefits can offer many advantages to you and your employees. How they affect your company and its staff will depend on the types of policies and benefits you put in place, but some of the advantages include:
- Financial security - Some employee benefits provide financial support to your employees in the event of them being unable to work due to sickness or injury, being diagnosed with a critical illness, passing away, and other scenarios. This may help them with their financial commitments during stressful periods.
- Improved work-life balance - Benefits that provide greater flexibility for your staff, such as flexible working arrangements, may provide many benefits in itself, such as increased productivity, reduced absenteeism, improved wellness and more.
- Job satisfaction - Employees that receive benefits for working with your company alongside their salary may be more satisfied with their position and the company they work for.
- Company loyalty - Benefits may help employees feel more loyalty to their employer through increased satisfaction, health and wellness, and feeling towards their employment.
- Improved physical and mental health - Employee benefits may help improve your staff's health and wellness. Some benefits directly target these areas, such as business health insurance, health assessments, occupational health services, and others.
- Attract skilled employees - When looking to employ talented staff, offering a competitive benefits package alongside a salary may help to attract them to your company versus a competitor.
- Reduce absenteeism - Benefits that improve the health of your employees reduce the likelihood of them getting sick, and employees who are more engaged with their job may be less likely to miss work due to reasons outside of health and wellness.
- Cost savings - While employee benefits are a direct cost, they may result in savings made through higher productivity, reduced absenteeism, and retaining your employees.
- Company culture - Employee benefits that help and encourage employees to live healthier lives may help to create a positive culture amongst your employees. As your culture becomes more positive, your employees may report higher job satisfaction, wellness and loyalty.
- Enhance your reputation - Offering a comprehensive benefits package may help to attract staff, but it also demonstrates the actions your company is taking to improve its employees lives.
- Increased diversity - Employee benefits that cater to the needs of different people may help to attract a more diverse workforce. For example, flexible work arrangements may cater to the needs of families who have commitments to their children where flexibility benefits them more so than other types of policies.
- Tax benefits - Some benefits may offer tax savings for the business and its employees, such as pension contributions and childcare vouchers. You may also be able to deduct the cost of employee benefits from pre-tax profits.
- Competitive advantage - Offering employee benefits that are competitive with other businesses in the industry may give a business a competitive advantage in attracting and retaining top talent.
- Replaces a personal expense - If your staff are receiving a benefit, such as health insurance, through work, they may not need to pay for this expense from their taxed income.
How do you choose an employee benefits package?
Choosing the right benefits package that considers the unique characteristics of your business and its employees may help to enhance the benefits you’ll experience as a result of offering them. There are several factors to take into consideration, such as:
- Why are you providing employee benefits? - Do you have a specific goal in mind, are there any benefits that you know your employees would benefit from the most, and do you personally want to offer a specific benefit?
- How large is your company? - Smaller companies may have access to different policies compared to ones with more employees. However, a smaller company may have the option to tailor its benefits package around its staff more than a large company.
- What type of work do you offer? - If, for example, you offer services that are inherently risky to employee health, you may benefit from tailoring your package around those risks as they’ll be more relevant to the type of work you offer.
- What’s the demographic of your employees? - Different age groups, lifestyle habits, locations and genders may resonate with different employee benefits.
- What’s your company structure? - Some benefits may be more suited to employees, while others are aimed at directors and executive staff. Understanding your organisation's different groups may help tailor your benefits package to cover a large range of staff members.
Get help choosing an employee benefits package
Choosing a tailored employee benefits package may be more advantageous than purchasing a generic package, and it’s something that you should aim to bespoke around the different goals and needs of your business and its employees.
We know that it can be difficult to understand the options available or find the time to do this effectively, so we offer a free consultation and advice service for any company interested in employee benefits. If you’d like a hand getting started or our advice on any aspects of employee benefits, please don’t hesitate to get in touch using the form below.
