Employee Benefits Guide | Breathe
It can be hard to know where to start when considering which employee benefits are right for your SME. Providing your people with benefits they value can have a huge impact on the employee experience – and how your team view where they work.
In this guide, we look at what the different types of benefits are, why they matter, and how SMEs can implement them.
Employee benefits are a form of non-cash compensation that supplement an employee’s salary. They often have a financial benefit to the employee and are likely to have a cost to the employer.
Historically, benefits would have been limited to things such as pensions, medical insurance and life insurance.
Nowadays, there are a wide-ranging list of employee benefits.
Employee benefits are more than a nice-to-have. They have the potential to truly advance your business and your workforce.
Employee benefits have a longer history than you might think – they were first introduced in the industrial revolution.
Philanthropists such as Titus Salt and the Cadbury family recognised that giving employees more than a wage would result in better productivity and a healthier, happier workforce. As well as providing a safe working environment, they provided healthcare, leisure facilities and high-quality housing.
However, times have changed. Statutory benefits cover a broad range of employee needs, and few organisations need to provide employee housing. On this basis, it could be easy to assume that employee benefits are nothing more than window dressing. But evidence shows this isn’t the case.
Businesses which provide only statutory requirements risk higher staff turnover and reduce their potential talent pool when recruiting. The high costs of replacing employees rapidly adds up.
Setting recruitment costs aside, you’ll also need to factor in onboarding costs and a loss in productivity as new employees get up to speed.
And the advantages go further than strong employee retention and easier recruitment. Businesses that support employee wellbeing see stronger job satisfaction, lower absence rates and stronger productivity.
There are countless benefits that you can offer your employees. Although it’s true that you don’t need to offer all of them – or indeed any benefits at all – it’s important that they appeal to your employees and are seen as a genuine benefit.
Bonuses are a great way to incentivise employees. They’re most commonly based on productivity or profits and are normally triggered when employees hit certain targets. But they can also be based on attendance, customer service, quality, and team or individual performance.
Employee bonus schemes can help create a sense of a shared culture, demonstrating that everyone is working towards the same goal. They might not be suitable if your business has highly specialised roles as it can demotivate key players who feel like they are carrying the burden.
Another alternative is a profit-sharing scheme. Here, you issue shares in the business rather than cash. Employees can cash in the shares they are given or hold onto them for a longer-term investment.
EAPs – or employee assistance programmes – can play a powerful role in supporting employee physical, mental and financial wellbeing. An EAP is a confidential phone or online service that provides employees with access to information and support about issues ranging from anxiety and grief to workplace discrimination and relationship problems. This supports employee wellbeing both in and out of work, allowing for a happier and more productive workforce.
Changes to family-friendly legislation means increased statutory rights for new parents. As with all statutory benefits, you’re liable to provide the statutory minimum, but can choose to provide more as a way of attracting and retaining employees. Women are entitled to a year’s maternity leave. During this period, eligible mothers will get 39 weeks of statutory maternity pay.
This equates to six weeks at 90% of full earnings and 33 weeks at statutory maternity pay. The remaining 13 weeks of leave are unpaid.
With paternity leave, the father, partner of the mother (or adopter) and same-sex partners, are entitled to two weeks’ paid leave once the baby is born. Shared parental leave (SPL) is shared between both parents and consists of up to 50 weeks of leave and 37 weeks of pay between both parents. This cannot be taken in addition to maternity and paternity pay and leave.
Although companies are not legally obliged to offer more, it’s common to offer enhanced parental pay to help attract and retain skilled employees. Doing this helps demonstrate that you are a family-friendly company and can also support employee wellbeing for working parents. You could, for example, keep full pay in place for the entire period or offer half pay when it drops to the statutory minimum. You can introduce clauses in the employment contract where an employee will have to pay back that extra money if they don’t return to work or leave within a certain period of time after parental leave ends.
Staff are entitled to statutory sick pay which you are legally obliged to provide.
However, you may choose to offer occupational sick pay where you pay more than the statutory allowance or allow staff to claim sick pay for longer.
The benefits of flexible working are increasingly recognised. Whether that’s starting late, finishing early, job sharing, working part-time or even setting their own hours, flexible working allows staff to fit work in with other commitments. It also allows staff the chance to choose where they work and can help promote work/life balance. From an employer perspective, flexible work can empower your workforce, improve loyalty, reduce staff retention and boost your image as a good company to work for.
Some employers offer free gym membership, others will offer a discounted membership with a particular chain or a local gym. Giving your employees subsidised gym membership can support their health and wellbeing and boost employee engagement. Choosing the right gym provider is important to boost employee uptake. It is also crucial to make sure your provision is inclusive and caters to staff of all ages, life stages and fitness abilities.
All employers must now provide a workplace pension. However, enhanced pensions are still an attractive financial benefit, especially for older workers who are more aware of retirement plans. The most common enhanced pension option is a defined contribution pension scheme where the employer and employee pay in a set amount of money each month.
Because a workplace pension is now mandatory, many employees undervalue this benefit. Taking time to explain the pension scheme to your employees and adapting it to your workforce - for example, allowing flexibility in contributions - can be especially beneficial in ensuring employees fully appreciate this benefit.
This entitles your employees to have private medical treatment should they be ill or injured. More than employee wellbeing, health insurance can help reduce absenteeism and attrition. In the UK, 20% of employees have had to reduce their working hours while they wait for treatment on the NHS. Offering health insurance helps employees feel cared for and may help reduce sickness related absence. Dental and optical insurance are related benefits which are well-appreciated by many employees.
Employers are increasingly realising the value of a healthy and happy workforce, resulting in an increase in health and wellness benefits.
Share schemes help build employee loyalty and give workers a broader interest in business success.
They work by giving employees free shares in your company, and/or matching any shares they buy in the company. Doing this helps employees feel more invested in the business and encourages them to work harder. Share schemes are a flexible tool and can be built into your reward and recognition programme.
Some employers will offer their staff interest-free travel loans so they can buy annual tickets, which are usually cheaper than buying weekly or monthly ones. Doing this helps your employees reduce the cost of their daily commute and spread the cost. It can also support a commitment to low-carbon transport.
Having the flexibility to stay at home allows a worker to take the occasional day off when they’re feeling under par but aren’t sick. These days are built into the annual holiday allowance but are not treated as annual leave or sick leave.
Used cautiously, this kind of non-judgemental time off work can help support employees at every life stage and can act as a preventative benefit. For example, it could support parents whose children have not slept well and who need time to catch up on sleep, women experiencing a serious menopause and employees who may need some downtime to benefit their mental health. These wellbeing days can help reduce actual sick days while treating workers with respect.
On top of more traditional benefits there are many different things you can offer your employees to incentivise and retain them.
Although this isn’t a benefit you can quantify, it’s great for morale. By letting employees take the day off, you’re allowing them to celebrate and showing you care about more than the work they do.
Cycling to work can help improve employee physical and mental health and reduce environmental impact. A cycle to work scheme allows employees to buy a bike and associated equipment without paying money upfront. Tax efficient payments are taken directly from their salary, helping save at least 25% on the cost of a bike or eBike.
Training programmes are well documented in larger organisations but often get left in smaller businesses because of a lack of time and resources. However, setting regular time aside for development can lead to positive change within your organisation.
It creates a culture of self-learning and once one employee gets fired up about something new, it can quickly spread through your team.
Investing in employee development has been proven to improve employee retention and makes you a more tempting prospect for potential candidates. What’s more, many studies show that learning and development is more motivating to employees than a pay rise, making this an effective way to manage your wages bill.
A sound benefits scheme can have a profound impact on employees’ health, wellbeing and job satisfaction. But it’s important to take a strategic approach, planning the benefits you’re prepared to offer, under what conditions and when.
Adopting a piecemeal or adhoc approach can mean employees do not gain full advantage of the benefits on offer. It can also result in benefits that have no value to your employees, negatively impacting your employer brand.
As with all decisions, it’s important to identify the objectives of your benefits programme. Here are a few examples:
With the objectives in place, it’s time to understand how different benefits appeal to your workforce. You’ll need to consider your existing employee profile and take account of how this may change in line with your business objectives.
Be wary of creating a benefits package that is too focused on one type of employee. This can contribute towards a lack of inclusion and eventually result in a one-dimensional workforce. For example, providing childcare vouchers may seem irrelevant if your business predominantly employs young men. However, you will find it more difficult to attract skilled working parents if you don’t provide this benefit. Sharing example combinations of benefits with a sample group of employees will give you feedback on potential benefits and ensure the resulting package is suitably attractive.
Benefits can be exciting to employees but costly to businesses. Finding a balance between high investment benefits such as pensions and health insurance, and high value/lower cost benefits such as training and development, career conversations and flexible working conditions will create a benefits package that meets objectives without creating financial pressure.
Once your benefits are in place, it’s important to monitor the value they deliver to employees and whether or not employees understand the benefits available to them. Some benefits such as pensions or share schemes may not be immediately attractive to employees. This may also be the case with initiatives such as an EAP or cycle to work scheme. Taking the time to explain benefits in more detail to your staff may encourage take-up and increase feelings of staff engagement – this in turn will help maximise the benefit of your investment.