Employee benefits can feel costly, but losing the wrong staff member can be far more expensive. The reason a lot of businesses see them as a drag on the bottom line is because they aren’t putting enough thought in and just throwing the kitchen sink at everyone.
You are going to be a lot better off if you focus on the benefits that really matter to your team. If you do you’ll be able to better retain talent and keep them healthier, happier and working more productively.
All employers in the UK must auto enrol their employees into a pension scheme.
The level at which you do this can say a lot about you as a (prospective) employer. You can either simply be compliant with the law at the minimum level or look to make a positive statement to your team. To be compliant with legislation employers need to contribute 3% and employees 5%, if you are contributing upwards of 8% then an employee’s contribution is optional.
The best advice is to stay in line with your place in the market for talent. If you are an overseas company, don’t be tempted to simply replicate what you do ‘at home’ as it could be wildly different from common practice for an employer your size in the UK.
UK standards for selected industries:
|Source: ONS Annual Survey of Hours & Earnings 2019||Average contribution as % of salary|
|All industry average||5.5%||5.9%|
|Accommodation & Food Services||5.2%||3.7%|
|Administrative & Support Services||5.3%||4.2%|
|Arts, Entertainment & Recreation||5.3%||4.0%|
|Financial & Insurance||6.0%||9.5%|
|Information & Communication||5.6%||6.9%|
|Professional, Scientific & Technical||5.6%||5.9%|
|Wholesale & Retail Trade||5.3%||4.8%|
An employer can choose to make contributions based on either qualified earnings (between £6,240 and £50,270 for 2022/23) or an employee’s full salary. For more information on Auto Enrolment see our Quick Guide.
If you are only going to choose one optional benefit to offer in the UK, private healthcare should be it. Here’s why.
Offering healthcare benefits to your team is equivalent to offering peace of mind. Other benefits like Income Protection and Life Cover can be seen as an extension to that.
People want to know that if they are unable to work that they will still be able to afford to live. And, should the worst happen, that their loved ones will be looked after.
The costs of Life Cover and Income Protection are dependent on both the employee’s age and salary - and of course how much cover you are looking for. If you are looking to stay in line with the UK standard for Life Cover of four times salary then you would likely be paying no more than a few hundred pounds per employee per year for both benefits.
Don’t forget. As well as protecting your employees you are also able to protect your business against incapacity or loss of key team members.
There are lots of different options and in the UK they can be very tax efficient. We have a guide to UK Share Option Schemes here.
If you are looking to use share options to motivate a global workforce things can get more complicated.
You’ll need both tax and legal advice before implementing any scheme whether in the UK or across multiple territories. The sooner you have those conversations, the sooner you’ll be able to work out what the right approach for your business is.
There is a lot of hype and chatter around a wide variety of employee perks and optional benefits.
Some popular ones are:
There will be an optimal way to do these things, but be warned they are often not tax efficient. Bottom line, find out what your people really value and build a benefits package around that.
|Start up||Scale Up/SME||Blue Chip|
|Workplace pension||Minimum payments||4% - 8% Employer contribution||10% + Employer contributions|
|Social Functions and Parties|
|Private Health / Dental|
|Digital GP service|
|Employee Assistance Plans|
|Critical Illness Protection|
|Cycle to Work scheme|
|Discounted Shopping Vouchers|
|Subsidised meals / canteen|
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