Company and Staff Benefits – The Basics


As the UK employment landscape continues to move away from the more ‘traditional’ workforce structure, in line with changing employee needs and the rising participation of millennials in the gig economy, many businesses are having to re-address how they attract and retain key staff.

Aside from an attractive remuneration package, employees are increasingly seeking non-cash provisions within their reward package, such as flexible working, increased holiday allowance, childcare support, health insurance and subsidised gym membership.

In our next series of articles, we look at some of the various employee benefits available and review what organisations may need to consider before implementing a staff benefits strategy of their own.

In the earliest days of benefit provision – dating back to the mid-1800s – benefits were often introduced by businesses who felt they had a moral duty to look after their employees, a policy commonly referred to as paternalism. Then, following WWII, alongside the creation of the NHS, a range of state benefits were introduced; these included sick pay, state pensions (via national insurance contributions) and unemployment support (categorised today as Employment and Support Allowance (ESA) or Job Seekers Allowance (JSA)).

While these state benefits continue to be universally provided, businesses in the UK, and worldwide, are opting to provide a range of flexible and attractive financial and non-financial benefit options as part of their overall total reward strategy, one that aligns with both the needs of its employees and the businesses long-term objectives.

In the UK, employee benefits are broadly grouped into three categories: core benefits, flexible benefits and voluntary benefits.

Core Benefits

These are benefits which all employees enjoy as part of their standard employment package, such as pensions, life or private medical insurance and sickness or holiday pay. Whilst not all employers will offer all of these as standard, such as medical insurance for example, some are statutory entitlements including a minimum level of paid annual holiday, maternity, paternity, adoption and parental leave.

Flexible benefits

Under a flexible benefits scheme, employees can choose how a proportion of their remuneration is paid or are given a benefits budget by their employer to spend. They can also adjust their salary up or down by taking fewer or more benefits. These are commonly implemented using salary sacrifice schemes, where the employee gives up the right to part of the cash remuneration due under their contract of employment in exchange for the employer providing them with some form of non-cash benefit.

In recent years increasing numbers of UK companies have used the tax and national insurance savings gained through the implementation of salary sacrifice benefits to fund the implementation of flexible benefits.

Voluntary benefits

Also known as affinity benefits, these are benefits that employees can choose to opt-in for and pay for personally. These commonly include products or services that can be acquired at a discount, such as the government-backed cycle to work scheme, childcare vouchers, discounts at certain retail and leisure outlets or subsidised gym membership, for example. These schemes differ from flexible benefits as the employee pays for the cost of the benefit either out of their own taxable income or through a salary sacrifice arrangement.

Nathan Mead-Wellings, Director at Finura comments: “As a growing business ourselves, we are fully aware of the need to provide attractive, flexible yet affordable workplace benefits packages. At Finura we can research what your competitors are providing for staff to ensure that any benefits package is relevant to your industry or profession. We will manage the process from the design of the package through to implementation and ensure that any benefit we propose is set up in the most tax efficient way possible.”

In our next article we will look specifically at pensions, one of the more expensive parts of an employee benefits package and a legal requirement for employers since the introduction of Auto-enrolment.

Articles on this website are offered only for general informational and educational purposes. They are not offered as and do not constitute financial advice. You should not act or rely on any information contained in this website without first seeking advice from a professional.


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