Employee Benefits describe the ‘non-cash’ benefits on top of the salary you pay to your employees.

These extra rewards can make all the difference in attracting new employees or retaining and motivating existing employees.

The list of possible benefits commonly starts with pensions, with nearly all employers required to offer a workplace pension scheme. The rules around such schemes include minimum contribution levels, from both employer and employee. People value their pensions very highly, so one option which you may wish to explore is if you can enhance your pension provision for your team, by introducing an option known as Salary Exchange. This is sometimes alternatively described as Salary Sacrifice.
This is a cost-effective way of increasing pension contribution amounts.
Salary Exchange is where you agree with your employee that they will reduce their salary, with the reduced amount instead being added into their pension.

The reduction in salary creates a significant tax and national insurance saving, for both employee and employer. The employer may choose to retain all, part, or none of their national insurance savings. Employer national insurance savings can be redirected as an additional pension contribution or used to fund other benefits.

The net effect of this is that an employer has no more expenditure overall, but the employee gets an increase in their pension contribution – much higher than the salary amount exchanged. Offering employees life assurance, sometimes known as ‘Death in Service’ is also very popular with employees. It is more efficient for an employee to have their life assurance provided through the company than it is for them to receive salary and then pay for the life assurance themselves.

Death In Service pays a tax-free lump sum usually as a multiple of salary, for example four times salary to their family or nominated beneficiaries.
Up to certain limits employees are accepted without medical underwriting. This means pre-existing conditions are typically covered for most people, which may not be the case with a personal life assurance policy.

Group Critical Illness Cover will pay out a tax-free cash lump sum should an employee suffer a serious illness. Most policies cover cancer, heart attacks and strokes and many other serious medical conditions.

Group Private Medical Insurance provides your employees with access to private healthcare paid for by an insurer. This allows them to potentially bypass lengthy NHS waiting lists for eligible conditions.

Private Medical Insurance is designed to supplement and complement the NHS rather than replacing it fully. It therefore doesn’t cover every medical need that may arise.

Most policies cover cancer care in full, offering access to cutting-edge cancer treatment, including drugs and procedures that don’t tend to be available on the NHS because the cost is prohibitive.

Optical and dental benefits can also be added as an option. If an employee becomes sick or injures themselves too severely to work, a Group Income Protection scheme will provide them with up to 80% of salary to supplement their lost earnings while they are recovering. This benefit comes with several valuable support services to proactively reduce sickness absence as well as providing access to rehabilitation specialists to help ill employees return to work.

Like Death in Service, up to certain limits employees are accepted without medical underwriting. There are many other types of benefit you can consider; this list includes share schemes, cycle to work, gym membership and travel loans.

When you consider what to offer your employees you will need to weigh up several important factors, over and above the cost.
For example, do you offer the same package to everyone regardless of their position, or length of service, or should you provide enhanced packages to some of your team?

Then you will need to look at the tax position, both for your company and for the individual employee and understand the different tax consequences for different benefits.

You will see therefore that there are many ways of building up your employee benefits package and you can shape this around your budget, the variable needs of your team and your business goals.
We are here to help you explore this further.