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In today's competitive job market, creating a comprehensive and enticing employee benefits package has become vital for SMBs striving to attract and retain the top talent.
If you’re a HR professional who finds themselves constantly juggling tasks and responsibilities, managing employee benefits packages can be an additional time-consuming task. In this expert guide, we will equip you with the necessary tips and tools for a streamlined process to create and maintain robust benefits packages for your employees.
What is an employee benefits package?
An employee benefits package refers to a set of perks and advantages offered by an employer to attract and retain talent. These none-wage compensation packages have been designed to enhance job satisfaction, as well as physical and financial wellbeing for employees beyond their basic salary.
Why are employee benefits packages important?
Whilst employee benefits packages play a pivotal role in enticing the best candidates during the recruitment stage, they are also a crucial component when it comes to retaining existing staff. When weighing up job offers, an employee will often consider the overall value of a benefit package and benchmark this against other opportunities.
As well as this, a comprehensive benefits package provides employees with a sense of security, wellbeing and satisfaction leading to greater loyalty and commitment to the business. So, by investing in your company benefits package you will not only aid talent acquisition but maintain a satisfied and motivated workforce who remain within the business long-term, contributing to the success of your business.
Types of employee benefits
There are various types of employee benefits, including some mandatory and common additional perks offered by businesses across the UK. Let’s look at some of the legally required benefits, before exploring the supplementary offerings that can help enhance your employees overall experience and satisfaction.
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Mandatory benefits in the UK (Statutory Benefits)
In the UK, mandatory benefits are typically statutory requirements. This includes National Insurance contributions which fund state benefits such as state pension and healthcare contributions through the National Health Service (NHS), as well as sick pay and workplace pension schemes.
However, eligibility for each statutory benefit in the UK varies and requires some adjustments for part-time or irregular-hour employees. Let’s look at each of the mandatory benefits and their eligibility requirements:
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Sick Pay
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Employers must provide Statutory Sick Pay (SSP) to eligible employees who are unable to work due to illness. This pay is mandatory for up to 28 weeks and is eligible for employees and agency workers earning an average of at least £123 per week who have been ill for more than three days in a row.
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Pension
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Employers are legally obligated to enrol eligible employees into a workplace pension scheme and make contributions to it under Auto-Enrolment legislation, ensuring employees save for retirement. To qualify for a workplace pension UK workers must be between the age of 22 and the state pension age who earn at least £10,00 per year.
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National Insurance
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National Insurance contributions fund benefits like the State Pension and healthcare through the National Health Service (NHS). Employers and employees both contribute.
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Social Security
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Social Security encompasses various benefits provided by the government to ensure financial assistance and security, including Jobseeker's Allowance, Employment and Support Allowance, and Universal Credit. Eligibility varies depending on circumstance.
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Mandatory Leave Allowance
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Employees are entitled to a minimum amount of paid leave, ensuring employees have time off work for personal and family reasons. This leave includes:
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- Annual leave
- Maternity leave
- Paternity leave
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For detailed information, visit https://www.gov.uk/browse/working/time-off-work
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Common additional benefits companies offer their employees
Companies will often provide additional perks that go beyond the mandatory requirements, aiming to enhance the company benefits offering. Some of the most common additional benefits include:
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1. Enhanced mandatory benefits
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In the UK, it's increasingly common for employers to supplement mandatory benefits with enhancements, such as offering additional annual leave allowance beyond the statutory minimum.
Last year, the average number of annual leave days taken by UK employees, including bank holidays, surpassed 34 days according to a report by People HR, indicating a trend of employers offering more generous leave policies. This reflects the rise in companies taking a proactive approach to employee wellbeing, with many recognising the importance of time off for rest and rejuvenation which in turn will improve productivity upon their return.
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2. Additional leave types
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In addition to standard annual leave and statutory allowances, companies often offer various other leave types to accommodate different personal circumstances. These include:
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- Pet adoption leave
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Some employers provide paid time off to employees who adopt a new pet. This leave allows employees to bond with their new furry companions and ensure their wellbeing during the adjustment period.
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- Duvet days
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Also known as mental health days, duvet days are unplanned days off that employees can take when they need a break from work due to stress or burnout. These days are typically granted at the discretion of the employer and are aimed at promoting employee mental health and work-life balance.
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- Life Leave/Admin Days
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Life leave or admin days are additional days off provided by employers to allow employees to handle personal matters or attend to important life events that may arise unexpectedly. These days recognise the need for flexibility and support in managing both work and personal commitments effectively.
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3. Benefits at work
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When it comes to creating a positive working environment, many businesses will opt for workplace perks such as:
Skills Development: Investing in employee growth by providing opportunities for skills development and career advancement through training programs, workshops, and tuition reimbursement schemes. This not only benefits the individual but also strengthens the business by creating a skilled and adaptable workforce.
Office Refreshments: Some companies offer free or subsidised refreshments in the office, such as coffee, tea, snacks, and fruit. This provides employees with convenient access to healthy refreshments throughout the workday.
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- 4. Benefits for health
In addition to workplace perks and skills development opportunities, companies often provide various health-related benefits to support the wellbeing of their staff. Some common health benefits include:
Healthcare and Dental Benefits: Employers may offer health insurance coverage to help employees cover medical expenses, including doctor's visits, hospital stays, prescription medications, and dental care. Providing access to comprehensive healthcare benefits ensures that employees and their families can receive necessary medical treatment without financial strain.
Child and Dependent Care Benefits: Some companies aid with childcare or dependent care expenses, such as subsidies for day-care services or access to flexible spending accounts (FSAs) or childcare vouchers. These benefits help employees balance their work responsibilities with family obligations, reducing stress and improving work-life balance.
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5. Benefits for financial security
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Some companies will include a range of financial benefits in their benefits package for employees to provide security and stability for their staff's future. Common financial benefits include:
Pension schemes: Enhanced pension schemes help employees save for retirement, often including contributions from both the employee and the employer. These plans provide financial security and peace of mind for employees as they plan for their future.
Stock Options: Some companies offer stock options or equity ownership as part of their compensation packages, allowing employees to purchase company shares at a predetermined price. This gives employees a stake in the company's success and potential for financial growth.
Insurance Options: Employers may provide various insurance options to protect employees and their families against financial risks. This can include income protection insurance, which provides financial support if an employee is unable to work due to illness or injury, as well as other types of insurance such as life insurance, critical illness cover, and private medical insurance.
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6. Wellness and lifestyle benefits
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In addition to traditional benefits, companies often offer various perks to enhance employee satisfaction and well-being, including:
Tech Scheme: Some employers provide employees with access to technology schemes, allowing them to purchase devices such as laptops or tablets, at discounted rates through salary sacrifice arrangements. This enables employees to stay up to date with the latest technology for both work and personal use.
Electric Vehicle Scheme: To support environmental sustainability efforts, some companies will incentivise employees to switch to electric vehicles. They may do so by offering discounts on electric vehicle purchases, providing access to charging stations at work, or contributing towards electric vehicle lease payments.
Gym Membership or Wellbeing Allowance: Many employers offer gym memberships or provide employees with a wellbeing allowance to spend on fitness classes, wellness activities, or mental health resources.
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7. Flexible working benefits
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Employers increasingly recognise the importance of offering flexible working arrangements to accommodate the diverse needs and preferences of their employees, and as such have introduced the following benefits:
Flexible Start/ End Times: Hybrid working models, where employees split their time between remote and office-based work, offer flexibility in start and end times. This allows employees to adapt their work schedules to suit their personal needs whilst optimising
Working Location: Providing flexibility in where employees work, whether it's from home, a coworking space, or the office, allows individuals to choose an environment that best suits their work style and preferences.
Working Abroad: As well as flexibility working remotely, some companies allow employees to work abroad, for short periods. This flexibility enables employees to travel while maintaining productivity and work-life balance.
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8. Volunteering hour allowance
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Mentoring or volunteering hour allowance is a benefit that has been increasingly embraced by companies, reflecting a growing emphasis on corporate social responsibility and employee engagement. This benefit allows employees dedicated time to participate in mentoring programs or volunteer activities outside of their regular work responsibilities, which can provide a sense of purpose and fulfilment, strengthening an employee's connection to the company.
Tips for creating an employee benefits package
With comprehensive employee benefits packages a crucial component in attracting and retaining talent, it’s little wonder there are so many perk options available. So, how do you ensure that your benefits package is suited to the needs of your company? Here are some practical tips to help you tailor your offering.
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Consider individual costs of employee benefits
Employee benefits packages are not without their costs. Whether it's providing health insurance, offering additional annual leave days, granting stock options, or implementing wellness programs, each benefit incurs a specific financial obligation for the employer which can extend beyond the direct monetary outlay.
By carefully considering the individual costs of each benefit and assessing any financial constraints, companies can strike a balance between offering attractive benefits whilst ensuring that the overall cost remains manageable.
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Communicating the value of the company benefits package
It is crucial that employees have a clear understanding of their company benefits packages. This goes beyond simply listing the perks available to employees, requiring employers to articulate the purpose and value of each offering and send regular communications about benefits packages.
There are several opportunities for businesses to communicate their benefits offerings. These include:
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- During the onboarding period
- During annual enrolment periods
- Through employee handbooks and online portals
These communications help reinforce the company's commitment to employee well-being, whilst highlighting the significant investment made in their overall compensation package.
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Conduct employee surveys
Conducting employee surveys to gauge the usefulness and desirability of various benefits is a proactive approach that can help your business effectively tailor its benefits packages to meet the needs and preferences of your workforce.
By directly asking employees for feedback, you can gain insight into the benefits they value and appreciate. Additionally, surveys such as this can help identify benefits that may be underutilised or not as effective as initially anticipated, allowing business to reallocate resources towards more impactful offerings.
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Flexible vs fixed employee benefits package
Flexible and fixed employee benefits packages represent two distinct approaches to providing benefits to employees, each with its own set of advantages and limitations.
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Flexible Benefits Packages
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Flexible benefits packages offer employees the opportunity to choose from a menu of options and tailor their benefits package to best suit their individual circumstances and preferences. This level of customisation empowers employees and can enhance their overall satisfaction.
However, managing flexible benefits packages can require significant administrative effort, including tracking individual selections, managing enrolment periods, and communicating effectively with employees about their options.
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Fixed Benefits Packages
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On the other hand, fixed benefits packages offer a predetermined set of benefits to all employees without the option for customisation. While this approach simplifies administration and can be more cost-effective for employers, it may not fully meet the diverse needs and preferences of all employees.
You must carefully weigh the advantages and limitations of both approaches when designing employee benefits packages. Factors such as company culture, workforce demographics, budget constraints, and administrative capabilities all play a role in determining which approach is most suitable for your business. Ultimately, the goal is to strike a balance between offering flexibility and simplicity to ensure that employees receive valuable benefits that support their well-being and satisfaction.
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Use technology to your advantage
HR professionals can harness the power of HR software to efficiently manage employee benefits packages, streamlining processes and enhancing the experience for both HR staff and employees.
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Reduced administrative burden
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By utilising technology, HR departments can significantly reduce the administrative burden associated with benefits administration, by automating tasks such as benefits enrolment, tracking employee eligibility and changes, and generating reports.
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Mitigated errors
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HR software can help minimise the potential for errors in benefits management, as automated systems reduce the reliance on manual data entry and processing, decreasing the likelihood of inaccuracies.
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Employee self-service
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HR software also provides employees with convenient access to their benefits information and self-service tools, empowering them to make informed decisions about their benefits and manage their benefits-related tasks independently. This accessibility enhances employee satisfaction and engagement by providing a seamless and user-friendly experience.
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Clear communication
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HR software can also be used to effectively communicate with employees about their benefits, as well as analyse data to make data-driven decisions regarding benefit offerings.
Get started with HR software to successfully manage employee benefits
Crafting an effective employee benefits package is essential for attracting and retaining top talent. By understanding your employees' needs and preferences, you can create a benefits program that truly values them. Ready to elevate your employee benefits offering? Check out our flexible employee benefits platform to streamline administration, increase employee satisfaction, and drive business success.
To see how PeopleHR can help your business, book a demo today.
