Why innovative employee benefits are more valuable than ever

There are now a wide range of benefits that companies make available to their staff, as well as the more traditional or mandatory ones, such as maternity and paternity leave and holiday pay. One example put forward by Eason, who - along with his team - has many years of experience of working in the field of employee benefits, is offering electric vehicles by salary sacrifice. This is particularly topical in light of the country’s ambitious net zero emissions targets.

Eason says: “There is a lot that can be achieved without spending money. And there are plenty of opportunities within employee benefit programmes to do things more efficiently for the employer and potentially the employee, particularly with pensions. Using salary exchange, for example, as a contribution mechanism is well established. It allows the same amount of money to go into a pension, but, as the employee salary is reduced in lieu of additional employer pension contributions , they pay less tax, And both the employer and employee pay less National Insurance. It’s therefore very tax efficient for everyone.”

There is a great deal of innovation around salary exchange at the moment, explains Eason, who goes into more detail about electric cars. “Effectively, people are able to get electric vehicles free of income tax and National Insurance which is super valuable for them,” he says.

Electric car schemes can also demonstrate a business’s green credentials, something that is becoming more important in such areas as tender processes. And as leases on cars generally span three or four years, this can be an incentive for a staff member to stay with that employer, adds Eason.

Other innovations include things like groceries by salary exchange by offering employees cards with supermarkets, which could be especially popular during the current cost of living crisis.

Healthcare is a hot topic when it comes to employee benefits. Private Medical Insurance (PMI) is becoming increasingly appealing for a number of reasons, including the burden of long NHS waiting times. It also has a major role to play in staff recruitment and retention, in trying to ensure the workforce is present and able, and in mitigating the risk of employees being on medium or long-term sick leave, according to Eason.

He explains: “A focus on healthcare is undoubtedly one of the biggest trends. We’ve written more healthcare policies for clients in the last couple of years than in the previous decade. People now see it as a gold-plated employee benefit. In the past it might have been available to only the more senior members of the workforce, but employers are tuning in to the fact that it helps recruit staff into a business, and keep them.

“Employees are aware of the time it can take to get a routine NHS appointment and there is a real business case for employers to have healthcare policies, including from a revenue point of view. It’s quite subjective but there is a cost to businesses if people are waiting a long time for treatment and not able to function fully in the workplace. Not only will there potentially be the physical aspects of the ailment people may feel anxious while waiting for a diagnosis, for them or family members, and that can affect those working around them too.” All of these factors can be mitigated with the placement of a PMI policy supporting employee wellbeing and employer productivity alike.

Next, Eason points to changes to pension uploads from May this year which will impact payroll processes and may unearth auto-enrolment breaches that employers might not have been aware of.

The Pensions Regulator requires providers and employers to monitor the contributions paid into their workplace pension schemes. From May it will become mandatory for an employer to provide a worker’s pensionable earnings each time they submit a contribution.

Eason says: “There are many different dynamics at play with auto-enrolment and varying definitions of what is pensionable salary. With the best of intentions best practice isn’t always followed which can lead to breaches that companies may be fined for.

“From May there will be greater clarity on the correct amount of contributions to be paid.. For large organisations with modern payrolls this should be fairly simple. But smaller businesses might have more archaic systems and rely on manual processes, so the changes could create a lot of work for them to get it right.

“The Pensions Regulator brings thousands of actions against employers and it isn’t slow in naming companies. So it’s not just the actual financial cost for employers, but reputational risk. Companies should be reviewing what they have with a payroll provider to ensure they’re compliant.”

Eason concludes by emphasising how important it is that companies communicate with their employees and educate them on what benefits are available.

“How does a business get a return on investment unless employees understands what is provided ?,” says Eason. “It’s front and centre for me that people are educated to understand the benefits available. A litmus test is to ask someone in the workforce what their benefits are. It comes down to education and regular communication on employee benefits. For example, people starting out in the workforce should be encouraged to discuss pensions and look down the line to retirement they want as opposed to assuming what they have will provide what they want, small changes early can have a significant impact in the years to come.”

The information provided is the opinion of Andy Eason and should not be regarded as advice. Acumen Employee Benefits is an appointed representative of Acumen Financial Planning who are authorised and regulated by the Financial Conduct Authority. FCA number: 916905.