Employers use benefits to attract, retain and provide incentives for employees. Commonly they are provided as part of an overall strategy designed to achieve defined business objectives. Such benefits take many forms, offering both financial and non-financial rewards, and go to make up an employee’s total reward.
The benefits employers make available to employees have seen considerable enlargement in recent years. These now range from traditional occupational pensions and sick pay, to flexible working and voluntary arrangements. Many employers offer flexible benefit schemes under which employees are given a sum of money to buy those benefits that reflect their circumstances at the time. However, by offering employees cash to buy their own benefits, employers shift the burden of responsibility to make an informed choice to employees, which may not always be appropriate.
Although the age of an employee can affect which benefits they prefer, the top five desired benefits usually include pensions, bonuses, flexible working, final salary pensions and extended holiday entitlement.
Some benefits have tax advantages, the most obvious being a pension. Voluntary benefits, which use an employer’s bargaining power to negotiate discounts on products and services for employees, promote the employer’s reputation for providing a good place to work.
It is important that an employer looking to introduce or change benefits has identified clear business goals and analysed how the benefits will affect their employees. For the value of benefits offered to be fully appreciated it is essential that there is effective communication with employees.