Employee benefits are typically included in a total compensation plan for employees. They’re not considered part of a salary package (although they’re typically tax-deductible).
Instead, they’re offered in conjunction with the salary, and are intended to draw employees into your company. They can help employees be motivated to stay with your company and to do their job effectively (for reasons that aren’t related to their monthly paycheck).
Recent changes in how employers view employee benefits has increased the importance of flexibility, rather than offering employees the same choices.
Benefits for employees in the UK
Examples of employee benefits What is legally required?
It is legal to provide employees a number of statutory benefits.
Automatic pension enrolment is required by law, you are required to provide your employees a pension plan at work and pay the employer’s minimum contributions.
Holiday allowance Employees have the right to an average of 28 days of paid annual vacation, which includes bank holidays (many companies provide higher than this minimum).
Sick pay – Employees can receive statutory sick pay (SSP) beginning on the fourth day of qualifying sickness, and for up to the period of 28 weeks.
Maternity leave: New mothers have the right to 52 weeks paid leave (paid in increments of 39 weeks).
New fathers who are taking paternity leave have the right for a period of one to two weeks paid holiday.
Adoption leave: If an employee adopts the child, they’re eligible for 52 weeks paid leave (paid for up to).
Parental leave for every child (up to the age of 18) Employees can use maximum 18 weeks leave without pay to take care of their children.
Flexible working – employees can ask to work flexible (for instance, remote or in part-time) within 26 weeks employment. However, employers can evaluate the request against their business requirements and deny it with an adequate reason.
Employee benefits examples: different kinds of benefits for employees
A lot of businesses provide more than what is legally required. Think about:
Healthcare – you could provide full medical insurance for private use (which includes both coverage and access to treatments) or a less comprehensive health cash plan that will pay for items like optical and dental costs. Companies are increasingly providing the option of mental health services.
Cover in the event of death or illness Insurance is offered to employees to cover their income in case they’re incapable of working due to disability or illness, and life assurance provides money to the beneficiary of an employee’s estate in the event of their death while employed by your.
A higher amount of pension contributions. Some companies choose to provide greater than their minimum requirements in addition to educating their employees on pensions (and their financial situation in general).
Bonuses – A bonus program encourages employees to exceed the expectations of their job. Bonuses are a great incentive for employees who have roles which are driven by targets (like sales) You can also give an annual bonus for everyone at the same time that is based on business performance.
It could be a bonus that is discretionary or a non-discretionary. The primary distinction is that non-discretionary bonuses must be included part of the employee contract in which the conditions are clarified.
The discretionary bonus is left for the employers discretion. The method of giving them to employees can be more flexible, and the rules do not have to be specified on the contracts.
Other employee benefits examples are:
Cycle to Work scheme (which offers the tax benefits as well as National Insurance savings for staff and VAT savings for employers)
season ticket loans to trips (with the possibility of tax exemption)
PS55 childcare vouchers or employer-sponsored child care for a week (which is tax-free in addition to National Insurance)
Benefits in the form of
Another form of employee benefits is benefits in form. These are the benefits that aren’t included in your salary or your pay cheque but are given to you in different ways. On job advertisements or employee contracts, they’re typically referred to as ‘perks’ or fringe benefits. These benefits are paid for by the employer and appreciated by employees.
In offering a reward in the form of a gift to employees, you’re creating the company’s culture and also making your employees feel valued they are.
Examples of benefit in kind
As with other benefits, there are times when you could be required to pay benefit tax in kind. These benefits will have to be disclosed to HMRC via the form of a P11D. Examples of benefits that attract tax are:
mileage reimbursements
Car fuel for company vehicles or cars benefits
Private health insurance
interest-free loans, e.g. season tickets loans
relocation expenses
Living space
home phones
entertainment costs (non-business related)
You can also provide benefits in the form of benefits that don’t require tax. Examples of benefits in nature where you do not need to have to pay tax are:
Office equipment
Business travel expenses
Material and stock
Work and safety clothes
Training for work
Benefits for employees and your culture
There are other examples of employee benefits which are more in line with the company’s culture rather than the products you offer.
For instance how easy is it the employees you employ to be flexible (and in turn, are you confident in their ability to complete their work)?
Furthermore, is there a space at work where they can focus on their wellbeing? Also, can you make time to allow them to be connected to each the other?
Concerning benefits for employees such as a pool table in the office and a Friday night drink are now commonplace and many companies are recognizing that the culture of the workplace needs for it to reflect positivity as well as encourage the connection between employees and their wellbeing.
They do however reflect the necessity for employees to be able to connect together Consider the social activities that are appropriate for your company.
Then, you can think about the flexibility of benefits and voluntary benefits.
Employees have the option of choosing from a variety of benefits that are flexible to make up their total benefit package (think gym memberships or cinema vouchers). This lets employees get benefits that are suitable for them.
However, voluntary benefits are usually additional levels of an employee’s basic benefits, that they may opt to purchase at a discounted rate. For instance, you may provide the basic benefits of the health cash plan to each employee, but give employees the option to pay for the higher level at the group cost (which is less expensive than if they purchased it on their own).
Do you need to use an employer benefits system?
As we’ve already established that employee benefits are diverse and varied. These examples are meant to provide a taste of what you could provide.
It is best to determine the best option for your company by talking to your employees currently employed, or by focusing on your business’s principles.
Since benefits can be different, you might want to consider investing in an employee benefits platform that can keep employees. Through these platforms, employees will log on to the platform and select various benefits that are flexible and work for them.
Platforms like these also provide an array of benefits and include methods to allow employees to meet and celebrate one another in addition to wellness resources.
Benefits for employees and taxes
Tax considerations for employee benefits are often a little tangled however, the majority of employee benefits are tax-free and have National Insurance responsibilities.
Bonuses and commissions are dealt with similarly to pay by way of PAYE. These benefits are also known as benefits in kind , and they can be treated differently, and reporting them on the form P11D from HMRC. But, you may also pay for benefits through payroll.
What is a minor advantage?
An unimportant benefit can be a tiny benefit for employees that is not tax obligation. Benefits that are trivial include those that
Cost it PS50 or less
They aren’t money or voucher
They aren’t an incentive to an employee’s hard work or their performance
isn’t in accordance with their contract
A benefit that is considered trivial must be able to meet the requirements above. There is no need to pay taxes and National Insurance, or let HMRC be aware of them.
A few examples of small-scale benefits are going out to lunch with employees to celebrate a birthday or giving employees gifts for Christmas.
A lunch for the team to celebrate the achievement of goals isn’t a minor advantage, since this is tied to performance at work.
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