In these tricky times, how do you as an employer remain profitable whilst trying to look after the wellbeing of your employees?
Many employers ask us what an acceptable level of employee benefits is and of course this has to fit within their budget.
The pension
Since around 2012, this has been non negotiable if you are a UK employer. If you have lots of young staff, they may not see this as a great perk as it’s a long way off before they benefit from this.
The minimum you have contribute is 3% of your employees’ (those who are eligible*) either basic salary or based on their qualifying earnings of over £6,240. The latter means that the first £6,239 is not pensionable so for some employers this will keep the cost down – it’s good to do your numbers here because there is no point agreeing something that the business just can’t afford.
Employees must commit to 4% of their net pay with a further 1% being topped up by HMRC in the form of basic rate tax relief.
*Those aged 22 or over with earnings of £10,000 will be automatically enrolled. Those younger or earning less can ask to be opted in and will receive the employer contribution. Those earning less than £6,240 can also ask to be opted in and make contributions but the employer does not have to make pension contributions for them.
Value add
As you can see, most of the above is mandatory. As an employer you could consider using salary sacrifice for pension contributions and passing some of the 13.8% employer National Insurance savings to the staff as extra contributions. This will not cost you anything extra. Take care though, you should speak to your accountant about the mechanics of doing this as it needs to be retrospectively approved by HMRC and a clear agreement needs to be in place between staff and the employer.
You could also think about running some pension information workshops to allow your employees to ask questions about pensions. Most people struggle to understand the benefits of pensions. Get in touch with us if you want us to do this either in person or remotely.
Death in service cover
This would pay out a multiple of salary to an employee’s chosen beneficiary if the worst happened. A way of showing that you care about the employees’ families and the cost is reasonably low.
Sickness cover
Under the UK benefit system, staff can only get £96.35 per week if they are too ill to work.
Again, a group scheme could provide staff with some reassurance and you with the knowledge that, whilst you will have to meet the premiums, you won’t be liable to pay a percentage of salary for the rest of their working life.
Private health insurance
Not something that many UK employers offer but perhaps with the post Covid pressure on the NHS, it might be something to think about and might attract a certain type of employee to your firm.
Budgeting / Financial Awareness sessions
Because financial pressure is a common cause of stress, depression and even suicide, we think that this is one of the best employee benefits you can provide! We also think that there should be more financial education in schools. One of our Directors is a Chartered Insurance Institute Education Champion and provides these to schools up and down the country. For employers, this could be done in person for local businesses or remotely for a fee to cover the time cost.
If you are a caring employer looking for ideas to look after your staff in addition to their normal remuneration, it’s worth talking to us.