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What are Employee Benefits?

Benefits for employees are generally included in a total compensation plan for employees. They’re not considered an element of the pay package (although they’re typically tax-deductible).

Instead, they’re provided alongside an income and specifically designed to draw employees to your company. They encourage employees to remain with your company and perform their jobs well (for reasons other than the monthly paycheck).

Recent changes in how employers view employee benefits has put more emphasis on flexibility instead of giving employees certain choices.

Benefits for employees in the UK

Examples of employee benefits What is legally required?

Legally, you must offer employees a number of statutory benefits.

Automatic pension enrollment – under law, you are required to provide your employees a pension plan at work and pay the 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 additional leave than what is required).

Sick pay – Employees can receive statutory sick pay (SSP) beginning on the fourth day of sickness, and for up to the period of 28 weeks.

Maternity leave: New mothers have the right up to 52 weeks paid leave (paid for up to).

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 they’re also legally entitled to 52 weeks vacation (paid in increments of 39 weeks).

Parental leave For any child (up to 18 years old) An employee is able to use as long as 18 weeks unpaid time off to look after their children.

Flexible working: An employee may request flexibility in work (for instance, remote or in part-time) following 26 weeks employment. However, businesses are able to weigh the request against their business requirements and then deny it if they have sufficient reasons.

Examples of employee benefits: Other kinds of benefits for employees

Many companies offer more than is legally required. Consider:

Healthcare – You can provide a full medical insurance plan (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. Many companies are also offering the option of mental health services.

Cover in the event of death or illness It is a benefit for employees who are covered by their income in case they’re incapable of working due to disability or illness, and life assurance will pay out funds to the beneficiaries of the employee in the event of their death while employed by your.

A higher amount of pension contributions. Some companies choose to provide higher than minimum amount in addition to educating their employees on pensions (and their financial situation in general).

Bonuses and bonus schemes encourages employees to exceed the demands of their job. Bonuses may be beneficial for employees who have roles which are driven by targets (like sales) You can also give an annual bonus for everyone in the same amount that is based on business performance.

This could be a bonus that is discretionary or a non-discretionary. The major distinction is that non-discretionary bonuses must be included part of the employee contract where the rules are clearly stated.

Bonuses that are discretionary are left on the discretion of the company. The method of giving them to employees can be more flexible, and the conditions aren’t required to be defined on the contracts.

Other examples of employee benefits include:

Cycle to Work scheme (which includes taxes as well as National Insurance savings for staff and VAT savings for employers)

Season ticket loans for journeys (with tax-free relief)

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 the form of. These are the benefits that aren’t included in your salary or your pay check, but instead are provided to you in different ways. On job advertisements or the employee contract, they are typically referred to as ‘perks’ or fringe benefits. These benefits are paid for by employers , and are appreciated by employees.

In offering a reward in the form of a gift to employees, you’re creating the culture of your business and also showing your employees how important they are.

Examples of benefit in kind

Similar to other types of benefits, there are times when you could be required to pay benefit tax in kind. These perks must be disclosed to HMRC via the form of a P11D. Examples of benefits that attract tax are:

Mileage payments

Car or company vehicle fuel benefits

Private health insurance

interest-free loans, e.g. season tickets loans

relocation expenses

Living space

home phones

Entertainment expenses (non-business related)

You can also provide benefits in kind that are tax-free. Examples of benefits in kind for which you do not need to have to pay tax are:

Office equipment

Travel expenses for business

Materials and stock

Work and safety clothes

Training for work

Benefits to employees and the culture you want to create

There are many instances of employee benefits that are more in line with the company’s culture rather as opposed to offering specific products.

For instance Is it easy the employees you employ to work in a flexible manner (and in turn, are you confident in their ability to complete their work)?

Additionally, is there room at work where they can focus on their health and wellbeing? And are you able to schedule time to allow them to be connected to each with each

Concerning benefits for employees the idea of an office pool table and a Friday night drink have become commonplace and many companies are recognizing that the general culture has 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 with one another Consider the social activities that are appropriate for your company.

Finally, think about the flexibility of benefits and voluntary benefits.

Employees have the option of choosing from a range of benefits that can be flexed to create their total benefit package (think cinema tickets and gym memberships vouchers). This allows employees to get benefits that are suitable for them.

However, voluntary benefits are usually additional levels of an employee’s basic benefits, that they may select and pay for at a discounted rate. For instance, you may provide the basic benefits of the health cash plan for all employees, and give them the option of paying for the higher level at the group price (which is less expensive than if they had access to it on their own).

Should you consider using an employer benefits system?

As we’ve already established the benefits offered by employees can be diverse and varied. The examples below are intended to give you an idea of what you could provide.

It’s important to find out the best option for your company by talking to your employees currently employed, or by focusing on your business’s principles.

Given that benefits are varied, you can put money into an employee benefits platform that can keep employees. By using these benefits, employees can log into the platform and select flexible benefits that are suitable for them.

Platforms like these also provide an array of benefits with methods to allow employees to meet and share their joy and also provide wellness resources.

Taxes and benefits for employees

Tax considerations for employee benefits can be a bit tangled however, the majority of employee benefits are tax-free and have National Insurance responsibilities.

Bonuses and commissions are dealt with exactly the same way as salaries via PAYE. These benefits are also known as benefits in kind , and they can be handled differently, with the tax authorities’ P11D forms. But, you may also pay for benefits through payroll.

What is a minor advantage?

An unimportant benefit can be an employee benefit that has no tax liability. Benefits that are trivial include those which:

Cost it PS50 or less

They aren’t money or voucher

They aren’t an incentive for work done by an employee or the performance of an employee.

aren’t covered by 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.

Some examples of benefits that are not important include going out to lunch with employees to celebrate birthdays, or gifting employees a Christmas present.

A group lunch to celebrate the achievement of goals will not be an insignificant advantage, since this is tied to performance at work.