Flexible benefit packages give employees choice!
They can choose the benefits that best suit their needs and lifestyles. They can also help both small and large employers share the costs of coverage with their employees, while providing them with a competitive benefits package.
Before implementing you need to decide how much choice you want to offer your employees around the types and levels of benefits they can access. This decision should be based on the employee demographic and affordability of the employer.
There are several components that make some schemes more flexible than others: –
• ‘Benefit Allowance’ or ‘Flex Pot’– which is a percentage of salary of fixed value on top of pay and benefits which the employee can put towards the cost of their elections
• Company-funded benefits – ‘sell’ as well as ‘buy’ benefits using their own salary. The most popular is selling annual leave entitlement and reducing insurances
• Salary sacrifice – all benefits become employer paid and the employee agrees to a new lower salary. The advantage of this is that the employee may save tax and National Insurance (NI), while the employer may also save NI
Most flexible benefit packages have a list of core benefits, which are those that an employer might be expected to provide. The employee may adjust them, but they cannot be entirely removed from the package. They tend to include:
– Life assurance
– Critical illness insurance/Long-term disability insurance
Many of the ‘non-core’ items within flexible benefits schemes are similar to those that might also be offered on a discounted basis under voluntary benefits schemes. These are generally grouped into three categories with some examples below:
– Health benefits – private medical insurance or dental insurance
– Financial benefits – household or holiday insurance
– Leisure/lifestyle benefits – including gym membership or childcare vouchers
The introduction of flexible benefits packages can be extremely beneficial to both large and small employers.
If you are considering this option, please don’t hesitate to contact one of our Chartered MCIPD Consultants today, who will be more than happy to discuss the next steps of the process.