Are Your Employee Benefits Attracting And Retaining Top Talent

Despite an improving economic outlook, high inflation pressures companies. Competitive and modernized benefits packages, including flexible and green options, attract talent cost-effectively. Clarkslegal advises on tailored implementation and policy drafting.
UK Employment and HR
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The country's economic outlook continues to improve, but many companies and employees are still under pressure due to high inflation and the resulting cost of living crisis. This has created a situation where employers who can offer competitive compensation packages are at a significant advantage in the talent market. Modernised benefits packages can attract employees in a way that can be either more cost effective than simple pay rises, or attractive in ways that go beyond a purely financial motivation. Clarkslegal can advise on the implementation of these packages and drafting of policies to ensure that these are implemented in a way that works best for the Company.

Flexible benefits

Employers are moving away from the historic model of employee benefits. Cost, changes to tax treatment and the needs and wants of employees have moved employers away from the standard package of family health insurance and a company car. As more families have two working parents, the offer of a family health insurance package is less attractive if both members of a couple are entitled to it.

Many companies deal with this by offering packages which allow employees to personalise their selections. This allows employees to choose the benefits which benefit them the most. For example, younger employees could choose gym memberships, or to forgo the benefits altogether in order to save money for a house or a wedding; higher-income employees may choose salary sacrifice schemes to stay below either the child benefit threshold or the personal allowance threshold. These policies need to be drafted appropriately as they can have significant financial value to employees, so a clear and comprehensive policy can be an important tool in recruitment and retention.

The most popular benefit granted to employees in 2024 is the ability to work flexibly, be it at unconventional hours or from home. Increasingly this is being seen by many employees as a non-negotiable requirement. Similarly, the ability to request this is increasingly codified. As of 6 April 2024, employees have the right to make a flexible working request from day one of their employment. Such requests must be seriously considered, though an employer can refuse the request on one of a number of statutory grounds, including the burden of additional costs, or an anticipated detrimental impact on performance. Employers should be careful when considering these requests as they may be grounded in a protected characteristic, so blanket refusal could be seen as an act of discrimination.

The Labour Party are proposing a consultation on whether flexible working should become a day-one right for all employees, requiring employers to accommodate this as far as is reasonably practicable, so more developments may come on this topic.

Modernised benefits packages can attract employees in a way that can be either more cost effective than simple pay rises, or attractive in ways that go beyond a purely financial motivation.

'Green' Benefits

Research done by the organisation Climate Perks has revealed that 50% of people are ready to reduce the amount they fly in response to climate change, but only 3% of people actually do so. A similar dynamic exists in a variety of spheres, including the workplace, where people would like to make environmentally friendly choices but are prevented by a combination of cost, time and convenience. Offering employees climate-friendly benefits can be a powerful tool in recruitment and retention and contributes to a wider 'green' corporate image.

There are schemes which alleviate these obstacles, for example the concept of "journey days" which are granted in addition to employees' standard holiday allowance, which are used to cover the time difference between flights and low-carbon travel. Policies along these lines will need to be carefully drafted so as to not cause grey areas or incur unnecessary costs for the employer.

Another popular benefit which allows employees to reduce their impact on the climate are electric car leasing schemes, often paid for through an employee's salary sacrifice. This allows employees to pay for the car from their pre-tax salary, saving income tax and both employee's and the employer's national insurance contributions. However, these schemes do tie the employee's car to their employment. If an employee leaves the company for any reason, the issue of the car will be a delicate and emotional one. Employers and their human resources departments need to take care to understand the terms of these lease agreements, and how they should be managed.

Factors to consider when implementing employee benefits

The primary factors that any employer will consider when implementing a benefit scheme for their employees are the cost and how it aligns with their wider business strategies. However, as mentioned earlier, there are a variety of legal aspects which need to be considered. For example, implementing a significant change to benefits may require changes to employee contracts, may create an increased workload or cost and, if implemented without due care, may expose an employer to the risk of a discrimination claim.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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