From the name alone, you could be forgiven for thinking that employee benefits packages only exist for the benefit of employees; this is not the case, however. Employee benefits packages are in fact useful tools for businesses as well as those that they employ. Some surveys suggest that as many as 68% of workers are more likely to stay with an employer who offers them a generous benefits package. A similar number of workers reported that they would consider switching employers for the same reason. It is clearly important then that businesses should be prepared to offer their workers employee benefits packages which will make them want to work for the business in question.
From the perspective of employees, a benefits package gives them a sense of how the company will respond should they find themselves facing an unexpected personal emergency. Being ill or injured is a stressful enough experience without also having to worry about losing your job. Employee benefits packages can also often save workers money on their day to day expenses. Both of these factors are important when trying to decide which business or organisation to work for.
For employers themselves, an employee benefits package represents not only a commitment towards supporting staff, it will also demonstrate to them that they are of real value to a business. A well-thought out and well communicated benefits package will make it far easier for potential employees to decide whether they want to work for a business or individual. An employer who is able to offer an enticing benefits package will have a much easier time when it comes to headhunting the most promising potential employees.
Not all employees will require the same benefits package, also different people will have different requirements at different points in their lives. It is therefore important that employees understand what they can realistically expect from a benefits package, and what the signs of a good or bad benefits package are. Knowing this information will put workers in a position of being able to judge the value of the package they are presented with without having to consult anyone else.
Benefits for Old Age
A pension is a benefit which employees can pay into throughout their working lives. This is known as a contribution pension and is the form that most pensions today take. Under a contribution pension, either the employee or their employer regularly pays a set amount of money into a pensions account. When the worker retires, the value of their pension will depend on the amount that they have paid in up until that point. One of the most common benefits of signing up to a pension scheme through work, rather than on your own initiative, is because an employer will often contribute to your pensions account as well.
The other type of pension commonly encountered is the ‘defined benefit pension’, although this is becoming increasingly less common in private sector businesses. Under this type of pension scheme, the amount of money that a worker is entitled to upon their retirement is calculated according to a formula. This formula will usually factor in considerations such as the salary at the time of retirement, their average salary over the total duration of their employment, and how long they have worked for the company.
Saving for the Future
People today tend to think about their finances in a much more long-term manner than the way that they used to. Anything that an employer can do to help an employee in planning for their financial future will clearly be of great benefit to the employee.
One of the more common examples of how an employee benefits package can help you save is the inclusion of a share scheme. The specifics of the share scheme will vary, but the end result is that workers are given shares in the company that they work for or have offered them at a much-reduced rate. Access to share schemes is usually restricted to certain employees with a certain amount of time with the company.
An ISA, an investments savings account, is something that an increasing number of workers are looking to take advantage of. When an ISA is included in an employee benefits package, it is usually an optional extra which employee can choose to pay into out of their wages (after tax). Any returns you generate through an ISA will be tax free and employees are often also able to avoid a number of the usual charges associated with investing by choosing to use an ISA.
Preparing for Illness or Injury
Every year in the UK, it is estimated that as many as 300,000 people decide to leave work because of a long-term mental health condition. Support for workers who become ill or injured, either physically or psychologically, has historically often been lacking. The result has been that many people have not received the standard of medical care or treatment that they should have received from employers. A recent study by stress.org states that only 6% of the employees do not report feeling stressed at work. Now that’s about 94% of employees feel some kind of stress during throughout the course of their careers.
Many employee benefits packages will address the issue of sick pay. Under UK law, every employee is entitled to a certain level of statutory sick pay which applies after an individual’s first four days off sick. Statutory sick pay covers workers for 29 weeks, after this time it is up to employers whether to continue paying sick pay. When employers offer more sick pay than this they usually will refer to it as ‘occupational sick pay’. You should find out as much as you can about sick pay policies before agreeing to work for any organisation.
Some benefits programs will offer workers sick pay insurance. This type of insurance offers some level of financial support to those who find themselves unexpectedly unable to work. Usually, the terms of the insurance plan will stipulate that it will pay out for up to one year’s absence, and a minimum of one week.
Income protection is another valuable tool for protecting those who suffer an unexpected illness or injury which affects their ability to work. Income protection schemes will pay a certain percentage of an employee’s salary every month, usually in the region of 60-80%, that they are unable to work owing to a long-term illness or injury. You can find a handy salary benchmark chart by industry (of that particular country/area you live in) to see roughly what someone of your level can expect. Obtaining income protection through an employer will allow you to access the most comprehensive plans and means that the most common medical conditions will be covered.
Finally, dental insurance is a useful addition to any employee benefits package. While the NHS in England will treat you for free whenever you need it, they do not cover routine dentist appointments. However, under many employee benefits packages, employers agree to reimburse the cost of any NHS dental treatments that an individual might need.
In Case of Death
None of us wants to think about what might happen when we die, yet those of us with families cannot help but consider the question. A life insurance policy can offer you peace of mind and provide some security to your family in the event of your death. Under a life insurance policy, on the event of your death, a tax-free lump sum will be paid to your financial dependents (usually a partner and children). This is usually calculated as a multiple of the deceased’s salary.
When you are looking at different potential employers and trying to decide between them, many people feel like there is little to differentiate one employer from the next. Employee benefits packages provide a simple and straightforward measure which you can compare amongst all the possible options. No employer is perfect, but the kind of benefits package that they offer will tell you a lot about how much they value you and how seriously they take your security and wellbeing.