When looking for a new role, salary is usually the top consideration for most employees because it’s the reason they work in the first place. Remuneration is followed by the role being a good fit logistically for the candidate. After this, many people are interested in the employee benefits as a potential draw to work for an organisation. Benefits can be a fantastic way to ensure a happy and productive workforce but what do they actually involve?
Employee benefits are extra incentives provided by employers, in addition to a worker’s normal salary or wages. Benefits are a lot more reliable than perks because they tend to be fixed and unchanging. They are designed to help promote employee satisfaction and wellbeing and could include anything from dental care plans and company pension schemes, to family-leave support programmes and flexible working hours.
Organisations that do not have a good quality benefits package are likely to struggle to attract and retain the best employees.
There are some things which UK employers are legally required to give their employees. This includes paid holidays, Statutory Sick Pay (SSP) for up to 28 weeks and a pension. A company with 28 days holiday and a minimum contribution pension scheme does not in reality offer any benefits because that is the least amount required by law, so you need to take this into account if you’re trying to weigh up a job offer.
All employees have the right to 5.6 weeks' paid holiday each year. For these purposes, a week means a normal working week for that individual (although the maximum statutory entitlement is 28 days, regardless of how long the normal working week is). If an employee starts or ends work part way through a holiday year, they are entitled to paid holiday on a pro rata basis. An organisation’s annual leave allowance can include bank holidays.
All employers must offer a workplace pension scheme by law. From April 2019, companies must make a 3% contribution to their employees’ pensions. Some organisations have fantastic pension schemes with some paying 25% contributions.
Perks are non-contractual extras given by organisations to their employees to improve staff wellbeing and to cement office culture. Company perks are different in all businesses and can be changed or removed at any point. Some places have a large budget specifically for staff incentives and perks whilst some companies offer nothing extra other than basic statutory benefits. Common employee perks include flexible working, company car, subsidised gym memberships, childcare vouchers, discounted shopping and free food or drink.
Salary sacrifice is when you agree to exchange part of your salary so you can get extra perks from your employer. Perks offered can include childcare vouchers, a company car and corporate health insurance schemes. Once you accept a salary sacrifice, your overall pay is lower, so you pay less tax and National Insurance. Sacrificing part of your salary means you earn less. This might affect maternity pay or mortgage applications. Lower earnings might also affect your State Pension or contribution-based state benefits. Surveys have shown that over two thirds of employees enrolled in corporate salary sacrifice perks packages do not utilise anything on offer even though they have paid for it. It’s best to way up if you’d realistically take advantage of any of the perks on offer in the long term before joining such a scheme.
To recap, benefits are intended to enhance salary, whereas a perk is more of an added incentive. A perk generally makes the work environment more enjoyable such as free breakfasts or flexible working hours. Whereas benefits are more substantial and do more to compensate the employee instead of paying actual money.