In last week’s Autumn Statement, Philip Hammond made a number of announcements that HR should take note of. The national living wage increase to £7.50 from next April and the pledge to improve productivity were two key issues. Businesses should think about how they will fund this NLW increase and how they can focus reward on increasing productivity. But the real story for HR were the changes to salary sacrifice schemes. So, what does the decline of salary sacrifice mean for the future of employee benefits?
The government’s intention to make changes to the existing salary sacrifice arrangements from April 2017, might seem like a bit of a blow. Certain benefits will not be affected by the changes including pension contributions, childcare vouchers, bike to work schemes and ultra-low emission cars. But the changes mean that tax savings will no longer be available to employees and employers where benefits are operated via salary sacrifice such as company cars, health screening checks, mobile phones and gym memberships.
It is estimated that millions of employees will be affected by the changes losing out on the savings they currently enjoy, as it’s feared that employers will simply scrap benefit schemes as they become too costly to run. However, I would encourage organisations to take time to consider all the options available before scrapping a benefits scheme entirely. Many schemes can continue on an employee-funded basis, with minimal cost to the employer, but benefit from discounted rates afforded by the employer’s buying power as an organisation.
Here are some steps to help you take stock of your current benefits offering, and think about whether it is valued by employees and providing value for money:
1) Understand your current benefit schemes - are they fit for purpose, delivering value for money, market competitive?
2) Listen to your employees - is your benefits package meeting expectations? Is money being wasted on a benefit that isn’t valued?
3) Design your benefits package with your employees in mind - full flex maybe too costly an option for many organisations, but semi-flex or providing the option to flex cover on one or two benefits is cheaper and simpler to implement and will achieve the desired outcome of giving employees more control over their benefits in creating a package that is relevant and valuable to them.
4) Stand out from your competitors by offering something relevant to your organisation but unique in the market place.
5) Communicate with your employees regularly to ensure they fully understand what is being offered to them and the associated value of the offering.
My advice - there’s no time like the present to get a handle on your employee benefits and understand what’s valued by your employees. Get in touch to find out how we can help you complete a benefits intelligence audit: 020 3457 0894.
