A complete guide to flexible benefits schemes (with 12 examples)
What are flexible benefits?
Flexible benefits are great for enhancing employee experience as your teams choose the benefits they actually want. For example, more comprehensive health cover. Obviously, employees have individual needs. So a flexible corporate benefits package will always deliver more value than a one-size-fits-all solution.
However, very few flexible benefits schemes are truly flexible. Most of them have mandatory core benefits. If this rings true for your organisation, try increasing the number of optional benefits to make your offering more flexible. Not only does this give your employees a better experience, but also prevents waste as you're only focusing on the benefits they value.
How does a flexible benefit plan work?
In a flexible benefits plan, employees contribute to the cost of benefits through a deduction of their before-tax income, reducing the employer's contribution. For employees, paying for benefits with pre-tax income lowers their taxable income while raising the amount of their take-home pay, which is, of course, an added "benefit." This means that companies benefit from sharing costs with employees.
The costs are fixed by the employer, although there is a flexible choice available to the employee. People can choose to increase or decrease their salary in line with an increase or decrease of benefit.
Looking to offer flexible benefits at your workplace? Perkbox can help.
But what do these schemes include?
Flexible benefit plans can include elements such as private health and dental plans, retirement plans, gym memberships, travel concessions, bicycle loans or cycle to work schemes, or workplace nurseries to name a few.
The right plan will vary from company to company. This means that it’s important for HR leaders to conduct research into what your staff members value as benefits - as this will differ between age groups and demographics. Also, check what other companies in your industry are offering to find the industry standard.
Although the name suggests otherwise, very few flexible benefit schemes are truly flexible - meaning that not every benefit is truly optional. Most schemes are built on ‘company paid’ benefits, where the employer provides a minimum level of core benefits and the employee will not be able to deselect, at least not for a cash alternative.
Choosing the right flexible benefits platform
When choosing a flexible benefits platform, keep in mind that what works well for one company may not be a good fit for you. Every company is unique and the needs of their employees are different. So when you're contacting different benefits providers, make sure your goals are clear. As this will make it easier for them to design a solution that best meets your needs.
For example, do you want to cover all aspects of employee experience? If so, you need a solution that takes care of your employees' mental, physical, and financial wellbeing. In this instance, a global rewards and recognition platform, such as Perkbox is the most cost-effective option. When we designed our platform we wanted to cover all aspects of employee experience, so we could give our customers the best value possible.
Take our Perks hub, it has over 4,000 discounts and perks that can be used worldwide, so is a great fit for international organisations. Our recognition feature Celebration hub, also has a global reach. Employees can show their appreciation by sending personalised recognitions. They can even tag each recognition to a company value. Keeping your culture alive wherever they're based.
How to make the most of flexible benefits
To make the most of your flexible benefits you need to monitor them. If you notice a lot of employees are hitting their allowance limits, think about increasing whatever they're redeeming. Alternatively, if another benefit is barely used consider reinvesting in a more popular option.
Employees may also prefer a particular cluster of benefits and perks at work, for example, those that focus on wellbeing. Acting on these trends will help you refine and optimise your offering, so it appeals to as many employees as possible.
Why introduce flexible benefits?
The advantage of flexible benefits over a traditional benefits package is simple - it gives employees more choice, which leads to several other advantages:
1. Increased employee engagement
If you work within HR or are a company leader - there is no doubt that engagement will be one of your top concerns. When you are offering incentives that your employees truly value, your staff become loyal to your company and engaged in their work, whilst also improving your employer reputation too.
2. More flexibility leads to greater engagement
When employees are given more choice over the things that affect them, they value the outcome more. This leads to your employees feeling more engaged and more likely to stay at the company.
3. Direct cost savings
Although you will be spending on these benefits - introducing flexible benefits can actually reduce overall company costs.
National Insurance Contributions (NIC) savings can be made through salary savings through salary sacrifice schemes or on the purchase of additional holidays. These savings can go towards offsetting the costs of setting up and administering the scheme.
4. Keep talent on board
When you offer a great flexible benefits package, it can have a direct effect on retention rates in your company. Employers feel less pressure and more appreciation with benefit packages that are altered to their specific situation, making them more likely to stay for longer. Especially if they can choose benefits that fit their needs while their lives develop.
5. A healthier workforce
By offering choice over benefits such as medical insurance, gym memberships or online GP services, you can ensure that your staff has access to what they need to stay healthy and happy. Checkups become more accessible, increased exercise leads to higher levels of productivity and both of these things can help to reduce serious illness.
6. You become an attractive employer
A flexible job plus the option for getting rewarded? Sounds like a dream for many, and that’s because it’s often not what we expect from our jobs.
People often feel like they can't have a boss who recognises their needs and different life-stages while also offering benefits. Prove them wrong and attract top talent that needs flexible benefits for all the right reasons.
7. Your benefits become more relevant
By offering everyone the same package of benefits, you might be offering some people benefits they don’t need, which could go to waste. Flexible benefit packages allow employees to choose the benefits that fit their needs and wishes. This saves you money, but also increases how much employees appreciate what they receive: it doesn’t feel like a one-size-fits-all-deal, but rather like a tailor-made package.
8. It fosters a healthy company culture
Offering rewards and benefits is part of a good company culture, but making them flexible and tailored to individuals, gives this culture an extra boost. It shows that your workplace is one that recognises individuals and listens to specific needs, while acknowledging that everybody still deserves rewards — regardless of their position.
9. It’s great branding
You should never take care of your employees only as part of a publicity stunt, but it does look great to the outside world too. People often shop or start partnerships with brands because they feel a connection, especially in a world where there’s an abundance of products and services. We follow our head, but also our heart. And people tend to favour brands who are known for treating their people well.
10. It’s future-proof
You don’t know what your staff will look like in five years. But while you grow and change, you want to be able to keep delivering the benefits you promised and have them be proportionate to your success. Flexible benefits give you this possibility because they are altered to each individual employee and thus can easily be powered-up when there’s room for that.
Can flexible benefits motivate your workforce?
When you work with your employees to create a flexible benefits program, they will feel listened to and valued. Offering the benefits that they really want allows you to show that you appreciate and value their work – which in turn leads to motivation.
Not only this but when people feel that their personal lives are being improved as a result of their work, it brings positive connotations to the workplace. For example, when an employee experiences a reduced waiting time to see a GP due to their online GP service, they think of work. This makes the employee think positively about their work, but also makes them more motivated to work hard, as they want to do well for those who do well by them.
Do flexible benefits mean a lower salary?
No, not always. Employees can flex their benefits to meet their own needs and sometimes this does not affect their salary. If a flexible benefit is part of a salary sacrifice scheme, such as cycle to work, an employer must ensure their wages don't dip below minimum wage after deductions. Also, importantly, a salary sacrifice arrangement is an agreement. Employees can opt out and you must adjust their contract accordingly when they do so.
What should be a part of your flexible benefits package?
With that in mind, here are 7 ideas to consider when building your flexible benefits plan.
1. Gym memberships
Being able to exercise close to work or home is important for many people, but gyms and exercise classes can become an extra, unaffordable cost. As health and wellbeing for your employees should always be a priority, by offering discounted gym memberships, you can ensure that you are doing everything you can to keep your workforce fit and healthy. You may also experience an increase in productivity as result of improved wellbeing due to the positive mental and physical impacts.
2. Buying or selling annual leave
Although many companies have a minimum number of days that employees must take as annual leave, as well as the usual maximum, the ability to buy or sell annual leave grants people more flexibility and is a benefit favoured by many.
Not everyone wants or needs the same amount of time off, so offering the option of buying or selling annual leave allows your employees the option to take a longer break, or even make some money if they don’t have any need for the days off.
When they buy extra annual leave they'll save money on national insurance contributions and the employer will save money on pay-packets. So, it's a win-win.
3. Private medical insurance
Including private medical insurance on a flexible benefits plan gives everyone the opportunity to access the benefit - not just directors. As wait times for healthcare have continued to increase and just getting an appointment can be a stressful experience - by offering an alternative, businesses can improve their employee’s experience.
4. Private dental insurance
In recent years it has become more difficult to see dentists on the NHS, and many now choose to see dentists privately. This means that offering dental insurance, which covers routine appointments and additional treatments like fillings or repairing damage after injuries, can be an excellent addition to a flexible benefit plan.
5. Bicycle loans/cycle to work schemes
These are usually offered on a salary-sacrifice basis and enable the loan of a new bike and safety accessories to those who cycle to work or who want to cycle.
There are numerous benefits for both the employer and the employee. The employee will save money on the bike and the accessories, which can often become expensive for road suitable bikes, but this will also significantly reduce commuting costs and will improve health and wellbeing. Further, if your company is based in a big city, it will most likely save the employee the horror of the rush-hour underground ride too.
In return, the employer will get healthier and more productive employees, the company will save on national insurance contributions (if the scheme is offered on a salary-sacrifice basis), it will help to reduce the company’s carbon footprint and can reduce the stress on the sensitive and tribal issue of staff car parking spaces.
6. Life assurance
Also known as a ‘death-in-service benefit’, this provides a tax-free lump sum to the family of an employee in the case of death. A life assurance policy will usually offer a payment of three or four times salary, but employees may be able to increase these multiples within a flexi scheme.
7. Pension contributions
Of course, employers are now required to enroll employees into a qualifying pension scheme since the introduction of pension auto-enrolment. However, many employers also give staff the opportunity to increase the contribution on a salary-sacrifice basis in flexible benefits schemes. With stats surrounding how many Britons may be struggling financially in retirement, this may be a benefit appreciated by forward thinkers.
8. Classes and workshops
One of the most popular benefits to offer is classes and training. Do make sure these are not classes that should be taken anyway, pretending to be additional perks. Keep your workforce learning and their brains fresh by offering language classes or creative workshops. This is also a great way for teams to bond and raise the team spirit, if they are working on goals outside the company, together.
9. Workplace nursery
When thinking of flexibility in jobs, most people think about childcare. In the past, childcare vouchers were an important perk for ambitious moms and dads returning to work. Now, workplace nurseries are a great solution.
These schemes are a great way of creating more equal opportunities in the workplace. They reduce the cost of childcare from a nursery of the employee’s choice. Payments are taken from the employer, who will then reduce the employee’s salary to match.
10. Budget for creating a healthy home office
Offering people to work fully remote or even just a few days a week is great, but only if they have a set-up that allows them to work in a healthy, productive way. A decent chair and good laptop are the basics, but most people don’t want to invest in this themselves. Motivate your team to give their best, even when working from home, by offering a budget for their home office necessities.
11. Transportation plans
Chances are, not everyone can come to work by bike or walking. Whether it’s by public transport or by car, the expenses of travelling from and to work can add up, and become a reason for dissatisfaction rather quickly. It could also prevent talent from applying to jobs at your company: they simply see the parking costs and a hurdle. Consider offering financial compensation for people who have to make costs commuting to work to expand your possibilities, and theirs.
12. Cafeteria plan or lunch budget
Not everyone’s a chef, but everyone benefits from having healthy meals throughout the day. It keeps people energized and healthy, but especially for people who commute or have a family to take care of, it can be stressful to make healthy lunches every day.
Keeping your staff healthy will help keep your business healthy, so you might want to consider adding lunch budget on specific credit cards to your benefit package, or have healthy lunches delivered to the office.
Learn more about how Perkbox can help build your benefits offering
Finally, review your offering regularly
To keep your scheme effective, you need to regularly review and evaluate that it's meeting your people's needs. Take the time to find out if your strategy works for your people, or if there is anything that could be added to improve it. Find out if your people are getting what they need or if there are any new benefits that they would appreciate.
If you want to know how Perkbox can contribute to your flexible benefits scheme, request a demo, and a member of our team will get back to you.