As business owners ourselves, we know that recruiting quality staff is becoming more challenging all the time.
With more than 1 million job vacancies in the UK, we’ve heard from several clients that finding good staff is tough in the current environment.
Additionally, retaining your best employees can be difficult. Indeed, the Independent has reported that “more than a quarter of all employees around the world in different industries are showing clear, measurable warning signs normally associated with people who have already quit”.
This so-called “great resignation” can be partly attributed to the pandemic. For many people, the ongoing economic uncertainty and lack of opportunities in 2020 and 2021 meant that leaving their current role was not an option.
However, as economies open up, this reluctance to seek a better job elsewhere may be waning.
So, finding great reasons to encourage your staff to stay with you is more important than ever. That’s why fair compensation and a great benefits package is so vital.
Put a great employee benefits package in place
It may sound obvious, but ensuring you’re paying a fair salary for the role is a key way to retain staff.
As the Harvard Business Review advises: “Keep an eye on the market rates for talent in your area… [and] find ways to give raises to folks who are significantly underpaid relative to the market.”
While salary is often important to individuals, it’s not the only thing that matters. Many staff value the additional perks that your company offers – and they might not be the benefits you think.
A few years ago, we conducted an anonymous survey on behalf of a client with the staff of a medium-sized business. We asked them about a range of different benefits and asked them to identify those which they would find more attractive.
Interestingly, all respondents prioritised things like sick pay benefits and death in service cover over and above a pay rise.
Other surveys have come to similar conclusions. Built In reports that, according to a MetLife employee benefits trend study, 69% of workers indicate that having a wider array of benefits would increase their loyalty to their employers.
Employee benefits can come in a variety of different forms.
At a very simple level, home- or hybrid-working can be a huge benefit to many people. Flexible hours and the removal of a significant commute can be a huge draw for many employees – indeed we’ve heard stories where individuals are prepared to accept a lower salary in return for a more flexible working regime.
Financial benefits can also be valuable. Options that you might want to consider include:
- Matching contributions to a workplace pension
- Death in service (life cover payable if an employee dies while working for your business)
- Offering “salary sacrifice” to enable employees to exchange some of their gross pay for pension benefits
- Healthcare cash plans, which provide financial assistance towards dental and optical care
- Financial advice seminars/webinars or one-to-one sessions with a financial planner
- Long-term sick pay, such as income protection or critical illness cover
- Discounted gym memberships
- Recognition “perks” such as retail or entertainment discounts.
Crucially, offering these benefits can not only increase retention, but can also be useful when hiring new staff. Being able to offer a wide range of perks can be attractive to potential new starters – especially if they are comparing your business with others.
Many employee benefits can also be offset against tax, making them cost-effective
What many business owners also don’t realise is that it’s possible to provide employee benefits without breaking the bank. You can offset many perks against tax, making them a cost-effective way to add value to staff.
Here are a couple of examples.
Death in service benefit
Death in service benefit ensures a tax-free lump sum will be paid to the beneficiaries of an employee if they die while in your employment.
As an employer, a death in service policy will usually be considered a business expense. So, putting cover in place will typically reduce your liability to Corporation Tax.
In addition, HMRC does not usually consider death in service to be a benefit in kind. So, as well as being tax-efficient for you, employees won’t pay tax on the premiums.
Pension salary sacrifice
Under a pension salary sacrifice scheme, the employee gives up part of their gross pay and, in return, the employer makes an equivalent contribution to the pension.
There are benefits to an employee as it means they can reduce their Income Tax and National Insurance contributions (NICs).
Your business also benefits under this arrangement as you also save on employer NICs. Some businesses even channel the NICs savings into the employee’s pension as an additional benefit.
Read more about salary sacrifice and how it can reduce a tax bill.
We can help devise an attractive benefits package for your business
We work with many business owners to help them take control of their own personal finances, but also to help them structure their business finances in the most tax-efficient way.
Adding employee benefits can be a cost-effective way to retain and attract great staff. And, arranged in the right way, it can be highly tax-efficient too.
If you’re thinking about what you can do to assemble the best team you can, we can help. Email hello@sovereign-ifa.co.uk or call us on 01454 416653 to find out what we can do for you.
