The backbone of your cost-effective employee benefits set-up comes from designing an employee benefits package your employees love!
Whether its helping build a better business case for employee benefits or simply helping cut costs at a time where its arguably more important than ever, these employee benefits are a no-brainer.
Cost-neutral vs. cost-effective
There are two ways of looking at how to get the most bang for your buck when it comes to employee benefits.
A cost-neutral approach is one where you might look to cover the costs of implementing and running employee benefits through savings made in Tax and National Insurance (NI), for example through a good level of benefit scheme uptake.
The more staff enrol or engage with certain schemes, the more the business saves in Tax and NI, thus offsetting the cost of running the scheme.
This is definitely achievable! And it’s a solid way for particularly small businesses to operate employee benefits schemes. It can also help make presenting a business case for benefits much easier as there is a clear benefit to the business at little or no cost.
However, considering the bigger picture here is key.
There are lots of other aspects that add to the cost-effectiveness of your employee benefits set-up.
An effective employee benefits set-up will improve staff retention, thus reducing recruitment costs.
Happier employees are more productive and much more likely to buy into the vision of the business.
A highly competitive or unbeatable benefits package will not only create positive word-of-mouth, when it comes to hiring it may just make that crucial difference.
So, while some of the benefit schemes we’ll talk about here can indeed be cost-neutral, they are each cost-effective which over the long run will prove to be more effective!
Bike to Work scheme
At the beginning of 2020, while we couldn’t quite predict everything about the year ahead, we did predict a big year for the Bike to Work scheme.
After the government pledged significant investment in helping make cycling safer and more accessible, the Bike to Work scheme is now more popular than ever.
It’s a low-cost scheme to run and with employer savings on NI (typically 13.8% of the salary sacrifice value), it’s also one of the most cost-effective employee benefits available.
The Bike to Work scheme helps remove the high initial cost which is one of the biggest barriers for entry for anyone looking to cycle to work.
As a result, it has become one of the most sought after employee benefit schemes available!
The Holiday Trading scheme is a salary sacrifice scheme which allows staff to sell and buy annual leave to and from their employer.
Its another low-cost scheme, similar to the Bike to Work scheme, where employers can also save on NI as well as salary costs.
The versatility of this scheme is what really helps make it such a cost-effective employee benefit.
The amount of annual leave an employee can purchase can be set by the employer, helping them choose the level of control they’d like their staff to have over the work-life balance.
During 2020, its been used by many companies to manage hours where productivity has fluctuated for different businesses in different sectors, helping avoid difficult restructuring of pay.
For example, where companies have experienced a reduction in workload, they’ve been able to use the Holiday Trading scheme to agree with staff to purchase additional annual leave. This annual leave has then been used over an agreed period (for example, 1 day per week for 8 weeks) while the company manages a reduced workload.
Rather than taking a short term hit on their salary, employees have been able to spread the cost of their additional annual leave through salary sacrifice, while companies have been able to reduce salary costs and better manage their workload.
With good uptake, employee engagement and alongside benefits such as the Bike to Work scheme, the Holiday Trading scheme is a staple benefit in any cost-effective employee benefits set-up.
Instant employee discounts
The beauty of employee discounts is there’s a package out there to suit your budget which is one of the main reasons why it’s so cost-effective.
Discounts are one of the most popular perks with staff. The savings can really add up across the year particularly on things like the weekly or monthly shop.
When hosted on an online employee benefits platform, having employee discounts may even drive uptake with your other employee benefits.
Work with a provider to tailor your employee discounts to your budget. A wider range of discounts may be more cost-effective as it will appeal to more of your staff. This is completely down to you; you know your staff best!
Car Benefit scheme
Year after year the government provide more and more support for electric vehicle use, and the Car Benefit scheme is one of the most affordable ways to drive an Ultra-Low Emission Vehicle (ULEV).
For employers, implementing and administering the car scheme is low-cost and can even be offset depending on how the scheme is set up.
It’s also a no-brainer to implement with the ever-increasing demand for ULEVs, more charging points popping up across the UK and the increasing affordability of ULEV motoring.
From 2020, benefit-in-kind on electric vehicles has also reduced to 0% with tax rates reduced too.
All these plus points make the car scheme one of the most cost-effective employee benefits available!
Create your ideal benefits package
We’ve worked with thousands of companies to put the right benefits package in place that resonates with employees. Based on insights we’ve gained across all sectors and industries since we incorporated in 2009, we’ve learned what employees really want from their benefits package.
To create the ideal cost-effective employee benefits set-up for you and your employees, get in touch and we’ll put together a proposition your employees will love! You can even try our Salary Extras employee benefits platform for free!