Flexible benefits help you create a higher-performing and more engaging employee benefits proposition to suit the increasingly diverse needs of your workforce.
If you’re looking for improved employee engagement, increased employee benefits uptake and an overall better ROI on your employee benefits, then look no further than flexible benefits.
In this guide, we’ll run through everything you should know about flexible benefits, including what they are and how they work, why they’re so popular and why they’re right for your business and your employees.
Let’s dive straight in and nail down what flexible benefits are and how they work.
Contents
- What are flexible benefits?
- Deciding your flexible benefits allowance
- Which employee benefit schemes can be included in flexible benefits?
- Why flexible benefits are so popular right now
- 5 advantages of flexible benefits
- The ROI of flexible benefits
- 5 tips for a successful flexible benefits platform
- The benefits of using a flexible benefits provider
- Introduce your own flexible benefits platform
What are flexible benefits?
Flexible benefits give employees more choice over their employee benefits package.
As part of a flexible benefits plan, companies essentially share the cost of benefits with employees, with employees making a pre-tax contribution to their employee benefits.
This lowers the employee’s taxable income, increasing their take-home pay. There’s flexibility in how much employees want to contribute, so they can contribute more or less if they want to, while costs are fixed for the employer.
There’s more on this in our article “How do flexible benefits work?”.
Through our Flex Benefits solution we provide for our clients, employees are allocated a flexible benefits allowance to allocate towards their chosen employee benefits.
Deciding your flexible benefits allowance
With their flexible benefits allowance, employees can take advantage of the benefits that appeal to them the most.
The flexible benefits allowance is set by the employer and can be adjusted to help employees make the most of it. The employer can also choose how often the allowance is refreshed.
Employees have the flexibility with their flexible benefits allowance to contribute some or all their allowance to a benefit scheme included in their company’s flexible benefits plan or scheme.
How you set your employees’ flexible benefits allowance can depend on a number of factors including:
- How your employees have used their flexible benefits allowance in the past
- If you’ve launched any new schemes as part of your flexible benefits plan
- If your employees’ needs have changed
- If flexible benefits could help you hit key HR KPI’s including recruitment and retention.
For more, read our full guide to determining your flexible benefits allowance.
Which employee benefit schemes can be included in flexible benefits?
A flexible benefits plan can include both optional and non-optional benefits and is usually built upon a ‘core’ set of benefits that are available to all employees.
On top of these ‘core’ benefits will sit a range of benefits that employees can contribute to or not contribute depending on their needs or contribute their flexible benefits allowance towards.
It’s imperative you do the right research before deciding which benefits to include in your flexible benefits plan. A flexible benefits provider can help you with this.
The right research will help you uncover insights on the broad range of needs your employees have, from which you can choose which benefits to include in your flexible benefits plan.
Here are a few benefit schemes that could work really well in your flexible benefits plan.
Gym scheme
The gym scheme has a wide appeal and is guaranteed to be a hit with loads of your staff.
Reducing the cost of gyms and classes and making exercise more accessible not only helps save employees money but helps keep your workforce fit and healthy physically and mentally, which could even boost productivity.
Holiday Trading
Holiday Trading is one of the most flexible schemes out there. The scheme allows employees to buy and sell annual leave to adjust their time off to suit them and their family.
The scheme is a win-win for everyone. When employees buy extra annual leave, they make tax and NI savings while employers save on salary costs.
The scheme is flexible for employers too who can adjust the number of days employees can buy or sell to suit everyone.
Bike to Work scheme
There are loads of advantages to the Bike to Work scheme and it’s no surprise it’s one of the most popular employee benefits out there for both employers and employees.
Employees save up to 42% on the cost of a brand-new bike and accessories while employers save on NI.
The scheme is a no-brainer for employers looking to help staff get fitter and save money while providing additional options for the work commute.
Commuting Loan scheme
Whether you’ve returned to the workplace full-time or in a hybrid model, the commuting loan gives employees more options when it comes to their commute.
The scheme helps employees spread the cost, interest free, of their rail, tram or bus travel for example and can even help employees save on parking.
The increasingly diverse needs of your workforce include increasingly diverse commutes too, so it’s important to help employees in as many ways as possible to provide more options to make the commute easier, faster and cheaper.
PMI
Providing access to private medical care for all your employees has never been more important.
Since the pandemic began, waiting times have increased and appointments have become harder to get.
Many appointments and procedures have been delayed and there’s increasing apprehension about attending hospitals unless absolutely necessary, meaning many have put off the treatment they need.
Private Medical Insurance gives employees another vital option. We introduced the scheme to our employees at caboodle in response to changing attitudes since the pandemic and it’s been greatly received.
These are just a few schemes you could include in your flexible benefits plan. For more read our full guide to building your flexible benefits package.
Why flexible benefits are so popular right now
The demands of employees have changed quite dramatically in recent times. Flexibility in almost every aspect of employment is key and quite rightly expected by employees.
Employee’s commitments vary from childcare to health or even studying. Their priorities vary too whether it be short-term or long-term finances, health or career progression. Attitudes to the climate crisis have changed too and so employees might look for greener ways to commute, for example.
The pandemic has stretched these differences even further. Some used the pandemic to save while others lost out financially, while commuting distances have stretched as employees took advantage of the flexibility of remote working to move to more rural locations.
This means a standard set of employee benefits may no longer meet the changing and more varied needs of your workforce. This is where flexible benefits come in to help personalise the employee benefits experience and ensure all employees can take advantage of the benefits on offer to them.
5 advantages of flexible benefits
1. Employees can personalise their benefits
As mentioned, flexible benefits create a more personalised employee benefits experience, meaning employees can make the most of the employee benefits that matter to them and their families.
The more personalised the employee benefits experience the more of an impact it’ll make.
2. Improved employee retention
If employees get more from their employee benefits package, they’re much more likely to build a more positive relationship with the business, improving loyalty.
A more tailored benefits package can not only help employees more on a personal level but on a financial level too.
Higher scheme take-up means employees are more likely to take advantage of the savings on offer from certain employee benefit schemes such as salary sacrifice schemes.
A more valuable employee benefits package on the whole, thanks to flexible benefits, supports employee retention and helps create a more loyal workforce.
3. Improved employee recruitment
When the whole pay and compensation package is taken into account, your offer of a more valuable proposition thanks to flexible benefits can help your business win the war for talent and improve the recruitment process.
As flexible benefits open up your employee benefits package to appeal to more employees, this not only applies to the people within your business but potential future employees too.
A benefits package with a wider appeal only serves to make your business a more attractive place to work.
4. Improved employee engagement
A more personalised and attractive employee benefits platform will drive scheme take-up and improve employee engagement.
A flexible benefits platform is key to this, providing a well-designed, user friendly and easy-to-access home for all your employee benefits.
5. Bigger tax and NI savings on salary sacrifice schemes
Increased up-take on salary sacrifice schemes often means increased tax and NI savings for the employer and the employee.
This can help improve the cost-effectiveness of employee benefits and can even help make some schemes such as the Bike to Work scheme or Holiday Trading cost-neutral.
For more advantages to flexible benefits, read our “advantages of a flexible benefits platform” article.
The ROI of flexible benefits
One of the biggest barriers to introducing employee benefits that employers cite is a lack of budget. Research by Employee Benefits shows 84% in fact cite this as the main barrier. 29% cite a lack of senior support for implementing employee benefits.
So, are flexible benefits feasible financially for businesses?
The short answer is yes. The higher your employee benefits engagement, typically the more cost-effective it will be, meaning the value and ROI will be easier to prove to the C-suite and higher-level management.
In reality, employee benefits provide a whole host of benefits for employees from their health and wellbeing to work-life balance to finances.
All these advantages come together to improve the employee experience, thus improving business and HR KPI’s such as productivity, loyalty and even recruitment and retention.
Of course, there are many elements under the HR umbrella that contribute to improving recruitment, retention, loyalty and the overall employee experience. But employee benefits play a vital role in supporting all manner of HR objectives and priorities.
So, the true ROI of benefits can often be difficult to measure but is more often than not higher than you think, and this is especially so with flexible benefits.
5 tips for a successful flexible benefits platform
1. Research
Before you dive in, get a good idea of what your employees’ priorities and needs are right now. Either draw on previous research or conduct new research specific to your plan to implement flexible benefits.
Qualitative feedback is invaluable for companies of any size, but for bigger companies, quantitative research becomes even more important. A combination of focus groups or employee forums with surveys can produce invaluable insight and can even help make the case for flexible benefits even stronger for the C-suite.
Be sure to include exploratory questions and don’t just focus on flexible benefits directly, but any potential problems flexible benefits can solve or any needs or wants flex could support.
2. Speak to a provider
A flexible benefits provider can give you tailored advice for free before you make the final decision to implement flex.
Your research can play a huge part here, helping the provider understand your team better allowing them to advise you best based on their experience implementing flexible benefits solutions for other companies.
A provider will also help you find a solution that best fits your budget and business needs. Flexible benefits are flexible in many ways and can be adapted to suit both the employer and their employees.
That flexibility extends as your business expands too. A provider can help make sure your flexible benefits platform expands internationally or globally as you and your team do.
3. Plan
Establish what you want to achieve with flexible benefits and how it will support your overall HR KPI’s, strategy and objectives as well as your business objectives.
Establish SMART objectives which can be monitored and measured as you roll out flexible benefits to assess its impact.
This can not only help justify the implementation of flexible benefits but help identify any areas of strength or weakness, so your flexible benefits plan can be adjusted to either address a weakness or capitalise on a strength.
4. Review
Keep a keen eye on scheme uptake as you roll out flexible benefits and utilise pulse surveys.
You might review how you currently survey your team and add in questions about your benefits offering specific to flexible benefits to get a better idea of how it’s been received.
Employees’ wants and needs can change quite dramatically so it’s important to keep an eye on how your flexible benefits can meet these changing needs.
Be on the lookout for new benefits that can be incorporated into your flexible benefits plan too. New benefits come up each year and flexible benefits are always changing and adapting.
Your provider will give you a comprehensive overview of the employee benefits market, what schemes are out there, and which schemes will suit your flexible benefits plan and your employees the best.
5. Work on your comms
Work with your provider to produce the right communications for your flexible benefits plan.
This could utilise email, internal communications platforms like Slack or Microsoft Teams, workshops and communications through line managers. “Coming soon” and “now live” communications should be considered too as well as reminders as scheme windows are open or due to close, for example.
With our enterprise flexible benefits platform, you’ll get bespoke communications designed specifically for your internal brand designed to boost uptake and employee benefits engagement.
The benefits of using a flexible benefits provider
We’ve talked a bit about using a flexible benefits provider to source, implement and optimise your flexible benefits.
Finding the right provider has a number of key benefits.
Sourcing your employee benefits
Bringing together a number of employee benefits from different providers all under one roof is a huge task.
A provider can help cut down the time and effort needed and simply present you with a range of benefits to choose from.
You’ll simply select the benefits you want to include in your flexible benefits package and the provider will do the rest.
If you go with a provider that offer loads of different employee benefits, it’ll make the process much easier, quicker and more effective for your business.
Reducing time and admin
From the initial conversation, through to deciding which benefits and platform features to include to the final implementation and optimisation of your flexible benefits plan, a flexible benefits provider will help reduce time spent and reduce administration to help make the implementation and running of your flexible benefits platform as smooth, simple and effective as possible.
Expertise and experience
Flexible benefits providers are experts and have vast experience when it comes to working with other businesses, often many similar to yours, and therefore know exactly what works and exactly what doesn’t.
You may already know exactly what you want for your business and your employees, but to ensure maximum employee benefits engagement providers can offer expert advice along the way on how to set up your flexible benefits and which employee benefits to include in your flexible benefits plan.
Scale your flexible benefits platform with your business
As your business grows, your platform and flexible benefits package will grow with your business.
A flexible benefits provider will help you to adapt and improve your flexible benefits offering even as you enter new countries and continents.
As you grow, new employee benefit schemes may become viable which your provider will support you with. A provider will handle any complicated currency exchange issues and make sure your flexible benefits package is as fair as possible and rolled out to as many employees as it can be.
Introduce your own flexible benefits platform
Looking to implement flexible benefits? Look no further. Over 2,000 businesses use our Salary Extras platform to host their employee benefits, improve engagement, recruitment and retention.
Our platform is also flexible enough to fit within your budget and deliver a superior ROI.
For more, get in touch on 0333 2000 104, email enquiries@caboodle-technology.co.uk or submit an enquiry on our contact us page.
