XpertHR benefits and allowances survey 2020: Overview

Author: Sarah Byrne

Employers routinely offer their employees a varied range of benefits and allowances to boost salaries. We look at some of the most common benefits in use and also ask about any changes made to the offering in response to the coronavirus (COVID-19) pandemic.

Benefits are a key part of an organisation's overall reward package and can help to increase employee engagement and attract new talent. Our annual survey looks at the provision of 55 different benefits and allowances, based on a survey of 172 organisations.

The findings from our survey are presented across a series of resources in order to fully share the information available. Here we look at the most common benefits and how employers use flexible benefit, voluntary benefit and salary-sacrifice schemes to deliver these. We also cover:

• health benefits, including private medical insurance and income protection;
• a pensions round-up, which looks at the type of pension schemes in operation, and the level of contributions made to these by employers and employees;
• company cars and car allowances in our travel benefits resource; and
• other benefits and allowances, which includes:
  • childcare vouchers;
  • long-service awards;
  • volunteer days and staff discounts; and
  • allowances, including those for standby and call-outs, tools and first aid.

In addition, we have undertaken more detailed research on a number of other benefits, which are excluded from this resource. Our findings on:

• annual leave;
• maternity and paternity leave and pay;
• employee assistance programmes;
• occupational sick pay; and
• bereavement leave

are available to read separately.

Impact of coronavirus on employee benefits

In this survey we usually ask organisations whether or not they are planning to review their benefits offering over the next 12 months. However, due to the coronavirus pandemic and the ongoing uncertainties for many employers, we asked instead about any changes that have been made to benefits and allowances as a result.

Almost one-third of respondents (32%) told us that they have made changes to their benefits and allowances offering. Among these, a number of employers have put some benefits on hold temporarily. For instance, an organisation in the retail sector has suspended the option to buy additional annual leave, while organisations in the finance and professional and business services sectors report that they have frozen their gym membership option for the time being. One employer in the transport and storage sector has temporarily delayed the launch of its new cycle-to-work scheme, while another in the retail sector has done the opposite and introduced a cycle-to-work initiative.

A number of respondents told us that they have launched additional benefits in response to the pandemic, ranging from employee assistance programmes to wellbeing initiatives. Others have enhanced certain allowances. For instance, one public-sector organisation has increased its employees' travel allowance so that they do not have to use public transport for work purposes.

An organisation in the transport and storage sector is allowing its furloughed employees to choose whether or not they wish to reduce or stop payments/deductions for benefits during their furlough period, citing contributions towards pensions and childcare vouchers as examples, although it notes that its own employer contributions and fully paid benefits remain unchanged.

Most commonly offered benefits

Our survey looked at the availability of a wide range of benefits and allowances and asked whether or not they are offered by the respondent organisations. The most commonly provided benefit this year is a counselling service or employee assistance programme (EAP) provided by almost nine in 10 (87.2%) respondents. An EAP is an employer-paid scheme that allows employees to contact an independent adviser (by telephone and/or by making an appointment for a meeting) on a confidential basis to discuss any issues that are troubling them, causing stress or interfering with effective job performance or attendance. With many employees experiencing increased levels of anxiety during the coronavirus pandemic it makes sense that EAPs lead this year's table. Close behind in second place is life assurance (which topped the 2019 table), offered by 84.9% of organisations. This is followed by childcare vouchers (73.3%), which each year consistently appears near the top of our list of the most commonly offered benefits, despite now being closed to new entrants. It is also worth noting that in fourth and fifth place are free car parking (69.2%) and cycle-to-work schemes (66.3%). Although these benefits regularly rank around the top of our table each year, the number of organisations offering them has increased further, perhaps in response to the coronavirus pandemic and the desire by some employees to avoid using public transport for health and safety reasons. Table 1 outlines the most common benefits and XpertHR Benchmarking lists all the benefits covered by this research.

Delivering benefits

Employers can structure their benefits offering in a number of ways, from having one set of benefits available to everyone, to giving employees some choice in the way their benefits are delivered through flexible and voluntary schemes.

Flexible benefits

Offering a full flexible benefits scheme is a huge undertaking for any organisation and just 9.3% of respondents do this (compared with 6% in last year's research). Instead, 35.5% of our respondents prefer to offer some benefits on a flexible basis.

The benefits most likely to be available on a flexible basis are:

• pension contributions (70.1%);
• bicycle loans/cycle-to-work scheme (67.5%);
• childcare vouchers (67.5%);
• annual leave (buying/selling) (64.9%);
• retail discounts or vouchers (48.1%);
• gym membership (44.2%);
• healthcare cash plan (44.2%);
• private medical insurance (44.2%); and
• dental insurance (35.1%).

For more information on setting up a flexible benefits scheme, see How to introduce and manage a flexible benefits scheme.

Voluntary benefits

Voluntary benefits schemes enable employees to access a variety of discounted external goods and services obtained by their employer, either themselves or via a third-party system or portal. Four in 10 of our survey respondents (40.7%) offer a voluntary benefits scheme. Among these organisations, just over one-quarter (25.7%) run the scheme themselves, while 41.4% offer voluntary benefits entirely through a third-party supplier. Just under one-third (32.9%) provide a combined offering from a supplier and the organisation themselves.

Benefits most likely to be offered through a voluntary scheme are:

• retail discounts/vouchers (57.1%);
• gym membership (47.1%);
• healthcare cash plan (42.9%);
• dental insurance (35.7%);
• private medical insurance (32.9%);
• health screening (27.1%);
• legal advice/helpline (25.7%);
• travel insurance (21.4%); and
• critical illness insurance (20%).

For more information on offering voluntary benefits, see How to introduce and manage a voluntary benefits scheme.

Salary-sacrifice benefits

Through salary-sacrifice schemes employees agree to waive part of their salary for non-cash benefits, which can enable tax and national insurance savings to be made. Salary-sacrifice schemes remain the most common way to provide flexibility in the benefits offering. More than six in 10 (61.6%) of our survey respondents offer benefits on a salary-sacrifice basis.

The benefits that attract savings through a salary-sacrifice scheme are now limited to:

• childcare vouchers (made available in 84.9% of organisations with a salary-sacrifice scheme);
• pension contributions (83%);
• bicycle loans/cycle-to-work scheme (77.4%); and
• ultra-low emission company cars (5.7%).

For more information on introducing a salary-sacrifice scheme see How to introduce and manage a salary-sacrifice scheme.

Table 1: Most common benefits offered, 2020 and 2019

Our research

This report is based on research undertaken in May and June 2020. Responses were received from 172 organisations that between them employ more than 317,000 people.

The breakdown by economic sector is as follows:

• 124 (72.1%) are in private-sector services;
• 38 (22.1%) are in manufacturing and production; and
• 10 (5.8%) are in the public sector.

Broken down by workforce size:

• 77 (44.8%) have between one and 249 employees;
• 45 (26.2%) employ between 250 and 999 people; and
• 50 (29.1%) have a workforce of 1,000 or more.

The smallest organisation employs 12 people and the largest 68,000. The median number employed is 296.

What should I do now?

• Read about our findings on health-related benefits in more depth, including details of the level of private medical insurance and permanent health insurance benefits.
• Find practical step-by-step guidance on introducing and managing a flexible benefits scheme or a voluntary benefits scheme.
• Review and interrogate the full data from XpertHR's 2020 benefits and allowances survey including details of all the benefits offered on XpertHR Benchmarking.