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Employee Benefits

In all sectors, recruiting and retaining the right staff to meet the business’s ongoing needs can be a major headache. The traditionally fluid and transitory nature of the workforce in certain sectors of the food industry, coupled with the expected downturn in migrant workers following Brexit means that this issue could be particularly acute.

The Office for Budget Responsibility has forecast that net migration will fall from over 300,000 per annum in 2016 to 185,000 per annum by 2021. (Although as the Chartered Institute of Personnel and Development commented in their June 2017 report “Facing the future: tackling post-Brexit labour and skills shortages”: “It remains the case that any institution or commentator who pronounces confidently on the wider impact of Brexit on the labour market is probably going to be proved wrong.”)

Aside from salary, the nature and extent of the benefits package can be an important factor for an employer looking to differentiate themselves in an environment where there is fierce competition for the right type of worker.

Some benefits that an employer might consider will result in a direct cost that the business must factor into its overheads, for example setting up private health insurance or similar cover, although the cost can in turn be set off to reduce profits.

Other benefits are more structural or organisational in nature, for example allowing flexibility to the employee to consider (within certain limits) when and where to perform their duties.

Not all types of benefit are suitable for all types of business or all types of role within a business. If the duties that need to be carried out involve waiting on tables or otherwise serving customers in person, then clearly these are not suitable for a home working arrangement. However, some elements of the role might be. In all cases it is prudent to ensure that the discretion as to whether and when to allow home working rests with the employer so that the appropriate business cover can always be maintained.

The diversity of work types and the different interests of different types of employee can mean that a range of benefits may be attractive. Some employers deal with this by offering their staff a menu of options to choose from. This might include buying and selling additional holiday days, flexible start and finish times, school friendly hours, subsidised travel or catering, or health and wellbeing options.
Further considerations arise if the employer wishes to operate any benefits via a salary sacrifice arrangement. This is an arrangement where the employee agrees to reduce the amount of cash pay that they receive in return for a non-cash benefit. The employer will need to change the terms of the employee’s employment contract, which can only be done with the employee’s agreement.
National minimum wage rates still apply so an employer must be careful to calculate the impact on the employee of the change to ensure they don’t inadvertently breach the legislation.
If the employee wants to opt in or out of a salary sacrifice arrangement, the arrangements need to be carefully documented each time so that it is always clear what the employee is entitled to by way of cash and non-cash benefits.
As well as ensuring the employment contract and policy documents are updated and correctly reflect the position, the employer will also need to take advice to ensure that they deduct and pay the correct amount of tax and NICs in relation to the cash and benefits package for each individual employee.
Some benefits such as sabbaticals and time off for volunteering or personal development (whether paid or unpaid) or those that carry a greater upfront cost to the business, such as enhanced maternity, paternity or other family leave and pay, can seem daunting to implement and cope with, especially for smaller businesses. An employer would need to weigh carefully the cost and disruption of any of these measures against the costs of not implementing them.

If there is a specific request from an employee, would the employee accept the position if the employer said no? If not, how easily and quickly could the employee be replaced if they chose to resign – and at what cost? Would the employer need to engage a recruitment consultant, or pay overtime to other staff until the vacancy is filled? It’s possible that these costs may outweigh the temporary costs of granting the employee’s request.

Employers need to bear in mind that if they grant (or decline to grant) a benefit they need to do so consistently and fairly and must make sure that decisions are taken in a non-discriminatory way. If staff see that the request has been granted for one employee then it is reasonable to suppose that, individual circumstances allowing, other employees may request the same treatment.

For this reason, an employer considering introducing or enhancing the benefits package on offer, whether as the result of a direct request or as part of measures designed to enhance recruitment and retention in general, should make sure that it has considered and recorded in appropriate policy documents when and in what circumstances each type of benefit on offer will be granted, (for example, whether there are any qualifying conditions such as length of service) and how requests will be dealt with.
If you are considering how to use employee benefits to reward and retain your workers, Bright Solicitors can advise on the steps to take to ensure your policies, procedures and contractual documentation achieve your aims.