One of the ways that businesses attract top talent is by offering an enticing benefits package. This is aimed at fostering a healthy workplace culture that improves loyalty, satisfaction, and overall productivity. While each business offers its own array of benefits, there are four main employee benefits that are included in almost every competitive benefits package.
What are employee benefits?
Employee benefits is a type of compensation provided by employers for their employees, apart from their usual wages or salary. The benefits are meant to enhance the overall compensation that an employee receives, and they usually revolve around improving the quality of work-life balance by providing additional financial security and supporting personal growth.
For instance, companies typically offer benefits like health insurance. While not considered direct monetary compensation, it can help alleviate an employee’s financial burdens. Some increasingly popular benefits include offering gym memberships, or even flexible allowances to help employees allocate a portion of their salary to cover specific expenses.
By offering these benefits, employers can create a more supportive and rewarding work environment that improves employee engagement, retention, and job satisfaction.
Why are employee benefits important?
Employee benefits are important for three main reasons:
- Attracts top talent in the industry. Employees expect competitive benefits packages and it’s often a key factor when searching for a job. This helps companies stand out from the rest of the industry and attracts more qualified individuals.
- Improves employee retention. Valuable benefits can foster a sense of loyalty and commitment, helping employees feel more valued and making them more likely to stay long-term.
- Boosts productivity in employees. Employee benefits contribute to overall job satisfaction which increases their morale and productivity. When employees feel more secure and healthy in their position, they are more likely to perform better and be more motivated.
What are the main four employee benefits?
There are four main employee benefits that are almost universally expected in most benefits packages.
Health insurance
Also known as private medical insurance, health insurance covers the costs of private healthcare. This typically includes the cost of private hospital admission, diagnostic tests such as MRI and CT scans, surgery, and the costs of seeing a consultant. It can also cover hospital accommodation costs and nursing care, and even pay for cancer treatment drugs.
Life insurance
When life insurance is provided as an employee benefit, it’s often referred to as group life insurance. This policy provides a lump-sum payout, also known as a death benefit, in the event that the covered employee passes away while having life insurance coverage. The benefit is only active as long as the employee is working for your company, and can be used by the insured's family and loved ones for any expenses they need, such as mortgage payments, education costs, outstanding debts, living expenses, and estate taxes.
Income protection
Also known as disability cover, income protection insurance is a type of insurance benefit that covers an employee’s finances in the event they are unable to work due to illness, injury, or disability. This cover will protect them until they are able to work again and typically includes regular payments that amount to 50% to 75% of their original salary before tax.
Retirement planning
Retirement planning, also known as pension planning, is a tax-efficient way for employees to plan their retirement. The employer and employee both pay into the pension automatically and the payments are deducted from the employee’s pay cheque. This pension pot grows over time and the value of the investment continues to rise. Employees can then access this pension once they reach a certain age, typically between the ages of 60 and 65. They can choose to access this payment as a lump sum, or they can choose to have regular income payments.
Countries such as the United Kingdom and Canada have made it mandatory for employers to make regular pension contributions on behalf of their employees, providing further financial security in addition to their regular salary.
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Final thoughts
In addition to these four main benefits, employers can often offer a wide variety of benefits to help foster employee financial, emotional, and physical wellbeing. From gym memberships to employee discounts, every business has its own unique benefits package to attract potential talent.
These employee benefits are incredibly important for attracting top talent in the industry, but they can also help employees feel more valued. This ultimately helps with employee retention, and it takes some of their financial responsibilities off their mind, leading to a more productive and motivated team.