• Date

    15 Jan 2024
  • Category

    Employee Benefits

Why do employee benefits matter in your organisation?

Your people are the biggest factor in any success your business has but they also account for your biggest expenditure each year.[1]

As such, ensuring the happiness and wellbeing of your staff is paramount to your business.

In this insight, we explore the importance of getting your benefits structure right, some of the typical benefits and ways in which they can be optimised.


What is the cost of an employee?

Practically, recruiting an employee is 20-30% of a new hire’s salary[2] and research suggests that the right benefits are a very important factor when deciding on a new role for a potential recruit.[3]

When you find the right person for your organisation, the cost of integration into your business is often very high. As an example, the average cost of an employing earning £27,600 is £62,890 in year one[4], and benefits make up a considerable portion of this.

While this is the case, the cost of getting an employee’s benefits package wrong can be crippling for businesses, with 55% of employees considering moving company for a more competitive benefits package.[5]


Optimising your business’ benefits structure

Providing comprehensive benefits to your employees can help with the recruitment and retention of your most talented members of staff, which is regularly highlighted as a concern for businesses.

When it comes to enhancing a reward package, there are a wide range of employee benefits available, including those which can be taken advantage of immediately and those which are longer term.

Azets’ Employee Benefits team can work with you to help ensure the benefits you put in place inside your business are:

  • Delivering the maximum value possible to your people
  • Structured around the needs of your business and your workforce
  • Delivered within budget and provide value for money
  • Understood by your employees and communicated effectively


Workplace pension

Since 2012, it has been a mandatory requirement for all employers to provide their employees with a workplace pension, ensuring they are saving for retirement and won’t be solely dependent on the state pension when they retire. Legally, employee and employer must pay a combined 8% of the staff member’s earnings into the pension scheme. The employer must pay at least 3% of this but they can choose to pay more, so can the employee.

There is the option of agreeing to a salary sacrifice scheme or Pension Salary Exchange (PSE), this is where employee and employer agree to reducing the employee’s salary, and the employer pays the difference into the employee's pension.

As the employee is effectively given a lower salary, this reduces the amount of National Insurance contributions (NICs) paid by both, making employees better off in the long term, and creating savings for the employer which can be retained or reinvested.

When it comes to pensions, there is no one size fits all, there are many different pension schemes available. Our specialist team are workplace pension experts and can help review, benchmark, and communicate to your employees the value of your workplace pension.


Group Risk - life cover, critical illness cover, and income protection

There are multiple benefits available to be provided to employees and their families if the worst happens.

  1. Life cover can be put in place to financially support an employees’ dependents should they suddenly pass away whilst under employment with your business. This is often considered a foundational benefit in the UK.
  2. Critical illness cover pays out a lump sum if an employee is diagnosed with an illness specified in their plan and survive for a pre-determined length of time following their diagnosis. The payment can be used to cover unexpected medical bills, to pay off a mortgage, or to cover any other bills that were previously not expected.
  3. Income protection insurance provides cover if an employee finds themselves unable to work due to an illness or injury. This cover provides regular payments to replace part of an employee’s usual income and typically pays between 50% and 75% of an employee’s income if they are unable to work, depending on their policy.


Private medical insurance

When illness and injury happen, private medical insurance can help to alleviate any stress or anxiety an employee may have. There are many plans available, including those which allow an employee to be seen earlier by the NHS, or allow them treatment on a private ward. Private medical insurance is explored further here.


Helping your staff with the cost of living crisis

According to the Office for National Statistics (ONS), around 67% of adults are spending less on non-essentials because of the rising of cost of living.[6] This is having a significant impact on the financial, social and mental wellbeing of people everywhere.

Employers are currently talking to us about ways to provide tax-efficient cost savings to their workforces, and some of the areas we speak to our clients about are:

Cashplans – coverage paid for by the employer on behalf of employees to help employees cover expenses related to everyday healthcare costs, prescription medicines, health screening and therapy treatments.

Perks, rewards and discount schemes – methods of employees making savings on the costs of everyday items such as their weekly shopping.


Other insurance options

Dental, Optical and Audiological insurance – coverage paid for by the employer on behalf of employees to help employees cover expenses related to eye tests, new prescription glasses, contact lenses, routine dental appointments and hearing tests. 


Low Emission Vehicles / Cycle to Work schemes

Electric vehicles (EVs) and Cycle to Work schemes are becoming increasingly popular alongside the UK’s Net Zero target. Both of these can deliver significant benefits and tax savings to employees. There is no cost to the employer for their setup, whilst savings on National Insurance are created.


We’re here to help

To provide you with a fully optimised benefits package that looks after the happiness and wellbeing of your most important asset – your people - we focus on:

  • Consulting – We take the time to support you in choosing the benefits which are most appropriate for, and design them to fit your organisation.
  • Broking – We secure the best deals with leading providers using our capabilities within a top 10 accountancy firm. We are whole of market, fully independent and operate as a one-stop-shop for clients employee benefit needs.
  • Administration – We support your organisation with the administration of your benefits.
  • Communication – We devise and deliver a communication strategy designed for your workforce to improve the effectiveness of the benefits and to improve return on investment.

If you would like to discuss your employee benefits structure, how to optimise or any of the employee benefits mentioned in this insight, please get in touch with a member of our specialist Wealth Management team or your usual Azets advisor.


[1] Five Reasons Employees Are Your Company's No. 1 Asset (forbes.com)

[2] The True Costs of a New Hire in the UK (theundercoverrecruiter.com)

[3] Why Are Employee Benefits Important? Types and Advantages | Indeed.com

[4] The True Costs of a New Hire in the UK (theundercoverrecruiter.com)

[5] Boundless – Global Employee Benefits Guide – 2022

[6] Cost of living latest insights - Office for National Statistics (ons.gov.uk)


Information correct at time of publishing, but may be subject to change in future. This article is for general information only and is not intended to be advice to any specific person. You are recommended to seek professional advice before taking or refraining from taking action on the basis of the contents of this article.

Azets Wealth Management is a trading name of Azets Wealth Management Limited, which is authorised and regulated by the Financial Conduct Authority. Registered Office: Bulman House, Regent Centre, Gosforth, Newcastle upon Tyne, NE3 3LS. Company Number 05674020. Incorporated in England. Azets Wealth Management Limited is a subsidiary of Azets Holdings Limited.

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Leonard Birnie

Head of Employee Benefits
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