Employee Perks Are Set to Cost More

Workers will pay hundreds of pounds more each year for perks including gym membership, health screening and mobile phones, under changes to salary sacrifice arrangements announced by Chancellor Philip Hammond in his Autumn Statement.

The Chancellor’s announcement follows a government consultation which sought views on the potential impact on employers and staff should the government change the way the benefits code applies when a benefit in kind is provided allied to a salary sacrifice or flexible benefits scheme.

These salary sacrifice schemes enable employees to give up part of their salary for a non-cash benefit, with both the company and worker paying less tax.

Schemes covering pensions, childcare, the Cycle to Work initiative and ultra-low emission cars will not be affected by the Chancellor’s announcement.

Arrangements in place before April 2017 will be protected until April 2018. The more expensive agreements for accommodation, motor cars and school fees will be protected for longer, until April 2021.

Appeal for government to delay move

It is anticipated that the changes will be effective from April 2017. The Reward & Employee Benefits Association (REBA) has said this is too soon and has appealed to the government to delay the move until April 2018.

Employers say that the proposed change date allows them “too little time to make the necessary employment contract changes and to make adjustments to online platforms that are used to administer these schemes”, according to Debi O’Donovan, the founder of REBA.

“REBA has appealed to the government to bring any changes into play from April 2018,” said O’Donovan, adding that REBA would continue to appeal to ministers to put in place incentives for employers to encourage wellbeing in the workplace. “We believe this emphasis on preventive wellbeing will save British people far more over the decades than any savings from withdrawing tax breaks now,” she said.

Claims that employers will face administrative burden

Jeff Fox, principal at Aon Employee Benefits, said: “This will be a major headache for employers. Operationally, the proposal will cause challenges due to the short-timescales for communications and payroll. It will also make it harder for businesses to offer a compelling and competitive benefit package. Organisations which do rely upon salary sacrifice to fund general benefits will be heartened that pensions, childcare, ultra-low emission cars and bikes are out of scope.”

Carolyn Fairbairn, director-general of the CBI employers’ organisation, said that companies would be discouraged from offering perks. “While exempting important areas like pensions and childcare, this measure sends the wrong signal to companies wanting to invest more in employee health and wellbeing,” she said.

Two-thirds see perks and benefits as important to their overall satisfaction

More than two-thirds (69%) of employees view perks and benefits as important to their overall satisfaction, according to research by employee benefits specialist Perkbox.

Its survey of 1,072 UK adults also indicates that 84% of 18-24 year old respondents and 78% of 25-34 year old respondents would be more likely to stay with their current organisation if it offered better employee benefits. Meanwhile, 26% of respondents cite a lack of reward and recognition for good work as their main grievance at work, and almost a third (30%) of those polled would not describe themselves as happy at work and would move jobs for better benefits.

Expert advice for employers and businesses

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