The Employer's Guide to Flexible Benefits

In today's fiercely competitive job market, attracting and retaining top talent is more critical than ever. And top of mind for both employees and employers alike is a strong benefits package.

A recent WTW report reveals that 56% of UK employers wanted their benefits to meet the needs of all of their employees. Flexibility in benefits stands out as a top priority, with 29% of employers listing it as a priority. 

Diverse and flexible employee benefits are no longer just nice-to-have—they're essential for meeting employees' needs, boosting engagement, and attracting and retaining talent. The data clearly shows that there is a more obvious payback to employers offering flexibility and choice, with 73% of employees reporting that they would be more likely to stay with their current employer if offered access to more benefits.

But what exactly are flexible benefits? And how do they work? In this guide, we’ll run through everything you need to know. Let’s dive in!

What are flexible benefits?

Flexible benefits are benefits that employees can customise according to their diverse needs. Unlike traditional, one-size-fits-all benefits solutions, flexible benefits empower employees to build a personalised plan that aligns with what they value and use most.

This level of personalisation is important because employees are all unique, and so are their needs, which can change based on various factors including age, family status, health, personal preference, and more. For example, where one employee might value voluntary benefits like gym memberships, others might prioritise the option to add dependents to core benefits like health insurance.

The ability to customise benefits doesn’t only benefit employees, but employers, too, as it leads to higher engagement with the benefits offered. Employees are more likely to use and appreciate benefits that they have actively chosen because these benefits resonate with their personal and professional needs. Plus, this engagement extends beyond the benefits themselves, also encouraging deeper engagement with their work and workplace, since when employees’ personal lives are looked after, they can be more productive at work.

Offering flexible benefits can also significantly enhance an employer's reputation in the job market. Top talent often looks for employers who demonstrate a commitment to understanding and meeting their needs. A flexible benefits program signals that an organisation values its employees' well-being and is willing to invest in their diverse lifestyles, making it a more appealing place to work.

How do flexible benefits work?

Flexible benefits programs are designed to empower employees by giving them the freedom to tailor their benefits package according to their unique needs and preferences. Let’s take a closer look at how flexible benefits work.

Customisation of voluntary benefits

Employees have a selection of voluntary benefits from which they can choose. This might include gym memberships, financial education, cycle to work schemes, eyecare vouchers – you name it! Employees can opt in or out of these benefits based on what suits them best. 

Flexible core benefits

Flexible benefits also extend to core benefits, such as life insurance, health insurance, retirement planning, and more. Employees can adjust coverage levels to better fit their needs, like moving from 1x to 10x their annual salary in life insurance coverage or adding partners and dependents to their health plans. This flexibility ensures that the core benefits are as personalised as their voluntary benefits.

Benefits platforms

The administration of flexible benefits is most easily supported with benefits platforms or software. These platforms serve a dual purpose. For employees, an employee benefits platform like Ben provides a user-friendly interface where they can view their options, make selections, and manage their own benefits throughout the year. For employers, they help manage and track benefits enrolment, ensure compliance with regulations, and offer valuable insights into employee preferences and benefits engagement. This data can be instrumental in fine-tuning the benefits offerings to better meet your team’s needs.

Eligibility rules

Your benefits shouldn’t be one-size-fits-all, and neither should their administration–that’s where eligibility rules come in. These rules ensure that benefits can be administered in a way that reflects each employee's individual situation. For example, different benefit options might be available based on an employee’s role, tenure, or personal circumstances, allowing for a more tailored approach.

Overall, flexible benefits work by putting choice and control in the hands of employees, supported by robust systems that streamline the selection and management process. This approach not only enhances employee satisfaction and engagement but also helps employers create a benefits package that truly resonates with their team.

Types of flexible benefits

The types of flexible benefits you can offer are as diverse as the benefits themselves. Let’s dive into the different types of flexible benefits that you can offer employees.

Flexible core benefits

Flexible core benefits are the mandatory benefits that employees expect in a standard benefits package, such as life insurance, health insurance, retirement planning, and disability coverage. What sets flexible core benefits apart is the ability for employees to customise how they use these benefits, such as their level of coverage. For example, an employee might choose to increase their life insurance coverage from 1x to 10x their annual salary, or add dependents like kids or a spouse to their health insurance plan.

Voluntary benefits

Voluntary benefits are optional benefits that employees can choose to opt into based on their personal preferences. Typically, these benefits are partially funded by the employee. Examples of voluntary benefits include wellness programs like workplace nursery schemes, vision and dental care. These benefits allow employees to pick and choose the benefits that matter most to them, so they get a more personalised and engaging benefits experience.

Flexible allowances

A flexible allowance provides employees with a budget to choose the best benefits or benefit providers that fit their needs. This allowance can be allocated within specific categories. For example, an annual L&D budget lets employees select the courses or conferences that align with their specific career goals. Similarly, a monthly wellness budget gives employees the chance to choose services that help them relax and maintain a healthy work-life balance. Some companies even offer flexible allowances with no restrictions, giving employees ultimate flexibility to spend on what truly matters to them, no questions asked.

Salary sacrifice benefits

While not technically a type of employee benefit, salary sacrifice is a tax-efficient mechanism that spans many of the benefits mentioned above. Through salary sacrifice, employees can deduct a portion of their pre-tax income to cover the cost of significant purchases over time, benefiting from tax savings. For instance, employees might join an electric vehicle (EV) scheme, enabling them to buy an electric car at a lower cost and pay for it through monthly salary deductions. This arrangement helps employees make substantial purchases more affordably while enjoying the associated tax benefits.

Examples of popular flexible benefits

Almost any benefit can be made flexible! Here are some popular flexible benefits to inspire your thinking.

• Private medical insurance
• Dental and vision care
• Pension plans
• Life insurance
• Financial planning services
• Gym memberships
• Flexible working arrangements
• Additional holiday purchase schemes
• Childcare support 
• Cycle-to-work schemes
• Commuter travel passes

Why are flexible benefits important?

Flexible benefits are more than just a buzzword; they’re a strategic way to transform your workplace. Here are a few ways flexible benefits can make a big impact.

Work-life integration

By offering benefits that address employees' needs both at work and at home, employers can ensure their employees are well-supported in all aspects of life. When employees' personal lives are looked after, they can bring their best, most productive selves to work. This holistic approach not only enhances job satisfaction but also boosts overall productivity and wellbeing.

Acknowledges diversity

Flexible benefits acknowledge and embrace the diversity within your team. Every employee has unique needs, and a one-size-fits-all benefits package often falls short. Flexible benefits allow employees to choose the benefits that serve them best, whether that's enhanced health coverage, wellness programs, or financial planning services. Plus, by offering a range of customisable benefits, employers can meet their ESG obligations, demonstrating a commitment to inclusivity and social responsibility.

Employee attraction and retention

In today's competitive job market, having a robust flexible benefits program can give employers a significant edge. These benefits allow employers to cater to individual needs, positioning the company as progressive, employee-centric, and invested in employee well-being. This not only attracts top talent but also retains existing employees. Benefits are almost as important as pay to many employees. A study by One Medical found that 69% of employees would choose one job over another if it offered better benefits. A standout benefits package tailored specifically to their needs means employees are less likely to leave for other opportunities.

Empowers employees

Flexible benefits empower employees by giving them control over their own benefits. This approach treats employees as adults who know what's best for them, rather than prescribing benefits in a paternalistic way. Lucy Adams, founder of Disruptive HR and former HR Director of the BBC posits the EACH model, which stands for Employees as Adults, Consumers, and Human beings. This model suggests that treating employees as capable individuals who can make their own decisions fosters a more respectful and engaging workplace. By allowing employees to take charge of their benefits, companies can enhance their sense of autonomy and satisfaction, leading to a more motivated and committed workforce.

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Are flexible benefits right for my team?

To answer if flexible benefits are right for your team, it’s important to remember that every company, like every employee, has unique needs and ways of working. A great place to start is by understanding your specific requirements, employee demographics, and business goals.

Choice is essential. We have an abundance of choice in our daily lives, and expect the same when it comes to their benefits. Without customisation, benefits packages can seem outdated and unresponsive. Offering flexible benefits ensures your company meets today’s expectations and gives employees the autonomy to choose what works best for them.

But while flexible benefits offer increased employee satisfaction, better retention, and a boost in interest from talent, they can also come with challenges. Implementing a flexible benefits program requires quite a bit of administrative effort if you’re taking a D.I.Y. approach. And if you decide to use a flexible benefits platform, there are associated up-front costs (though the long-term savings most often make the initial investment well worth it).

To determine if flexible benefits are right for your team, analyse the potential benefits and challenges. Gather employee feedback to understand their preferences, evaluate your budget, and assess your company’s resources and infrastructure. 

While implementing flexible benefits requires careful planning, the rewards are vast. Offering choice and customisation can transform your benefits package, your employee engagement, and your team’s culture altogether.

Advantages of flexible benefits

Embracing flexible benefits brings numerous positive impacts to both employees and employers:

Personalisation

One of the standout advantages of flexible benefits is personalisation. Instead of a one-size-fits-all package, employees can select benefits that truly meet their individual needs and preferences.

Engagement

When employees have the opportunity to choose benefits that align with their personal circumstances and lifestyle, their engagement with those benefits significantly increases. Higher engagement means employees are more likely to use and appreciate their benefits.

Employee recruitment and retention

Flexible benefits can give employers a competitive edge in attracting and retaining top talent. In a job market where benefits are nearly as important as salary, offering a customisable benefits package can make a significant difference. Potential hires are more likely to be drawn to a company that offers benefits tailored to their needs, and current employees are less likely to leave for other opportunities.

Disadvantages of flexible benefits

However, implementing flexible benefits also presents several challenges that need to be considered:

Difficult to DIY

The administration of flexible benefits can be challenging to manage on your own. Without the right benefits platform, managing a flexible benefits program can become a cumbersome and time-consuming task.

Cost

Because of the challenges of setting up flexible benefits yourself, a flexible benefits platform is the best way to go – but this can mean an extra expense for employers. Luckily, Nem can help offset this in the long run thanks to expert consultancy helping to reduce inefficiencies in benefits spend.

Communication

Employees may need more guidance to fully understand their options and how to manage their benefits effectively. A flexible benefits program comes with a learning curve, and employees might initially feel overwhelmed by the choices available. Effective communication and ongoing education are crucial to ensure employees can make informed decisions about their benefits.

By weighing these advantages and disadvantages, employers can make an informed decision about whether flexible benefits are the right choice for their team. Despite the challenges, the rewards are clear: flexible benefits make for a more engaged team, and that’s a worthy investment.

Flexible benefits platforms

Manually managing benefits is time-consuming, complex, and prone to human error. Flexible benefits platforms simplify the management and administration of benefits, providing a seamless experience for both employers and employees. These platforms allow HR teams to reclaim the time spent on administration and focus on more meaningful initiatives.

So how does a flexible benefits platform work? With Ben, the process is straightforward and efficient:

Set-up

Easily configure your benefits program by integrating existing benefits or selecting from a global network of options. Ben allows you to communicate all benefits in one place, set contributions, define plan options, and establish eligibility criteria. This streamlined setup ensures that your benefits program is comprehensive and tailored to your team’s needs.

Employees choose their benefits

The platform integrates with HR Information Systems (HRIS) to trigger communications and simplify the enrolment process. Employees can view their options, make selections, opt in or out of specific benefits, and choose payment methods. Employees are empowered to take control of their benefits, ensuring they get the coverage that best suits their individual needs.

Streamline admin and reporting

Automate benefit enrolments, manage budgets and reimbursements, and set eligibility criteria. The Ben platform connects to payroll and accounting systems to ensure seamless financial integration. Use custom dashboards for real-time insights into benefits engagement and detailed spend tracking. This automation reduces administrative burdens and provides valuable data to optimise your benefits strategy.

By using a flexible benefits platform like Ben, companies can enhance the efficiency and effectiveness of their benefits administration, leading to improved employee engagement, better cost efficiency, and a more strategic use of HR resources.

Choosing the right flexible benefits platform

Choosing the right flexible benefits platform is crucial for successfully managing and optimising your flexible employee benefits program. Consider the following factors to make you choose the best platform for your organisation.

User-friendly Interface: Ensure the platform has an intuitive and easy-to-navigate interface. Employees should be able to effortlessly view, select, and manage their benefits without confusion or frustration.

Comprehensive offerings: Choose a platform that supports a wide range of benefits. This allows you to offer a diverse array of options that cater to the varying needs and preferences of your employees.

Customisation and flexibility: Make sure it provides customisation options to align with your organisation’s specific needs. This includes setting up unique benefits packages, defining eligibility criteria, and adjusting contribution levels.

Integration capabilities:

Opt for a platform that seamlessly integrates with your existing HR and payroll systems. This ensures smooth data flow and reduces the administrative burden on your HR team.

Compliance and security: Data protection is paramount. Ensure the platform you choose adheres to compliance standards and has robust security measures in place to protect employee data and ensure privacy.

Analytics and reporting: Effective tracking and reporting capabilities are essential. The platform you go for should provide real-time insights into benefits utilisation and detailed reports on spending. This helps you understand employee preferences and optimise your benefits program accordingly.

By considering these factors, you can choose the flexible benefits platform that not only meets your administrative needs but also enhances the overall employee experience.

Final thoughts

In today's competitive job market, flexibility in your benefits package is a must. A flexible benefits package lets employees personalise their benefits, boosting engagement and productivity, and gives employers a leg up in attracting–and retaining–talent.

Implementing flexible benefits requires careful planning and the right tools. A flexible benefits platform like Ben can simplify administration, provide insights, and ensure compliance, making it easier for HR teams to manage benefits programs effectively.

Ultimately, investing in flexible benefits leads to a more engaged and productive team. By offering choice and customisation, you can meet the diverse needs of your employees and create a benefits package that works for your whole team.