UK startups plan to revamp their employee benefits

Business of all sizes need to look after their employees. Beyond ensuring a safe working environment and paying a fair wage, that means providing working conditions and employee benefits that help staff to stay healthy and happy and to perform at their best.

The smallest UK firms increasingly recognise the value of employee benefits for recruitment and retention and for business growth, according to new research. A separate study reveals that private medical insurance (PMI) is the most sought-after employee benefit.

Top benefits in startups

Certain benefits are mandatory under the law, including National Insurance contributions, workplace pensions, statutory sick pay, holiday pay, and maternity and paternity leave.

Employers may also provide supplemental employee benefits, for example PMI, additional paid time off, enhanced pension contributions, and group risk benefits such as life assurance, income protection and critical illness cover. Further benefits can include flexible working hours, meal vouchers, gym membership, sabbatical leave, and a company car or fuel reimbursement.

Almost half (46%) of decision-makers in UK startups view employee benefits as essential for recruitment and their sustained business success, Howden Employee Benefits found.

The top three benefits currently provided by startups are workplace pensions (80%), PMI (41%) and mental health support (38%). Nearly three-quarters (73%) of startups plan to revamp their employee benefit programmes in the next few years.

Among the 100+ startup leaders surveyed:

• 47% plan to expand or introduce PMI and mental health support. This can ensure that employees have faster access to healthcare services than with the NHS.
• Another 42% aim to enhance their workplace pensions, recognising the importance of long-term financial security and delivering better retirement outcomes for their employees.
• With an increasing focus on health and wellbeing, over a third (35%) of startups intend to offer gym memberships or lifestyle discounts.
• A similar proportion (34%) are considering adding group life assurance. This provides additional financial security by paying out a lump sum to an employee's family or next of kin in the event of their death.

PMI is most popular benefit

Private medical insurance is the number one company benefit that employees want, according to separate research from employee benefits technology provider Zest.

A third (33%) of employees in the UK ranked PMI as the top benefit, ahead of increased pension contributions (32%), employer support with energy bills (24%) and a wellbeing allowance (20%). Among employees aged over 55, four in ten (42%) named PMI as their top benefit.

However, many employees covered by PMI at work are not even aware that they have access to it.

Just 15% of employees said that private medical insurance was available through their company benefits package -- yet four in ten (40%) businesses offer it to their employees.

This lack of awareness around the options available suggests that employers need to improve how they communicate with employees and enhance engagement with benefits packages, Zest said.

Risk of losing out on key talent

"With NHS waiting times on the rise employers are seeing increased demand for private healthcare insurance," commented Matt Russell, chief executive of Zest.

"Greater numbers of employers need to introduce private medical insurance into their benefits packages -- not doing so risks losing out on key talent as employees may be forced to turn elsewhere."