Employee Benefits definition
Employee benefits are non-financial compensation provided to an employee as part of the employment contract. Employee benefits may be required by law (depending on the risk associated with the job or industry and the laws of the country where the job is held) or provided voluntarily by the employer.
From an employee’s point of view, a good package of benefits increase the value they receive from their working life and contribute to their own health and that of their family. From an employer’s point of view, benefits help staff remain happy and committed, reducing the chance of them leaving to work elsewhere.
In some instances staff swap a proportion of their pre-tax salary for a benefit, known as salary sacrifice – the Cycle2Work scheme is a good example of this, whereby companies buy a bike and the employee loans it from them until the initial purchase amount has been paid off. Benefits can be taxable or non-taxable. Private medical insurance is one of the most common taxed benefits.
In the last ten years, employers have increasingly provided less traditional employee benefits that provide benefit to the employee’s life as a whole rather than just their working life – examples of these are childcare, healthy foods in the office and subsidised gym memberships.
Due to increased competition for good candidates, the benefits an employer provides for a particular position will be an important factor in attracting applicants.
