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Pensions and other benefits

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Offering a good range of benefits can help with the recruitment and retention of staff. Some benefits are legally required (such as pensions and minimum levels of annual leave). Other benefits can be provided at low or no cost.

Pensions and auto-enrolment

Pensions auto-enrolment is a legal duty, introduced via the Pensions Act 2008, which states that ‘eligible employees’ will be ‘automatically enrolled’ into a pension scheme. ‘Eligible employees’ are those who are aged between 22 and state pension age and earn above an earnings limit which is set each year. You and the employee must contribute to the scheme, at minimum contribution rates set by law.

Even if you do not have ‘eligible employees’, you may have other pensions obligations. You can find further information at the Pensions Regulator or see Acas guidance on pensions

Annual leave

Whilst voluntary organisations cannot pay the highest salaries, annual leave is an area where it may be possible to be more generous than the statutory minimum (28 days including bank/public holidays).

Consider what annual leave provision you can afford. You might want to benchmark your annual leave against similar voluntary sector organisations.

For further information, see Annual leave.

Sick pay

Consider implementing contractual sick pay above Statutory Sick Pay where possible. Any contractual sick pay should include SSP payments. In setting contractual sick pay, consider not only what similar employers provide but also what you could afford, should one of your employees be on extended sick leave.

For further information, see Managing sickness absence.

Parental benefits

If you can, you may wish to give additional parental leave and/or pay. For more information on parental benefits, please see Parental leave.

Counselling

You could consider offering access to employee counselling. This may be especially important if the work your staff do is stressful. A cost-effective approach is to use an Employee Assistance Programme (EAP). See a list of EAP providers

Low or no cost benefits

There are lots of benefits you could offer your employees at low, or no, cost. Some examples are listed below:

Flexibility in working times

Many voluntary sector employers offer flexibility in working times and arrangements, including working from home. This costs little for the organisation, but can be a great employee benefit.

For further information, see Flexible working.

Staff discounts

There are several discounts you may be able to negotiate locally, such as a staff discount at your local gym or restaurant.

You may wish to contact a benefits company to help you to source staff discounts, in areas including holidays, car rental, theme parks, hotels and cinema tickets. The Personal Group is one such benefits company, Perkbox is another. It is not expensive to use such a company, as they will receive income from the organisations whose products they are promoting.

Buying and selling annual leave

Some staff may wish for more annual leave than the standard provision in your organisation. You could allow staff to take, say, an additional five days unpaid leave per year (‘buying leave’). Some staff may prefer less annual leave and to be paid for the days they do not take, again up to a maximum of five days (‘selling leave’) and subject to organisational affordability.

If you allow employees to sell leave, make sure that they still take the minimum statutory annual leave of 28 days per year.

Interest free travel loans

Many organisations based in London, and in other cities with public transport networks, offer interest-free travel loans for staff to purchase season tickets. Such loans are typically given after the probationary period and are paid back over a 12-month period.

Pension salary sacrifice

You could consider offering pensions on a salary sacrifice arrangement, if employees wish. This can be beneficial for tax purposes, for both employer and employee.

Cycle to work scheme

Some organisations offer bike loan schemes. As the schemes run via a salary sacrifice arrangement, there can be savings for the employer on national insurance.

Workplace facilities

You could offer a variety of workplace facilities at low cost, such as:

  • access to the internet for personal use in lunchtimes and before/after work
  • online ordering of groceries and delivery to workplace
  • prayer room/quiet room (or a meeting room/office set aside at certain times of the day)
  • access to local independent financial consultation on site
  • microwave and fridge facilities
  • free tea, coffee and fruit.

The right benefits for your particular workforce

Think about the benefits you are offering or considering offering. Do these benefits suit the profile of your workforce? If you are reviewing the benefits you offer, it is a good idea to consult with your staff about what they would most value. 

Benefits and age discrimination

The law provides that using length of service to calculate an employment benefit (pay or non-pay) will be lawful if a qualification period of five years or less is used.

If a qualification period of more than five years is used, to be lawful it must reasonably appear to the employer that adopting the length of service criterion fulfils a business need of the undertaking (such as encouraging loyalty or motivation).

For further information, see the Acas guide to age and the Workplace (PDF, 337KB).

Tax free childcare

Childcare vouchers are no longer available to new applications, but you may wish to alert employees to the government’s tax free childcare arrangements.

Further information

Page last edited Apr 06, 2020

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