The number of employees in the UK receiving company benefits is at a 12-year low, an analysis from an accountancy group shows.
According to the analysis of HMRC data by UHY Hacker Young, in just 12 months, the number of individuals receiving things like company cars, private medical insurance and staff accommodation fell by more than 600,000 – from 3.92 million in 2006-2007 to 3.6 million last year (a new 12-year low).
It’s an interesting revelation given that the tightening labour market has meant companies are needing to compete for talent more and employee benefits are often one of the key battlegrounds where organisations seek to differentiate themselves.
Nevertheless, there has been a decline, and Hacker Young believes it is due to a combination of the constant focus on reducing costs and the economic uncertainty caused by the 2008/2009 financial crash and the current Brexit malaise.
Company cars at nine-year low
The number of company cars, one of the most common perks, declined from 940,000 in 2016-2017 to 890,000 in 2017-2018 – a decline of 5% in 12 months. Similarly, business loans to employees and directors fell from £180 million in 2016-2017 to £150 million in 2017-2018 – a nine-year low.
Another potential reason for the decline in employee perks is the complexity of the tax system governing them. Employees and employers alike are often confused about what is and what isn’t exempt from tax, which has led to many smaller firms scrapping benefits altogether.
Speaking about this possible cause, Neela Chauhan, partner at UHY Hacker Young, said: “HMRC have had a tendency to tax every aspect of job perks to a point where they have been falling out of fashion.
“That is a real shame as these perks can act not just as an important tool in retaining staff and lowering staff turnover, but they can also encourage greater staff performance.”
Focus needs to be on what employees want/need
One of the biggest issues with employee benefits is that they are often offered without first considering what employees want and need. While such blanket offerings will indeed appeal to many individuals, they will not please everyone. For example, while high-value benefits, such as company cars and private medical insurance, will help businesses attract top talent, more experienced staff are unlikely to be wooed by things like cinema vouchers and yoga classes.
Furthermore, some individuals are extremely driven by perks like having more meaningful work and being able to manage how and when they work.
In fact, by offering the wrong perks, organisations could find they miss out on the best talent. So while the popular belief is that any perks is better than no perks, this might not actually be the case.
It is a real shame to see that the number of people benefiting from job perks has fallen. Employee benefits can make all the difference to the working culture of a business. Empowering, stimulating, motivating every level of staff and management that their own livelihood is considered as (if not more) important than the organisations as a whole.
I have over 15 years client facing experience in the Employee Benefits industry having worked for Mercer HR Consulting and The Willis Group in London. Bringing my expertise to mid and large corporate clients, I joined Premier Choice Healthcare in December 2015, with the aim of advising and developing a varied Corporate client portfolio.