21st March 2016
Skills shortages can mean it is hard for companies to retain key staff, meaning there is a risk they will be tempted away by rivals. This means you need to look at ways of making staff want to stay with you. While salary is of course key, another element of this is offering the benefits your employees want, which can range from company cars to private health insurance, gym memberships and even shopping vouchers.
Having the right HR payroll software package in place makes it easier to arrange the right benefits for your organisation. Some staff benefits have tax implications, meaning you need to ensure your payroll software can cope with this, for instance by providing P11D forms detailing the tax liability for benefits in kind.
Reasons to Offer Benefits
Attractive employee incentives can help with both recruitment and retention, improving motivation and loyalty. Staff who value these aspects of their current package will often be reluctant to move away, while the right benefits can also contribute to employee well-being and boost productivity.
If you are considering offering a benefits package, it is a good idea to get employee input at the outset and find out the types of incentives which they would find attractive. Various types of arrangement are available. These can include flexible packages where staff can decide which elements appeal to them and voluntary benefits such as health club memberships, which staff can choose to take up at a discount. Another option is “salary sacrifice” where you give up part of your salary in return for a benefit, which is a tax-efficient way of operating.
Whichever option you choose to offer, once a benefits package is put in place, it is important to communicate with staff properly so that they know exactly what is available and take advantage of it.
Most Popular Benefits
When it comes to choosing the right incentives for a company, one size doesn’t fit all. Expectations can vary greatly between generations, so what would be attractive to baby boomers wouldn’t necessarily appeal to Millennials. One recent survey found that the most popular benefits overall are long-term savings, such as pensions and employee share schemes. However, pensions are especially popular with older staff aged from 40 upwards, and probably won’t be a priority for younger employees.
Another survey found that company cars are one of the most popular perks for workers in their 20s or 30s. Staff in this age group are also likely to make use of discounted gym passes, while research shows that subsidised canteens or free food also appeal to younger staff, who may often be living alone and not want to cook for themselves at night.
Childcare vouchers are another staff benefit option which could encourage staff loyalty from parents. However, anyone taking advantage of these vouchers needs to be aware that they can affect tax credit entitlement. Other popular benefits include private healthcare and season ticket loans.
Not all employee benefits can be quantified in terms of cash. Flexible working and opportunities for additional leave or sabbaticals are also attractive to some staff. Indeed, there is evidence that flexible hours are one of the factors most likely to encourage staff loyalty.
Some benefits can be organised in-house, while others might be bought in from a specialist employee benefits provider. If you are looking at outsourcing benefits, for instance buying in a flexible benefits scheme for discount high street vouchers, it is worth checking what the provider’s track record is like and how good take-up has been elsewhere.
Employee Benefits and HR Payroll
Some benefits have implications for your company’s HR payroll systems, for instance in the case of salary sacrifice arrangements or with company cars, private medicine and some other Benefits in Kind (BiKs) which need to be declared to HMRC. IRIS FMP’s HR payroll software makes it easy to include all these elements within the payroll service.
Traditionally, various BiKs have been declared to HMRC via a P11D form following the end of the tax year. From April 2016, the Government is now bringing in a new alternative method of payrolling BiKs, which will enable companies to payroll the tax on these benefits through the year rather than submitting a P11D form.
IRIS FMP Teamspirit software has now been configured to incorporate BiK payrolling. Ideally companies should also have the Teamspirit P11D software module, but it is also possible to use parts of the configuration together with manual calculations to enable reporting.
With IRIS FMP Payrite software, the groundwork has been laid in the forthcoming new version, the 2016v01 release being rolled out to clients during March. A service pack will then be generated during the month to enable BiK payrolling and this will be implemented through Payrite’s Expenses module, an additional purchased module which many clients already have.
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