Although most employers still offer their staff traditional core benefits, the percentage that offer perks by some other means – on a voluntary basis, through a flexible benefits scheme or via salary sacrifice – has risen steadily over the past five years. Back in 2004, for example, 34% of respondents provided a core package, just 15% offered a flexible benefits scheme, 60% provided voluntary benefits and 69% claimed to offer perks through a salary sacrifice arrangement. By 2007, the percentages offering flex or salary sacrifice perks had risen to 27% and 72%, respectively. Offering benefits through one of these methods enables employers to give staff a wider choice of benefits at little extra cost to the organisation. The rise of total reward strategies may also be behind the move, as employers operate several types of benefit arrangement alongside one another.
The sector in which an organisation operates often determines the type of benefits package it is most likely to offer. For example, core benefits are most prevalent among publicly- quoted companies – offered by 73% of respondents in this sector – where benefits budgets are typically higher, whereas respondents in the public sector are most likely to offer employee-paid voluntary benefits (77%).
The only instance in which respondents appear equally likely to offer perks regardless of the sector in which they operate is where benefits are provided through a salary sacrifice arrangement.
Types of benefits packages on offer
The complexity of benefits packages has led to myriad definitions. Our research is based on the following:
Core package
The traditional package of employer-paid perks, where employees cannot opt out of, or switch between, perks.
Flexible benefits package
A flexible package of employer-paid benefits which allows employees to switch between two or more benefits, or between employerpaid benefits and cash.
Voluntary benefits
Products and services on which the employer has negotiated a discount with suppliers, but the employee pays for the benefit out of net pay.
Salary sacrifice
tax-efficient benefits that employees select, and for which they sacrifice some of their gross pay for their employer to buy the benefits on their behalf.