Corporate gym membership – buyers’ guide

Employers’ appetites for funding corporate gym membership for their workforce is in decline.

Employee Benefits’ Benefits Research, published in May 2013, shows that just 12% of employers offer gym membership as a core benefit to all employees, compared with 17% four years ago in 2009.

The Benefits Research also shows that many employers (12%) are offering employees the benefit through their flexible benefits schemes, but that there is an increasing trend for employers to offer the perk on a voluntary basis. The Benefits Research shows that 32% of employers offer their workforce gym membership as a voluntary benefit, compared with 28% in 2009.

The economic downturn has been a key driver behind many employers’ reduced corporate gym membership spend. Human resources departments are cost centres to organisations, like any other department, and have therefore been subjected to the same budget constraints and pressure to reduce costs wherever possible.

Health and wellbeing campaigns

Employers faced with limited benefits budgets and the desire to engage and support the majority of their workforce have, instead, been concentrating their efforts on offering employee benefits and health and wellbeing campaigns with wide employee appeal, which gym membership tends not to have.

The rise of such campaigns has seen employers focus on employees’ health in general, and not just their physical fitness levels, including mental health and mind, work-life balance, nutrition and sleep cycles. This has resulted in the introduction of benefits such as flexible working, holiday trading and employee assistance programmes to support employees achieve a work-life balance. The provision of advice on topics such as healthy eating and stress and debt management are also proving popular.

The rise of budget gyms also means that there is less incentive for employers to offer a perk that more employees can now afford.

Budget gyms

Budget gyms offer members the use of basic gym equipment and fitness classes with limited staffing for as little as £10.99 per month and, importantly, flexible membership terms.

Restrictive membership contracts were a major deterrent for many employees until an Office of Fair Trading investigation last year resulted in a call for improved contract terms from a number of established market players.

New budget gym chains, such as EasyGym, founded by EasyJet founder, Sir Stelios Haji-Ioannou, FitSpace Gyms, Gym London, The Gym Group and PureGym, enable members to pay for gym usage and fitness classes according to their needs.

EasyGym, for example, allows members to purchase membership of its branches from £15.99 per month and then buy an unlimited fitness class pass for £11.99 per month should they wish to do so. Access to music, TV and the internet is also available for £1.99 per month.

This means that budget gym membership can total less than £30 per month, which compares with more than £100 per month for some of the established gym groups’ flagship branches in central London.

Two-tier market

A number of established gym chains have responded to the rise of budget gyms by plowing millions of pounds into their existing gym networks, creating a two-tier gym market.

Virgin Active, for example, which is part of the Virgin Group, is in the throes of a £2m investment programme at its club in Mayfair, in the West End of London, which will see the creation of a lifestyle-branded gym-come-spa.

The creation of such spa retreats on employees’ doorsteps is recreating the aspirational feel of corporate gym membership. Of course, the clubs, which offer everything from state-of-the-art gym equipment to the latest fitness classes, swimming pools, saunas and beauty therapies, with cafes and restaurants to boot – hence their hefty price tags – are not for everyone, but they offer employees more choice.

A number of employers keen to maximise the gym choice they offer to their employees negotiate corporate discounts with gym chains near to their business premises to help make membership as affordable for employees as possible. However, negotiation is often dependent on the size of an employer’s workforce because of the high membership volumes gyms need to secure to meet their high business overheads, particularly gyms with city centre corporate premises.

Third party providers

A number of organisations use third-party providers, such as Incorpore, to help overcome this issue. Incorpore is a network of around 2,600 UK and Ireland-based gyms, health clubs and leisure centres that can offer employees gym membership discount of up to 30%, plus employers customer service and communication strategy support as part of their proposition. The provider works with gym chains including big established chains such as David Lloyd, Fitness First and Virgin Active, to smaller regional gyms across the country.

Communication is, of course, key to optimising benefits take-up, and gym membership is no different, be that internally, or via a third party provider.

Employers considering offering employees corporate gym membership as part of their benefits package first need to ascertain whether the provision is relevant for their workforce and justifiable as a benefits expense.

Education

Employers trying to support employees to adopt healthier lifestyles, perhaps to reduce sickness absence levels, could consider educating  their employees about the importance of physical fitness, and encourage them to lead a more active lifestyle, rather than funding the perk themselves. Employees are, after all, more likely to use their membership if they are funding it themselves.

However, employers keen to attract or retain top talent may be better placed to offer membership to the new-style health spas as a core or flexible benefit, depending on their budgets. That is, of course, unless an employer offers their own on-site gym facilities, which a number of employers, particularly in the banking sector, continue to do.

The facts

What is corporate gym membership?

Employers can offer their workforce membership to a gym, health club or leisure centre based on a core, flexible or voluntary basis, and through salary sacrifice.

Membership costs depend on gym brand, facilities, and location, plus any discount that an employer, or a third party provider on their behalf, may negotiate.

What are the origins of corporate gym membership?

Membership was traditionally an aspirational, exclusive benefit employers introduced to attract and retain top talent.

Where can employers get more information and advice?

http://www.employeebenefits.co.uk/benefits/healthcare-and-wellbeing

 

Nuts and bolts

What is the annual spend on corporate gym membership?

There are no official statistics.

Which gym providers have the biggest market share?

Again, there are no official statistics, but some of the biggest established market players include David Lloyd, Fitness First and Virgin Active.

Which provider increased their share the most over the past year?

There are no figures to show this.

In practice

What are the costs involved?

Corporate gym membership can range from £10 to over £100 per month, depending on the gym chain and branch location.

Any legal implications?

Some membership contracts can require employees to sign up for a minimum term of a year.

What are the tax issues?

Gym membership is subject tax and national insurance unless an employer has an onsite gym that is exclusively for employee use.