Extra benefits may be preferable to small pay rise

Nearly three-quarters (74%) of respondents would consider offering additional staff benefits instead of a small pay rise, according to research by Jelf Employee Benefits.

The survey, carried out at the organisation’s annual health and wellbeing forum in October, found nearly three-quarters (74%) of respondents would consider giving employees extra benefits in place of a derisory pay rise in certain circumstances.

A small pay rise, such as 1% across the business, could result in both the employer and employee being left out of pocket once national insurance contributions and tax deductions have been taken into account.

Steve Herbert, head of benefits strategy at Jelf Employee Benefits, said: “Particularly in hard times, employers can become blinkered into thinking their pay rise is generous because they look at the total cost for the entire workforce.

“However, when that becomes distilled down in the employee’s take-home pay per month, the figures can start to look fairly meaningless, and perhaps even slightly insulting as a reward for hard work.”

Herbert added that it might be more worthwhile for employers to channel money into low-cost benefits, such as health cash plans and employee assistance programmes, because these can help with employee engagement and absenteeism.