Employees rely more on company benefits as costs rise

Employees are increasingly using employer benefits to support leisure purchases, such as gym memberships and holidays, according to new research from Perkbox.

The research found a 126% rise in food delivery redemptions and a 26% increase in gym membership discounts between April 2022 and April 2023.  

Its survey of over 2,000 UK workers also found personal spending on leisure activities has dropped significantly due to rising costs.  

Over half (54%) of employees said they have cut back on dining out and takeaways and 38% had not been on holiday for financial reasons. 

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Simon Moyle, CEO of employee benefits platform Vivup, said the cost of living crisis is impacting employees on every pay level. 

Speaking to HR magazine, he said: “The current financial squeeze means that regardless of the salary level, it has become essential to look at ways to reduce spending, and benefits provide a great solution. 

“Employee benefits give us a way to save a meaningful amount of money over a year on the things we would have been buying/spending on anyway.” 

Moyle said benefits can be a cost-efficient solution to financial worries for both employees and employers. 

He added: “Approximately 4% of a weekly shop or 10% off a coffee may seem small, but it all adds up. In fact, a typical savvy user of lifestyle savings benefits can save over £1,500 a year.  

“Considering tax, an employer would need to give a pay rise of over £1,900 to match this – something most can’t afford. 

“Benefit providers can use economies of scale to negotiate strong deals that employers and individuals usually can’t access themselves, as well as make use of tax efficiencies provided by the government.”  

Just a third (35%) of employees who do not have access to benefits and rewards are happy in their current role and are not actively seeking a new job. 

By comparison, two thirds (65%) of those with access to rewards and benefits said they were happy and secure in their job. 

Access to a rewards platform also impacted how people perceived their employer. 

Among those without access to rewards, 72% believed their employer does not care about how the cost of living crisis impacts them, while 28% of those who do receive rewards felt the same. 

Lou Campbell, programmes director at employee benefits provider Wellbeing Partners, said the right benefits can help staff significantly improve their health and productivity. 

Speaking to HR magazine, she said: “Benefits that staff can use to improve their physical and mental health also make it more likely that employees will be productive, engaged and effective at work – a win-win for everyone. 

“In addition, the organisations who offer genuinely life-enhancing benefits and extras are more likely to retain and recruit reliable workers, who continue to rank wellbeing as one of their top priorities.” 

Campbell said she has observed a trend in employers taking a more tailored approach. 

She added: “At Wellbeing Partners we are seeing a strong trend of employers cutting back on the expensive scatter-gun approach towards benefits and extras. 

“They are providing a much more individualised service, geared towards individual employees’ expressed needs and wants.”  

Moyle said it is important to make rewards systems as easy to use as possible. 

He said: I advise avoiding cashback or schemes that collect points as direct money off is always more meaningful and prevents people from forgetting to claim later. 

“Salary sacrifice benefits are also a real lifeline for many employees, for example cycle to work schemes and 'green car' schemes, which enable employees to purchase a new electric or hybrid car.” 

In order to build an effective benefit scheme, Moyle said HR should listen to people within the company and provide schemes that will benefit them. 

He said: “Everyone is different, so the more input you take on board, the better. Every business wants a return on investment, so by listening to your team, it’s more likely you’ll increase engagement, boost usage and keep people happier.  

“As a result, employees will be more stable; there’ll be fewer leavers as well as reduced recruitment and onboarding costs.”