Employee Benefits For Startups

Which Employee Benefits Should Your Startup Offer?

There isn’t a one-size-fits-all approach when it comes to employee benefits for startups. Every business, regardless of size and industry, will have different requirements. That said, there are some benefits you have to provide by law.

Mandatory Employee Benefits In The UK

It doesn’t matter whether you’re a startup or an established business, there are mandatory Employee Benefits for UK businesses. You have a legal obligation to offer. These include:

• A Workplace Pension Scheme
  As an employer, you must provide an auto-enrolment Workplace Pension scheme by law. You and your employees will pay into the scheme on a monthly basis.
• Paid Maternity / Paternity / Adoption Leave
  Employers have a legal obligation to offer staff Statutory Maternity and Paternity leave. You also have to provide paid leave for employees adopting a child.
• Statutory Sick Pay
  If an employee is off work sick, you must pay them Statutory Sick Pay for up to 28 weeks as a minimum. Some companies have their own sick pay policy that pays out more as an enhanced benefit.
• Annual Leave
  Last but not least, you must offer your employees annual leave. Employees are entitled to 5.6 weeks of paid holiday / annual leave per year. You can include bank holidays in this if you wish.

Popular Company-Paid Employee Benefits For Startups

Outside of the mandatory benefits you have to offer, there are a number of voluntary options you can add. Some of these will require a level of budget, whereas others are free to implement. Some of the most popular paid for benefits include:

• Company Health Insurance
• Death In Service Benefit
• Group Income Protection
• Group Critical Illness.

While paid for benefits will mean a startup has to pay monthly premiums, there are other low-cost or free perks that staff would like too. These include:

• Flexible working
• Option of home working
• Gym membership discounts
• Discount schemes
• Holiday trading
• Casual dress code
• Free snacks.

It’s common for the best employee benefits to incorporate both free and company-paid-for employee benefits. Below we will go into more detail about these specific benefits as well as others you might want to consider for your startup.

Workplace Pension Benefits Offered By Startups

56% of employees think that pension provisions are an important factor when considering a new employer. With this in mind, as a startup, it’s important to make your Workplace Pension as good as it can be.

Simple changes can turn it from a mandatory benefit into something that employees truly value. But how can this be done?

Increased Workplace Pension Contributions

It’s a legal requirement to auto-enrol all your employees, if eligible, into a workplace pension scheme. As a minimum, you have to pay at least a 3% contribution into your employees pension pot. However, you can choose to pay more to enhance this benefit.

40% of employees say that they want their employer to offer additional pension contributions as a benefit. According to Wealth at Work, by simply increasing contributions by just 1%, could increase your employees pension pot by 25%. This takes this mandatory benefit and amplifies it.

Set Up & Communication

You should also consider the ins and outs of the pension scheme provider. There are other simple things you can do that will make this benefit even more attractive. For example:

• Salary Sacrifice
  At no extra cost to you, you can allow workplace pension contributions to be made via salary sacrifice. This option provides big savings for you and your staff due to the tax efficiencies that come with it
• Investment Funds
  Ensure your pension scheme offers investment funds with the best returns, to ensure your employees are getting the most out of their pension savings
• Provide Financial Education
  Many employees don’t know if they are saving enough for retirement, or don’t understand the tax benefits that come with their workplace pension. Consider offering financial education to help ensure they know what their workplace pension offers, so they know just how valuable it is.

A well-thought out workplace pension paired with a strong communication strategy can turn this mandatory benefit into one of the most valued benefits you can offer.

Group Insurance Benefits For UK Startups

Group risk products such as Group Income Protection, Death In Service and Company Health Insurance, are great employee benefits for start-ups.

To set these up, you need at least 3 employees. Let’s look at these benefits in more detail.

Business Health Insurance

A Corporate Health Insurance policy provides your staff with private healthcare. It’s not a legal requirement, but the majority of startups offer employees this benefit.

Business Private Health Insurance allows staff to get healthcare without waiting weeks or months for NHS treatment. While it only covers acute conditions (treatable issues), it helps take the burden off the NHS.

When your workers get a quick diagnosis and the right treatment, it can minimise their time off work. For a startup, this is crucial. You don’t want any of your key employees to be off work sick or injured in your startup’s early days. You want a fit and healthy team to help you take it to the next level.

How much it costs will depend on the level of cover you choose and how many workers you want to cover.

Corporate Health Cash Plan

If Business Health Insurance is on the pricier side for your startup, you’ve got an alternative. A Corporate Health Cash Plan offers your employees health benefits at a more affordable price.

Instead of full health cover, a cash plan helps staff to cover the costs of everyday healthcare. For example, your employees will receive part of the costs back for:

• Routine dental checkups
• Eye tests and glasses
• Physiotherapy sessions.

Some cash plans cover private consultations, NHS prescriptions, and cashback for nights spent in a hospital. While a cash plan doesn’t provide the same cover as Private Medical Insurance, it still provides monetary support for healthcare.

Death In Service Insurance

Death in Service Cover is a policy that pays out a lump sum if an employee dies. The payout is a multiple of an employee’s salary, typically between 2 and 4 times their basic annual salary.

This is one of the first benefits most companies set up. It provides financial security to their loved ones if an employee dies while working for you. But it does require at least 3 full-time existing employees for a business to be eligible for cover.

The majority of Death in Service policies are set up in a trust. This protects the lump sum payment as it excludes the amount from the employee’s estate when they die. Their loved ones don’t have to pay any Inheritance Tax (IHT) on the payout, the money is all there’s.

Their family is then free to use the money in any way they wish. For example…

• Funeral costs
• Pay off an outstanding mortgage
• Pay off any debts an employee has accumulated
• Cover everyday living expenses.

It’s a key employee benefit since most people live with debts or expenses in some form or another. When an employee dies, their family will receive the payment and be able to pay off any outstanding debts. This is valuable, as it can relieve any financial stress that may occur in an already difficult time.

Relevant Life is a great solution for small businesses, contractors and company directors, as it enables you to still get Life Insurance.

If one of your staff members dies while working for you, the policy will pay out to their loved ones. This is the same as Life Insurance as the benefit amount is typically a multiple of the worker’s salary.

Joseph ToftSenior Consultant, Employee Benefits

Group Income Protection

Group Income Protection or group sick pay insurance can enhance a startup’s existing sick pay policy. Most startup employers offer a set period of sick pay to their staff, but employees are then moved onto Statutory Sick Pay once the period is over.

Statutory Sick Pay is the legal minimum amount of sick pay an employer must pay their staff. However, it’s not enough for the average employee to survive on. Group Income Protection is an insured way of extending your sick pay policy and would become active when the full sick pay ends.

It pays a proportion of the employee’s wages as a monthly benefit if they cannot work. The payments can continue for a limited period such as 2 years or continue right up to retirement depending on the options you select.

Group Critical Illness Cover

Another employee benefit for startups to consider is Group Critical Illness Cover. This pays out a tax-free lump sum if a worker develops one of the critical conditions listed on the policy. It covers the top three critical conditions:

• Cancer
• Heart attack
• Stroke.

Most policies cover around 12 critical conditions as standard. You can add extra illnesses to a policy for a higher premium.

The payout an employee receives is a multiple of their salary, often between 1 and 4 times their earnings.

For a startup, it’s not a benefit many employers rush to set up due to the costs. It’s more expensive than Group Life cover as the chances of an employee suffering a serious illness are higher than death during their working life.

Free Additional Benefits

Many of the insurance products listed above come with a range of valuable health and wellbeing services for free. For no extra cost on top of your core cover, your employees may get access to services such as:

• 24/7 virtual GP service
• Mental health support helplines
• Physiotherapy
• Nutritional and fitness programs and support
• Healthy living discounts.

These aim to provide extra value to your staff without bumping up your premiums. The best part of these free benefits is that your employees don’t need to claim to access them. This makes an insurance policy useful from the get go.

We have many of these services available to our staff here at Drewberry™. Our team finds being able to book a GP appointment outside of working hours is one of the most valuable aspects. Even our director has used AIG’s virtual GP service and shared his experience here >>

Low Cost & Free Employee Benefits For Startups

There’s much more to employee benefits for startups than just insurance policies. There are also a range of low-cost and free options. Any of which can make a great addition to an employee benefits package.

Budget is an important factor for startups so looking for benefits which add value, but that are also affordable, is vital. The good news is there are plenty for you to choose from.

Below, we’ve broken these options down in terms of how they can help your employees.

Benefits To Improve Work-Life Balance

First up are the employee benefits designed to support a good work life balance. This is something many people strive for, with 66% of UK employees stating it makes them happy. A good work life balance is vital to create a healthy, happy and productive workforce.

Promoting a good work life balance can help your workers to avoid burnout, stress, and health issues related to overworking. Helping your staff out is essential if you want a team that remains productive and focused. So, how can you help? The following benefits are known to help strike a good balance:

• Flexi-time (flexible working hours that suit an employee’s schedule)
• Holiday trading (allowing employees to purchase more annual leave)
• Option of home working (hybrid work models or full remote work)
• Gym membership discounts
• Casual dress code
• Free snacks.

These benefits cost very little, if anything, for you to provide to staff. You may look to introduce these sooner rather than later as they help to attract a wider range of new talent. They can also help your startup to stand out from your competition.

Benefits To Improve Employee Engagement

The first stages of a startup can be tricky, so engaged employees are key to help get your startup off the ground.

Staff who are not enthusiastic about their work can have a significant impact on the whole team’s morale and productivity. The chances of unmotivated workers leaving your company as a result are higher. This will increase staff turnover and recruitment costs.

Your startup needs to focus on making the working environment enjoyable for employees. Here are some valuable benefits to improve employee engagement:

• Employee awards, rewards and public displays of appreciation
• Company-paid social events
• Discount schemes
• Gifts such as free event tickets, high-street vouchers or even a bonus cash payment
• Education and training opportunities for career development.

Employees who are engaged with your startup mission can offer many business benefits. So these perks are not to be ignored. It’s worth the extra time and effort to show your employees they are valued.

Benefits To Help Family Life

Even the most dedicated and enthusiastic staff can struggle to juggle work and family life. As an employer, you have the power to support your employees in this area.

The high cost of childcare can price people out of the workforce, even if both parents work full time. You can help support them by offering:

• Work from home opportunities
• Flexible working hours to support the school run (especially start and finish times)
• Childcare information and resources
• Good maternity and paternity leave.

Offering flexible working and work from home opportunities are two excellent ways to make a difference. Flexible employment is often a key component for working parents. You can make your startup more appealing to job seekers with these types of benefits.

Benefits To Help Improve Health & Wellbeing

We’ve talked about Group Health Insurance as a great way to help support your employee’s health and wellbeing. But there are many other benefits you can offer to boost overall employee wellbeing at work.

Considering that the UK population is 20% less active than it was in the 1960s, tackling the issue is important. A lack of physical activity and poor nutrition can be a problem for many businesses.

While you might not put 2 and 2 together, sedentary lifestyles can lead to health problems for staff. This may then result in increased absences from work. You can help to improve employee wellbeing, though. You can look to provide things like:

• Standing desks
• Active team building events
• Discounted gym memberships
• Healthy snacks
• Fitness trackers
• A cycle-to-work scheme.

These support an employee’s health and wellbeing. Providing such benefits can help ensure your top talent is fit and healthy to work.

Nice-To-Have Benefits

A lot of startups offer more quirky benefits, which aren’t always necessary to have but look good on a job advertisement. It’s important to not go over the top with these kinds of office perks, as they might not offer any solid value to your employees.

Here are some of those ‘nice-to-have’ perks:

• Dog friendly offices
• Pawternity leave (time off for employees to bond with their new pet)
• Summer hours (e.g. Fridays off during the summer months)
• Monthly company-paid for lunches
• Nap rooms / chill-out areas with ping-pong tables, etc.

Remember that these are not essential. They can make the work environment fun, but it’s important you provide the employee benefits that offer the most value to your employees.

Some of the very best Employee Benefit packages we see offer both free and paid benefits. If you’d like advice on your start up Employee Benefits, give us a call on 02074425880 or email help@drewberry.co.uk.

Joseph Toft
Senior Employee Benefits Consultant

Compare Employee Benefits For Startups And Get Expert Advice

If you feel daunted by the prospect of setting up new employee benefits for your startup business, we’re here to help.

At Drewberry, we have extensive experience in setting up employee benefits for startups. We can do all the heavy lifting so you can focus on growing your new business.

If you need help to set up up an employee benefits package for your startup, email help@drewberry.co.uk or call us today on 02074425880 and speak to one of our friendly expert advisers.

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