How Much Do Employee Benefits Cost In The UK?

How Much Do Insurance Benefits Cost Per Employee?

The cost of insurance-based employee benefits depends on factors such as the size of your company and how much cover you want.

The Cost Of Group Life Insurance

What Is Group Life?

Group Life Insurance—also known as Death in Service Cover—pays out a lump sum if an employee dies while working for you. They don’t have to die during work hours or in the workplace to be eligible for a payout.

This lump sum is usually a multiple of an employee’s earnings and usually goes to their family. Although it can also be paid to a charity of their choice.

For employers, HMRC usually allows premiums as a tax-deductible business expense.

What Impacts The Cost Of Group Life Insurance?

The cost of group life insurance depends on both your employees’ personal factors and the coverage you want to offer.

Details that affect the cost of group life cover include:

• Employees’ earnings / level of cover
  As the benefit is a multiple of each employee’s earnings, this, plus the multiple you choose to provide, has a major impact on the cost
• Cease age
  The age the policy stops covering workers. This is typically 65 / each employee’s state pension age, but can be up to 75. The higher the cease age, the greater the risk of employees dying during the scheme, which means higher premiums
• Your industry / job titles
  Some industries, and jobs within those industries (e.g. manual work / work at heights), are riskier than others. If lots of your employees do higher-risk activities each working day, you pay more for cover
• Employees’ ages
  Older employees are more likely to pass away, so the older your workforce, the higher the cost of cover
• Group size
  While there are more people to insure the bigger the group, insurers often offer discounts to companies with more employees, due to economies of scale in covering larger groups
• Employees’ place of work
  Location matters because life expectancy differs across the UK. Employees living and working in some areas are less likely to die prematurely than those in other areas.

Example Premiums

In the table below, we provide group life insurance premiums per employee for different companies. Each company also offers a different benefit with a different cease age.

Compare Group Life Insurance quotes from the top UK insurers ⟶

As you’ll see, the cost of group life insurance is relatively low. One company offers a four times salary benefit up to age 75 for less than £10 per month per employee, making it one of the cheapest employee benefits available.

That’s why it’s usually the first insurance benefit our clients introduce.

The Cost Of Group Income Protection

What Is Group Income Protection?

Group Income Protection — sometimes called Group Sick Pay Insurance — pays a monthly benefit if an employee is off sick. The benefit is a percentage of their gross income.

This is an extension of your company’s sick pay policy. It covers any accident or sickness that stops an employee working for longer than the policy’s deferred period.

HMRC typically deems group income protection premiums as a business expense for employers. However, the insurer pays claims to the company and you distribute it to the employee (as you do their salary). At that point, the income is taxable for the employee.

What Impacts The Cost Of Group Income Protection?

As with group life, the cost of group income protection depends on your employees’ circumstances and the benefit you want to offer.

The following impact the cost of cover:

• Level of cover
  You can cover between 50% and 80% of gross earnings. The bigger this percentage, the higher the costs
• Deferred period
  The time between an employee falling sick and the insurer paying out. Deferred periods start around 13 weeks. The longer the deferred period, the lower your premiums
• Length of payout
  You can either limit the payout, to 2 years for example, or have it pay out until retirement. The longer the payment period, the higher the premiums
• Employees’ ages
  The older your workforce the higher the cost of cover as older workers are more likely to suffer illnesses and injuries
• Industry and occupation
  Some industries involve more risk. For example, builders face higher risk of on-the-job injuries than desk workers. Industries with a higher claims risk attract higher premiums
• Include National Insurance and pension contributions
  You can opt to cover employer National Insurance contributions and employer / employee pension contributions on top of a percentage of earnings. Doing so will increase premiums.

Example Premiums

The table below features group income protection premiums for companies of various sizes in various industries. Each company also has slightly different policy options that impact the cost of cover.

Compare Group Income Protection quotes from the top UK insurers ⟶

As you can see the level of cover and the deferred period both have a significant impact on the cost. If you would like to compare quotes specific to your business, please do not hesitate to enquire below.

The Cost Of Group Critical Illness Cover

What Is Critical Illness Cover?

Group Critical Illness Insurance pays a lump sum if a worker suffers a critical illness. This lump sum is either a multiple of their earnings or a fixed amount of your choice.

The most common claims on group critical illness cover are for cancer, heart attacks, and strokes.

In most cases, group critical illness premiums are a tax-deductible business expense for employers.

What Impacts The Cost Of Group Critical Illness Insurance?

As with all employee insurance benefits, the cost depends on staff personal factors and the level of cover.

The following impact the cost of premiums:

• Benefit Amount
  Employers typically offer workers a payout of between one and five times earnings. The higher the payout, the higher your premiums
• Employees’ ages
  The older your workforce, the more likely they are to suffer a critical illness, meaning a greater monthly cost
• Coverage
  ‘Core’ cover protects against around 12 critical conditions. You can extend your policy with ‘additional’ cover for a further 20-25 or so conditions. The more conditions your policy covers, the higher your premiums.

Example Premiums

The table below offers example group critical illness insurance premiums for companies of various sizes with slightly different policy options.

Compare Group Critical Illness Cover quotes tailored to your company ⟶

As cancer is a common illness, many employers offer critical illness cover to provide financial support to staff.

If you would like to compare quotes from all the leading UK group critical illness providers don’t hesitate to enquire below.

How Much Do Employee Health & Wellbeing Benefits Cost?

There are a few types of health and wellbeing employee benefits. The most common are Business Health Insurance and Corporate Health Cash Plans.

However, other options are increasingly appearing to offer popular benefits, including digital GP appointments or access to counselling, as standalone benefits.

Meanwhile, you may also find other health benefits, like virtual GPs and mental health services, as free extras.

The Cost Of Business Health Insurance

What Is Business Health Insurance?

Business Health Insurance pays for your employees to have private healthcare. They bypass NHS waiting lists, getting the care they need exactly when they need it.

This employee benefit not only improves staff health and wellbeing, but also has a positive business impact. It provides fast access to treatment, helps reduce time off sick, and increases productivity.

For employers, the insurance costs are typically a business expense not liable for corporation tax.

What Impacts The Cost Of Business Health Insurance?

Premiums vary depending on your company, your employees and the level of cover you want. To price a business health insurance plan, insurers look at:

• Group size
  While covering more employees means higher premiums, the more staff you have the lower the cost tends to be per worker. This is due to economies of scale in covering larger groups
• Employees’ ages
  It costs more to insure older employees due to the fact they’re more likely to claim. So you’ll pay more to cover older staff
• Location
  The cost of healthcare around the UK varies. As employees want treatment near their home, it costs more to cover them in areas where healthcare is more expensive, such as in and around London
• Occupations
  Premiums depend on how risky your employees’ daily working lives are. Office-based workers cost less to insure than scaffolders, say, who are seen as at greater risk of a claim
• Policy options / coverage
  Every policy option impacts the premium cost. All business health policies cover inpatient treatment, but there are many other optional add-ons. These increase coverage for a higher premium. There are also options which cut premiums, such as an excess or 6 week NHS wait.

Example Premiums

The examples below are for different sized companies, each wanting business health insurance. Every company has chosen different policy options, which affect the price of cover.

Compare Group Health Insurance quotes for your business here ⟶

The cost of company health insurance could vary significantly depending on your location and your staff demographic.

If you want to understand the specific costs of implementing group health insurance, please enquire below.

The Cost Of A Corporate Health Cash Plan

What Is A Health Cash Plan?

A Corporate Health Cash Plan is a more affordable way to provide some health benefits rather than a full business health policy.

Rather than paying for private medical treatment, a health cash plan reimburses money towards everyday medical expenses, such as routine dental and optical care. It might also pay towards other treatments / procedures such as:

• Therapies (e.g. physiotherapy, acupuncture, osteopathy, podiatry)
• Health checks
• Dental accidents / injuries
• Diagnostic tests / scans.

What Impacts The Cost Of Corporate Health Cash Plans?

As corporate health cash plans aren’t as complicated as group health policies, there are fewer options to consider.

The main factors behind the cost of premiums are the number of workers you have and the level of cover. The level of cover impacts how much reimbursement workers get. Higher cover means greater reimbursements and therefore higher premiums.

HMRC typically allows corporate health cash plan premiums as a business expense.

Example Premiums

The premiums in the table below are for companies of different sizes, each looking for a corporate health cash plan. This only offers a rough idea of cover. It could be different for your company.

Compare Corporate Health Cash Plan quotes from the best UK insurers ⟶

How Much Will Workplace Pensions Cost My Business?

Since the introduction of auto-enrolment, every business must provide staff with a defined contribution workplace pension, at least. Workplace pensions are mandatory schemes which you must implement for employees who are:

• Aged between 22 and their state pension age
• Earning at least £10,000
• Normally working in the UK under a contract of employment.

Employees are automatically enrolled in a pension. They can opt out if they wish. Although, staff will be re-enrolled after 3 years if they’ve opted out.

How Much Do I Have To Pay Into My Employees’ Pensions?

As an employer, your pension contributions are a percentage of employees’ earnings. The cost of a scheme depends on how many staff you have, their earnings, and your contributions.

Under auto-enrolment, employers pay a minimum of 3% of ‘qualifying earnings’.

While this is the absolute maximum employers pay by law, many companies pay higher contributions or offer to match staff contributions up to a set percentage. In a competitive labour market, it helps you stand out.

Jonathan Cooper
Senior Paraplanner at Drewberry

Qualifying earnings are all earnings between £6,240 and £50,000 you pay an employee. They include:

• Salary / wages
• Bonuses / commission
• Overtime
• Statutory Sick Pay
• Statutory maternity, paternity or adoption pay.

£50,000 is the cut off for qualifying earnings. You don’t have to pay 3% on anything above this.

For example, if an employee earns £50,000, your contribution as an employer is £1,312.80 per year / £109.40 per month. You calculate this as follows:

But if an employee earns more, say £55,000, the 3% employer contribution is still only on earnings between £6,240 and £50,000. Your total contribution under auto-enrolment is therefore £1,312.80 per year per employee.

Setting Up An Employee Discount Scheme

With the cost of living crisis, more employers are offering employee discounts schemes to help staff through these difficult times.

An employee discount platform gives employees access to a variety of discounts. They can get money back on everything including groceries, clothes, technology, travel and fitness.

How Much Does An Employee Retail Discount Scheme Cost?

For only a few pounds per month an employer can provide a discount scheme. This enables employees to save hundreds of pounds a month.

Below is a list of some of the discounts an employee will have access to through our discount platform.

If you’d like to provide retail discounts to your employees, please don’t hesitate to pop us a call on 02074425880 or email help@drewberry.co.uk.

How Much Will It Cost To Train & Educate My Employees?

The cost of training is a business expense if the training is for the purpose of improving your employee’s skills.

You can typically claim tax relief on the cost as long as training benefits the business. The company may also be able to reclaim costs related to that training and development. For example, allowable expenditure in this area includes:

• Travel costs (e.g. public transport, parking, congestion charges / tolls)
• Hotel accommodation if an employee needs to stay overnight
• Food and drink
• Books / course materials.

But if the training takes place at an employee’s usual workplace, travel expenses to that location are not allowable.

By upskilling your staff, HMRC lets you deduct the cost of it when calculating your taxable business profits.

The cost of training and development will depend on your industry and the skills your business needs. You can check prices of training and education courses with professional bodies for your industry.

How Much Would It Cost To Offer My Workers Childcare?

The government once offered Childcare Vouchers schemes to help with employees’ childcare costs.

Employers managed this via salary sacrifice. Employees would then get vouchers for childcare in return for some of their gross salary. Some employers did offer childcare vouchers on top of gross earnings.

But the government stopped childcare vouchers for new entrants in October 4th 2018.

Only parents receiving childcare vouchers on or before this date and who remain with the same employer can still get them. This is only while they and their child meet eligibility criteria.

The government replaced childcare vouchers with tax-free childcare. This has no employer involvement at all. The government manages it via National Savings & Investments. They top up eligible parents’ contributions to a childcare account with the equivalent of basic-rate tax relief.

Can Employers Still Offer Childcare?

Since October 2018, the only way for employers to support childcare is to set up and fund their own nursery or childcare facility.

This must meet the same criteria and standards as any other childcare provider. It must also:

• Be available to every employee
• Provide childcare for employees’ children (or children they have parental responsibility for)
• Provide childcare up to the maximum age its registration and approval allows for
• Not be in a private residence.

The facility doesn’t have to be in the workplace. It could be off-site, but not in a private residence. Obviously, setting up a childcare facility would be costly and something that would only viable for a bigger company with many employees needing childcare.

How Much Does A Cycle To Work Scheme Cost?

The government introduced Cycle to Work schemes in 2011 to reduce traffic congestion and encourage physical activity.

Any sized employer can run a cycle to work scheme. It lets you offer staff a bike and relevant safety equipment as part of a consumer hire agreement. To be eligible, the bike must be mainly for commuting and business travel.

Employees pay for this hire from their gross earnings through salary sacrifice. Employers will make National Insurance savings at 13.8% on the proportion of the salary an employee sacrifices.

At no point must employees get an option to buy the bike / safety equipment alongside, or as part of, the initial hire agreement. This changes it to a hire-purchase agreement, which requires different regulatory permissions. It would also not be eligible for tax exemption.

At the end of the scheme, employees can:

• Extend the hire agreement
• Return the bike / equipment
• Buy the bike / equipment under a separate agreement entered into at the time, at a value based on a markdown laid out in legislation to account for depreciation.

There’s a £1,000 cap on the cost of the bike / equipment you can hire to the employees. But if you get the required authorisation from the Financial Conduct Authority (FCA), you can become authorised to hire bikes and safety equipment worth more than £1,000.

Get Employee Benefits Quotes & Expert Advice

With many employee benefits, the cost depends on so many factors that it can be hard to know where to start!

If it’s all getting a bit much, you can always ask us to lend a hand. We provide regulated fee-free advice to businesses from start-ups to large corporates across the UK.

For help and fee-free advice on your employee benefits package, don’t hesitate to get in touch. Just pick up the phone — our team of experts is available on 02074425880. Or, if you prefer, drop us an email at help@drewberry.co.uk.

Why Speak to Us?

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We all deserve a first class service when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to talk to us.

• We are award winning 🏆 independent insurance advisers who work with all the leading UK insurers
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• Claims support when you need it most.