Key facts

What is corporate gym membership?

Employers can provide staff with access to on-site gym facilities at no cost or can negotiate a deal or discounts with local and/or national gym operators. The employer can determine the amount that the employee is required to pay.

Where can I get more information?

HM Revenue and Customs’ website is a good source of information for employers.

Who are the main providers?

Courtneys, Curves, David Lloyd Leisure, DW Sports Fitness, Esporta, Fitness First, Incorpore, LA Fitness, LivingWell, Nuffield Health, Virgin Active.

Gym membership has become a very popular voluntary or flexible benefit with staff, and there are several ways for employers to organise its provision and funding, says Scott Beagrie

Corporate gym membership has proved a perennially popular benefit and this year’s Employee Benefits/Alexander Forbes Benefits Research found that 27% of employers offer it on a voluntary basis.

It is not hard to see why, because it makes what can be seen as a luxury item for cash-strapped employees eminently affordable. Employers also benefit from promoting staff fitness and wellbeing, which is known to increase engagement and motivation.

Matt Duffy, head of online benefits at Lorica Consulting, says gym membership is increasingly being offered as a voluntary or flexible benefit, often via salary sacrifice. “Employers that have a good, strong health and wellbeing strategy would certainly see gym membership as complementary to it.”

Employers that want to offer gym membership can go to a gym provider and negotiate discounted rates on staff membership or operate an on-site facility.

David Brame, commercial director at Nuffield Health, says: “Blue-chip organisations in particular are trying to attract the best employees and need the best packages, and on-site gyms seem to be one of the benefits they want to see.”

But according to Brame, a gym on an organisation’s own premises can cost as much as £60,000 a year, although some costs can be recouped by operating it on a commercial basis and charging members.

“We will charge the employee directly via direct debit, but the price is always set at between one-third and half of the high-street rate, so they get an extremely good deal,” he says, “and it is on their doorstep.”

Choosing a major brand

When negotiating deals with potential providers, the tendency is for employers to plump for one of the major brands. But Duffy says there are advantages in using providers that offer membership with several different brands in multiple locations. This kind of arrangement could cost as little as a £300 annual administration fee to give an entire workforce access to discounted gym membership. “Look for a provider that gives a good breadth of choice, both in terms of geographical spread and choice of gym chains,” he says.

Before making any final decision on the gym offering, benefits professionals should weigh up the various tax and national insurance (NI) implications. Unless the gym is located on the employer’s premises and is restricted to staff use only, it will be subject to tax and NI and will attract P11D dispensation.

Alternatively, the cost of discounted employee membership can be paid up front by the employer and reclaimed via a salary sacrifice arrangement. If an employer chooses to cover the cost of the benefit entirely, then the VAT incurred can be reclaimed.

It is important for an employer to offer gym membership in a way that suits the needs of its workforce so it can be an effective addition to its health and wellbeing package.

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