Ensuring employee perks aren’t undermining pay equity, optimising benefits spend and utilising artificial intelligence (AI) are key priorities for the year ahead.

With the cost of providing employee benefits set to increase again this year, finding ways to optimise existing budgets, while keeping employees healthy and engaged will be a key priority.

Better use of salary sacrifice schemes1 will be increasingly used to mitigate rising National Insurance (NI) costs, while new advances in AI  will help signpost employees into pre-paid pathways to reduce private medical insurance (PMI) claims.

At the same time, forthcoming European Union (EU) pay disparity legislation2 will for the first time put pressure on employers  to ensure benefits spend isn’t undermining pay equity. All of which means employers will have to find more effective ways to automatically calculate, and report on, the total reward being spent on each employee.

To help you navigate the challenges ahead, our digital team share their top tips on how best to optimise your benefits spend while navigating the challenges ahead.

1. Mitigate soaring employment costs

With the rate of employer national insurance contributions (NICs) set to jump from 13.8% to 15% from 6th April 2025, the cost of employing someone on a median salary will increase by £900 a year3.

Many employers are considering how to mitigate this by adjusting their benefits offering. Having recently helped one organisation to save over £89,000 in NICs through the introduction of a new salary sacrifice scheme4, the potential savings employers can generate by paying people some of their income via a benefit is not to be underestimated.

Additional holiday leave, bikes, electronic vehicles and even pensions can all be provided in place of salary, to reduce the tax that would have otherwise been paid on the value of that benefit for both the employer and employee. Critical to success is exploring salary sacrifice, identifying benefits people genuinely desire and communicating the savings to them also.

2. Utilise AI to prevent sickness absence

Another area driving up employer costs is the record number of people becoming too sick to work. An astonishing 3,000 people a day are now being signed off as too sick to work5, with employers also having to bear the cost of sickness absence and replacing the individual.

With mental health and musculoskeletal (MSK) issues the main reasons behind the huge rise in lost working days6,  helping employees to access the support needed to stay in work is now vital. The advent of AI will not only start to make it easier for employees to ‘chat’ to benefits platforms, to find out what support services can best support them, but also alert employers to potential problems.

Instead of waiting until people get too sick to work before offering support, AI will soon be able to generate forward-looking insights to predict problems areas. For example, which demographics aren’t engaging with mental health support or where requests for help with backache are soaring, so that preventative solutions can be put in place. 

3. Signpost to prepaid support to reduce PMI claims

Another huge challenge for employers in 2025 will be addressing the cost of soaring private medical insurance (PMI). Although this is largely due to medical inflation it’s also due to policies not being better aligned with what each employee actually needs cover for and increased take-up of PMI due to issues accessing NHS support.

This is particularly pronounced when it comes to mental health support. For example, if an employee calls the private GP service associated with their PMI, this may activate a claim for counselling. Instead, they might have been able to access up to six free counselling sessions, via prepaid benefits, such as their Employee Assistance Programme (EAP) or cash plan.

As well as thinking about which aspects of the PMI they might want to scale back on, it’s therefore essential that employers also think about how best to signpost employees towards prepaid for services. Employee benefits platforms have a vital role to play, by alerting employees to the most appropriate service for their needs and letting employers know which services are being over or underutilised.

4. Ensure employee perks don’t undermine pay equity 

Although the UK is no longer part of the EU, many UK businesses will still be impacted by the forthcoming introduction of the EU Pay Transparency Directive. Developed to tackle the 13% difference between men and women’s earnings in Europe7, the directive will not only require organisations to close any gaps in pay but also perks including employee benefits.

All of which will require business to be able to produce total reward statements that quantify not only how much employees are being paid in pounds and pence, but also the value of non-cash benefits, ranging from private medical insurance to paid transport or childcare.

The time taken to do this manually could put additional strain on HR administration, meaning employee benefits platforms8 are set to become increasingly used. As well as automatically performing this process, they can also compare the value of similar benefits, from different providers, across different regions, to enable benefit pay gaps to be identified.

Is your benefits strategy missing a digital trick? Here are five factors to consider when selecting an employee benefits technology platform