Flexible benefits – definition – Cafeteria benefits

Flexible benefits schemes are also sometimes known as cafeteria benefits.

There are three main types of benefits plans: core benefits, flexible benefits and voluntary benefits. These describe the way benefits offered, and are not types of benefits. For example: Private medical insurance (PMI) can be offered as core benefit, a flexible benefit or a voluntary benefit.

Under flexible benefits schemes staff can choose their own benefits from a set range of benefits.

Often they can choose to upgrade certain benefits in exchange for others.

Staff are given a flexible benefits budget that they can use to ‘buy’ the benefits they want.

These types of schemes are very popular because staff don’t have to take benefits they don’t really want and can get benefits they do want.

Often employers offer a wider range of benefits in a flexible benefits schemes than they would in a core package in order to accommodate the diverse needs of staff.

It allows employers to offer ‘new’ benefits much more quickly so they are seen as leading employers.

Employers can control costs because if any benefit rises in price then the employee has to ‘pay’extra.

Flexible benefits plans are very popular with companies who are merging or who are buying/being bought because it is easy to integrate the packages. 

Many flexible benefits schemes are offered using salary sacrifice arrangements. 

Flexible benefits schemes run for a set contract period whereby staff can opt into or out of employer-paid benefits, select employee-paid benefits or take cash. This is not the same as voluntary benefits which are discounted products made available through the employer and the contract is between employee and provider. In some cases, if employees do not wish to take any of the benefits on offer, they can choose to keep the cash.

<< Back to ‘Flexible benefits – definitions ‘