There are loads of reasons why employee benefits make financial sense for companies. The improved productivity, output, retention and recruitment can save organisations a lot of money.
However, in the short-term it’s difficult to quantify these savings. Many companies see the initial figures of what it would cost to implement employee benefits and put it on the backburner due to budget restrictions. Many even go in search of ‘free’ employee benefits, when in actual fact these two schemes could offset the cost of employee benefits even before we consider things like improved output, productivity, recruitment and retention.
With a bike scheme, it’s not just the employees that make savings, employers do too. The savings come mainly in the form of National Insurance (NI).
The bike scheme is an employee benefit you’ll see in most companies that allows employees to purchase a bike through salary sacrifice, meaning they save on tax and NI.
Ultimately, due to the way the scheme works, it’s cost-neutral and the scheme won’t cost the employer anything to run.
One important thing to remember is that scheme take-up will dictate the savings employers can make. The higher the take-up, the more NI savings the employer makes, so you’ll want to make sure your communications are in place and effective in order to drive engagement.
For example, a company with 500 employees with a 5% take-up will save over £2,000 in NI when employees spend an average of £650 on a bike.
As it’s one of the UK’s most popular employee benefits, it’s probably a good idea to run a bike scheme at least once a year if you don’t already. If you do run a bike scheme, take a look at the way you communicate it and see if you can increase take-up this year.
The other key benefit here is Holiday Trading. With this scheme, employees can buy or sell annual leave.
With Holiday Trading, employers make both NI and salary savings. On a typical Holiday Trading scheme, if 50 of your employees on an average yearly salary of £20,000 purchase 5 days holiday, the company saves over £19,000 in salary and over £2,500 in NI. These figures may vary for different scheme providers, but this is just an example.
With this scheme, the amount companies save can vary greatly depending on a few different factors. These include the person’s salary, how many people purchase or sell holidays and how many holidays they purchase or sell. Some companies set the scheme up so their employees can only buy holidays and not sell them.
Of course, when you run multiple benefit schemes there are other costs to consider, and it’s never black and white. For example, you need to consider how you’ll communicate your benefits and the time and cost this involves. However, if these schemes are essentially paying for themselves from a quantifiable, financial point-of-view, consider the further savings made on things mentioned at the beginning of this article like improved output, productivity, recruitment and retention. Recruitment and retention costs alone can be highly expensive.
If you’re on a budget, these schemes are a no-brainer!