Employee benefits & perks guide

What are employee benefits anyway?

The short definition is compensation or reward paid to an employee in addition to regular salary. The compensation can be cash or non-cash based.

Whats the difference between benefits and perks?

It’s basically the same. They are often mixed as synonyms, however some benefits are required by law to all or some employees. This could be pension contributions or certain kind of insurances. Perks would then be considered as something extra, beyond what is mandatory to the employee.

So why is it important to offer good employee benefits and perks?

There are several reasons for this, but in short these are the most common arguments for offering benefits:

Retain and keep talented employees
Support and maintain a healthy staff
Effective recruitment tool
Promote a good work-life balance
Build and support a good employer brand
Competitive reasons
Drive desired employee behaviour
Laws and regulations
Moral and ethical obligations
Keep and control sickness absence
Good value and measurable return on investment
Cheaper than cash salaries

What are some disadvantages of offering employee perks?

Tax system might consider some perks and benefits as salary and put a tax on top of the offered perk. Either as a tax to the employer or to the employee. So certain benefits might prove more expensive than others.

It’s important to run a cost benefit analysis in order to evaluate the effectiveness of the perk in question.

Perks and benefits that are not adjusted to the needs of the company might not be used or considered relevant.
If the benefits are tied to some reward to encourage and trigger a particular behaviour it’s important to measure the effectiveness.
Maintenance: If you lack a good inhouse system or partner, it can become become complex to handle

So how common are certain benefits?

In the UK some of the most popular lifestyle benefits that are being offered by employers are below. The numbers are for the totalt share that have access to these benefits in 2019

Flexible work arrangements (76%)
Discounts (retail /travel) (62%)
Extra holiday for long service / benefit (55%)
Longer / enhanced parental leave (54%)
Legal counsel (43%)
Retail vouchers (42%)
Dining cards (38%)
Cinema tickets (36%)
Employee support network (32%)
company’s own products (32%)

In addition the most popular on site benefits are:

Fitness classes or facilities (49%)
Meditation and yoga classes (48%)
Subsidised catering (44%)
Massage therapists (31%)
Coaching / counselling (29%)

Tax efficient benefits:

Childcare vouchers (89%)
Pension contributions (84%)
Bike schemes (78%)

Insurance & group risk benefits

Life insurance (86%)
Permanent health insurance (60%)
Critical illness insurance (43%)

Travel insurance (32%)
Motor insurance (12%)
House insurance (8%)

The three most limiting factors for not offering some benefits are budget and lack thereof (86%) and time (40%) and lack of senior support (32%)

Health and wellbeing benefits

Counselling or employee assistance (EAPS) (82%)
Private medical insurance PMI (78%)
Health screening (62%)
Gym memberships (56%)
On site well being events (56%)
Dental insurance (55%)

In Germany the employee laws are in general quite complex, but some examples of perks besides the mandatory ones are:

General health & wellness perks
Extra vacation days or leave
Extra allowance for public transportation or car transportation
Subsidised lunches
Gym memberships
Product discounts (own products)
Gifts for birthdays, baby showers and more
Christmas bonus
Snacks and drinks in office
Company bikes
Health checks
Virtual doctos
Childcare

According to PWC the most beneficial benefits from a Norwegian tax perspective are:

Educational benefits

Free personal computer and tablet - it must however be considered as a long term loan and the property of the business in order not to be taxed

Personal fitness - if all or most of the employees are part of a common scheme there is no penalty tax on such a benefit.

Company trips and team building activities

Child care

Glasses for use in front of computer screens

Massage - as part of reducing absence and general sickness. Must be done at the location of the office.

Option programs

Health checkups and medical initiatives

Extra days in connection to business trips

Free newspaper / subscription. If the employee needs this in his daily job - or if he already has a minimum of one subscription from before, then it will not be taxed.