How to keep your employees committed and happy with benefits and incentives

Virtually every company has some form of benefits package in place, the delivery and development of which is managed by the finance or HR team. As businesses evolve over time, and as the benefits that are available, relevant law, and the expectations of new employees develop, those packages can require review and maintenance. Any one or a combination of those factors can cause those benefits to become less relevant or effective.

A well-designed and flexible package of benefits can improve the value of employees’ working lives, helping to keep them committed and happy in their work while maintaining their financial and physical health (and that of their family). With auto-enrolment into commercial workplace pension schemes having made low-level pensions saving a basic standard, employers must find other forms of benefit to compensate and motivate their workforce.

In this Keynote, pensions & incentives partner Kevin Gude discusses how, by working in collaboration with the business’s HR, finance and management teams and employee benefits consultant, an employee benefits lawyer is integral to the review and design of any new benefits arrangements. Advice to the business on its legal options and responsibilities when benefits are introduced or changed, the creation or assessment of a new benefit’s documents, all supported by a practical familiarity with those benefits and the providers who deliver them, make experienced legal support a valuable element of a successfully delivered project.

What benefits suit the business?

The first thing to assess when considering employee benefits is which range or combination will deliver the results needed by the business and by its employees. This is usually decided in consultation with the company’s HR, legal and finance personnel, external legal advisors and employee benefits consultants, insurers, and other third-party administrators.

There are many options available, and each will require different advice and setup.  For example:

Group life assurance schemes

This is a simple and relatively inexpensive arrangement to deliver lump sum (and sometimes pension) benefits to an employee’s dependants in the event that the employee dies while in the business’s service.  They are straightforward, but still require care and attention in order to deliver the correct benefits in a tax-efficient way.

Legal advice in connection with group life assurance schemes will include:

• Advising on the appropriate type of HMRC-recognised scheme
• Establishing bespoke trust deeds and rules for employers and model documents for life insurers to provide to customers
• Modernising or replacing documents (where old deeds have been lost)
• Providing practical guidance and documents to help trustees exercise their discretionary power to pay lump sum death benefits
• If needed, creating bare trusts for minor beneficiaries
• Advising on the tax treatment of HMRC registered and excepted group life schemes and how inheritance tax rules affect the latter.

Medical treatment arrangements

Another common, but valued, form of benefit offers private medical treatment with the added benefit to the employer that it can help to minimise ill-health absence. Again, there are several straightforward ways to deliver the benefit. The traditional method is through an insured product where the employee pays premiums in return for the provision of a range of private healthcare services to its employees.

A flexible and tax-efficient alternative is the employer-funded medical trust. These are an established, HMRC-recognised way for employers to take greater control over the range of benefits that they offer employees and the costs associated with doing so.  They are simple to operate, but there are details on which legal advice should still be obtained when setting up the trust, to ensure that trust law and HMRC’s conditions are able to be met. For example:

• Using employer-funded trusts as an efficient alternative to insured cover
• Analysis of the benefits and advice on the creation of new benefits in light of medical developments and employee expectation (for example, experimental cancer care, gene therapy, and fertility treatment)
• Advising on the effect of the interaction between HMRC and FCA rules
• Advising on the inclusion of equity partners and other self-employed professionals within a trust
• Identifying the points of interaction between the benefit arrangement and the employer’s employment assistance programme or other wellbeing schemes
• Facilitating a smooth transition between insured and self-funded models.

Pensions

Whilst most, if not all, workplaces have a pension scheme in place already, some of these can be legacy schemes which are not as efficient as they could be, or no longer serve an effective purpose as an employee incentive.

Legal advice can help here, by making recommendations on the establishment, operation and modernisation of self-invested personal pension schemes and self-administered occupational pension schemes for business owners and other key staff.

Other employee benefits where legal advice can be invaluable include income protection schemes, share plans and the creation of employee ownership trusts.

Keystone’s Pensions & Incentives team draws upon decades of practical experience and the maintenance of strong connections within the major insurers, providers and benefit consultancies, improving collaboration and efficiency on each project. If you have questions about implementing benefits and incentives for employees, please contact Kevin Gude.