Setting up a flexible benefits scheme - Veterinary Practice
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Setting up a flexible benefits scheme

Marilyn Martin looks at ways in which employers can provide benefits for staff in a cosbusit-effective manner.

Employee rewards are about attracting, retaining and motivating your people. Any size of organisation will have a wide variety of individuals with different ages, lifestyles and hence different motivations.

Offering flexible benefits may offer a number of attractions for large and smaller employers alike who often face the difficult task of providing benefits to employees in a cost effective manner. This is a way to offer rewards that can benefit everyone in a diverse workforce and also ensure that the rewards are fully appreciated, as they have been self-selected.

The idea of flexible benefits is simple. That is to focus expenditure on those areas where it will achieve maximum value and this is by letting employees choose the benefits that matter most to them. Such schemes are also sometimes known as “cafeteria benefits”. Employees are given a flexible benefits budget so they can “buy” the benefits they want.

People at different stages in their careers want different things. One person may place a higher value on a lower cost benefit than on a more expensive perk. Employees can choose their own benefits from a set menu, which may include choosing or rejecting certain benefits as well as upgrading certain benefits in exchange for others, normally within specific limitations.

In this way you can attract and retain a variety of personnel within a fixed budget that the employer sets. It is usual in most flexible benefit schemes that employees make their selections only once a year. This eases administration.

Schemes can, however, make exceptions for “lifestyle events” such as promotion, marriage, divorce or the birth of a child. Employers can take a building block approach, i.e. they don’t need to implement the system in one go; they can choose a basic version initially, with an option of building up over time to give greater freedom and to build confidence in the idea.

There are potential benefits for employers of all sizes. These may include tax and national insurance savings, such as those achieved by offering certain benefits through salary sacrifice, for example pension contributions, child care vouchers, health screening and bike loans.

The employer has the ability to control costs so if the provision of some of the benefits increased in price, the employee may be required to pay the extra cost of these price rises. Employers can target the spend on benefits that employees value.

In designing benefits, these will be influenced by the actual profile of the employees: for example, dental, health screening and travel cover will be more attractive than perhaps life assurance for younger staff members and smaller employers can often offer a more flexible range of benefits to enable them to compete with larger employers in the attraction of staff.

Employees usually value their ability to tailor pay and benefits to suit their personal circumstances and this is particularly useful to attract employees with particular skills, if there are specific skill shortages.

The principle is that the employees have an allowance to spend on various flexible options on top of their core benefits. Benefit choices can sometimes be linked with working arrangements such as enhanced flexible working, or the option to buy or sell holiday. In an acquisition or merger of practices, it is important to harmonise the benefits and integrate packages between the two parties.

As some of the flexibility can create savings, particularly national insurance, employers can use these savings to offer additional benefits, so keeping a cap on their payroll costs, but providing for and empowering their employees.

It will be necessary to review existing benefits and there are a number of organisations, PKF among them, that can provide this service and assist in the design of a suitable scheme, to include draft paperwork, etc., to fully communicate with the staff. This may be integrated into an employee savings scheme.

An employee saving scheme is another way for employers to reward employees without increasing salaries. These schemes are available through a number of specialist benefit providers and employees can be provided with access to a wide range of discounts and offers from leading brands and retailers, via a dedicated website.

These may range from leisure and shopping, eating out, entertainment, insurance to travel and gifts, as well as seasonal promotions and one-off deals.

The benefit provider will usually charge the employer a minimum fee or if there are many employees, a fixed cost per head, making it easy to budget for. If communicated effectively, employees save money and the employer can be associated with top brands, thereby distinguishing themselves in the present market as employers to work for.

A successful benefits plan relies on the interactions of design, access and communication, so in summary these are:


  • Assists recruitment and retention
  • Administration is simplified n Create savings, particularly in National Insurance
  • Keep a cap on payroll costs
  • Target expenditure at benefits that attract/retain employees
  • Budget for future expenditure
  • Further communication of benefits package
  • Complement existing benefit arrangements


  • Choice of benefits to suit personal circumstances
  • Better communication/improved value n Create savings, particularly in National Insurance
  • Benefit from discounted group rates negotiated by the company
  • Avoid duplication of benefits

  • Please note that that this advice is for guidance only and individuals should take their own professional advice before making any decisions based thereon.

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