This factsheet was last updated in January 2012.
What are employee benefits?
Employee benefits are non-cash provisions within the pay and benefits package, although they have a financial value or cost for employers, for example, paid holidays, pensions and company cars.
Such provisions may be offered for business reasons (helping to recruit, retain and/or motivate employees as required to achieve organisational objectives) and/or ‘moral’ reasons based on a desire to care for employees’ well-being (and, in so doing, potentially enhance employee engagement). The prevailing fiscal, regulatory and social background also play an influential role in the development and shaping of employers’ policies and practices on benefits. In the US, for example, the lack of well-developed public health and welfare infrastructures, together with generous tax provisions in relation to employee benefits, have helped drive the wide array of benefits arrangements on offer among employers (such as healthcare provision).
Employee benefits generally form a very significant part of the overall pay and benefits package, with estimates suggesting that their value can account for up to around 40% of the costs to organisations of employing staff.