Guide to employee perks and benefits for small businesses

As salaries, working hours and development opportunities are becoming more aligned from business to business, offering staff perks, benefits or incentives is a way of attracting, and retaining, talent.

Glassdoor, the career site, say that 57% of all workers rate perks and benefits as one of the top factors they consider when deciding whether to accept a job offer.

So what perks can your business offer to help you attract and retain staff, and what should you watch out for?

What perks could you offer employees?

There are numerous employee perks that can be offered to staff, depending on the budget, size and flexibility of the business. In addition, there are now companies such as Work Perk and Perks at Work which offer online databases of workplace benefits. As an employer you can sign up to these sites to gain access to a selection of perks for your staff.

Perks will, inevitably, have a financial cost so they need to be budgeted for. Free employee benefits such as casual dress, running clubs or ‘bring your dog to work day’ are a great way of rewarding staff without spending money. Employers could also enter in to discounts with local businesses to offer discounts or vouchers to staff, free of charge.

Depending on what the business does, an easy perk to offer is a staff discount. This can be as small or as large as the employer wants, but will increase goodwill in the company and may even increase sales.

Other initiatives include free food and drinks, whether healthy fruit or unhealthy breakfast rolls, wellness and health perks, such as a company exercise class or reduced gym memberships, or entertainment passes.

There are expensive benefits that can be put in place, for example a company car scheme, but these will need to be financially viable.

Alongside financial perks, employers can offer working benefits that help achieve a better work/life balance.

For example, you could offer flexible working perks that allow all employees to request flexible working from day one of their employment, rather than having to gain 26 weeks’ service first.

Other perks include increasing holidays, expanding travel allowances and allowing volunteering leave.

Policy on employee perks

To ensure full transparency about the company perks or benefits on offer, employers can consider introducing a policy on this.

The benefit of having a policy is that they set out the schemes in place, including the criteria to be eligible, and are available in a central location for all employees to read and understand. This will limit later arguments about whether employees should receive the perk or not.

If employers do not want to create a separate policy, they can include a perks page within their company intranet or publicise perks on a central noticeboard so all employees can see current benefits on offer. It will then be important to continually update these areas, and remove perks as they are stopped.

Having a hand-out or brochure containing employee perks can also be used as a way of attracting staff during recruitment stages or the induction process. Including current benefits within job adverts will, again, attract staff to apply to the business.

Offering staff incentives

Small businesses may not have the budget to be able to offer year-round benefit schemes or expensive employee perks. Instead, they can consider offering work incentives to staff.

Incentives can be run on a daily, weekly or monthly basis, rewarding staff with a prize once they meet a specified target. The reward could be as simple as a box of chocolates, getting an early finish or having a dress down day, although greater rewards can be given for achieving higher targets.

Incentives are a great way of increasing productivity and meeting targets, whilst rewarding staff for their hard work. Having a fun or competitive target, such as challenging teams to beat others, will spur staff on.

Incentives could also be tailored to specific times of the year, such as a Christmas incentive to win a Christmas hamper or an Easter incentive.

Commission and holiday pay

An employee perk which is commonly applied in sales roles is to provide employees with commission based on their work carried out. This will provide employees with greater pay at times they have achieved higher sales, and lower pay at times they have failed to achieve set targets.

If choosing to run commission schemes as employee perks, employers need to be aware that there is a binding case which says commission should be included in holiday pay calculations for the first four weeks of holiday leave.

This is to ensure employees are receiving their ‘normal’ pay when on holiday, and not missing out. A failure to include commission amounts in holiday pay could lead to a tribunal claim against the business.

The risks of offering employee perks

Although employee perks are seen as a positive matter, they do have the potential to cause conflict or complaints.

Benefit schemes need to be designed to avoid discrimination risks. These are likely to crop up where, for example, flexible working perks or childcare benefits are only offered to women and not men.

To limit these risks, all benefits should be made available to all staff, regardless of their gender, disability, age, etc. As well as preventing discrimination claims, offering benefits to all staff will remove the potential for complaints, or even grievances, about favouritism or bias among staff.

Employee perks should also be provided on a pro-rata basis to part-time workers to ensure there can be no claims of less favourable treatment.

For example, if additional holiday is offered as a perk, part-time workers should receive a proportion of this depending on the proportion of time they spend working in comparison to a full-time worker.

This guide has been written exclusively for ByteStart by Peter Done, Managing Director of Peninsula Business Services – the UK’s leading specialist Employment Law, HR and Health & Safety service.

Last updated: 22nd March, 2022

Tide Business Bank Account - £50 welcome bonus!

Exclusive for Bytestart readers + 12 months' free transfers. Find out more.

Combine all of your old pensions into one simple online plan

Sign up in 5 minutes - over 600,000 users, including the Bytestart team!

Superscript no-ties business insurance - pay monthly

Tailored just for you + pay monthly. You could be covered in just 10 minutes.

FreeAgent Online Accounting - 55% off - ByteStart exclusive!

Brilliant software. Get 55% of your first 6 months, then 10% for life.

Related articles

  • how having empathy helps grow your business

    How improving empathy can help grow your small business

    As business leaders, it’s easy to get consumed in the pressures of running your business. It’s stressful, but there is a consequence to that stress, and it can be damaging for business, as well as…

  • job advert in newspaper

    Guide to writing job adverts – for small business owners

    Advertising for a new member of staff is something many business owners will need to do. Whether it’s because an existing employee is leaving, or a new role is being created, advertising for job vacancies…

  • Making a contractual job offer to a new employee

    Following a successful recruitment and selection process, employers will be able to identify which candidates they wish to employ. Making a job offer to the successful candidate appears to be a straightforward area of law,…