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Firms prefer more benefits than small pay rises

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09/11/2012
Three quarters of employers would consider adding benefits instead of a negligible pay-rise for employees, a survey by Jelf finds.

The survey, which was conducted at the firm’s annual Health and Wellbeing Forum, found 74% of delegates said they would consider this as an option at least in some circumstances.

Jelf suggested that a small pay rise could potentially be worse for employee engagement than no pay rise at all.

Employers would see greater increases in the wage bill than just the pay rise due to national insurance contributions, while the employee would see deductions from the small rise following NI and income tax deductions.

Instead, Jelf Employee Benefits head of benefits strategy Steve Herbert said: “When that pay rise is distilled down into an employee’s actual take-home pay per month, the figures can start to look fairly meaningless, and perhaps even slightly insulting as a reward for their hard work.

“Alternatively, a transparent approach – where the employer comes clean and admits to insufficient budget for a meaningful pay rise and instead channels the funds towards a low-cost benefits may be better value for both the employee and employer, and when communicated well could be better for employee engagement.

“Employers who use their somewhat limited budgets to benefit their staff in more creative ways, may find that employees respond much more positively than when a measly pay rise is offered which almost disappears before it hits their bank account,” he added.

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