Salary Increase or Employee Benefits?

A survey conducted by Glassdoor in late 2015 showed that 79% of employees would prefer new or additional benefits rather than a pay rise. 37% would prefer more holiday/leave and 32% wanted paid sick days. Interestingly the most in demand benefit was healthcare insurance (40%). The Investors in People’s Job Exodus Trends poll in 2016 showed that more than a third of employees favoured a flexible approach to working hours rather than a 3% pay rise. And of course this is very fundamental to the argument, which is that economic pressures have had a downward impact on pay rises that organisations are willing and able to offer.

There are some very clear benefits for organisations of providing employee benefits instead of pay rises which will be detailed in just a moment. However perhaps more interesting is what motivates employees to opt for benefits over hard cash. 

Popular employee benefits

There are a number of employee benefits that can be offered and might be of interest to employees. Examples are private medical insurance, private dental insurance, access to onsite medical facilities, onsite gym or offsite membership, health assessments, occupational health assessments, and much more. 

 What motivates employees? 

  • The way in which benefits packages are offered is often flexible, which means that employees can alter what they need to an extent every year.
  • Some of the benefits such as additional holiday is not available to procure separately. If an employee values time off over and above monetary return, this benefit gives them the ability to achieve their goals. Whereas for a benefit such as medical care, this can be procured outside of employment, and a pay rise could theoretically be used to fund that. 
  • Employees can buy a level of work flexibility that is valued in today’s workplace – such as buying more holiday, or selling some. Some plans even let employees procure duvet days, for when you wake up and just can’t face work. 
  • This brings us onto the next point quite neatly which is that organisations have greater buying power than an individual employee meaning that they can typically purchase benefits at a lower cost and pass that saving onto the employee. 

What motivates organisations?

  • Organisations want to retain good employees and in difficult economic times offering large pay rises will be commercially infeasible. Offering non pay related benefit is a cheaper way to offer something of value to employees.
  • When employees have health and dental care, they are less likely to require extensive periods of time off of work. Those with cover have been shown to more readily seek preventative care which stops issues before they result in poor health that causes time off work. 
  • Having a good employee benefits package will make it easier to attract the best individuals into the organisation. 
  • There may also be some tax benefits.

In Summary

The good news for organisations is that there are businesses such as ours that can help to design and deliver employee benefits within the organisation. This includes working with you to understand the total cost of ownership of the scheme and how that would compare to the cost of offering pay rises. Done well, an employee benefits package will be more cost effective than pay rises, and should result in employees that are more content and more productive.

If you would like to discuss how we can help, please contact us at Business Insurance Service by telephone on 01273 789 979 or by email.


HR Magazine


A fully accredited service delivered by professional brokers

Get in touch

    This web from is protected by Google reCAPTCHA and the Google Privacy Policy and Terms of Service apply.