The top 6 employee benefits for 2021
Updated: Oct 27, 2020
We know 2020 has been a tough year, we don’t need anyone to tell us that. Whilst never having to hear the phrase ‘the new normal’ would cause many of us to do a mini fist bump, possibly even a dance around the kitchen. We can’t ignore that there have been many changes, some of which, will hopefully be with us long after the social distancing stickers have been ripped from the coffee shop floor of our consciousness.
Whether it’s flexible working or genuinely wanting to know how someone is, some of our interactions and expectations have been changed for the better. Now is the perfect time to adjust employee benefit strategies to support employees as we recover form the effects of the pandemic, and start to hope that the light at the end of the tunnel is more than just an on-coming train.
In this article we look at what we expect is going to happen in the coming 12 - 24 months and provide our top six benefits to help support employees to come out of it stronger and happier.
We’ve looked at research from PwC and Gallagher, read reports from SAGE, tried to filter out the politics from Government briefings and gathered feedback from our own customers.
To start, it’s worth taking a quick look at the progress that’s being made in producing a Vaccine;
With hopes rising that there will be a Vaccine in early 2021 for the Coronavirus, we wanted to provide a constructive look ahead to summer 2021.
Let’s look at the current progress of any Vaccine, and what the proposed role out might look like.
There are approximately 240 vaccine studies being conducted worldwide, with 40 currently in clinical trials, and 11 are already in the final stages of testing.
Scientists are optimistic that a small number of people such as healthcare workers may even be vaccinated before the end of the year. Followed by widespread availability by the middle of 2021 with multiple vaccines on offer.
However, the UK Government has recently issued a clarification, that they do not intend to vaccinate everyone. For example, there is no plan to vaccinate people under 18, it is an adult only vaccine. They are intending to focus on the most vulnerable, there is no set plan yet, however, there are likely to be specific groups such as healthcare workers, people who are more susceptible and the older members of society who will receive the vaccine first. Meaning that the majority of the workforce will have to wait for vaccinations, if they get them at all.
We’re told that 60%-70% of the population need to be immune to a virus to slow the spread, therefore when you add the group of people who have already had the virus with those who will be vaccinated, it is believed this 'herd immunity' model is the one the Government is most likely to use, rather than trying to vaccinate everyone.
Meaning that there is a strong probability that we will be able to manage Covid-19 far more effectively in the very near future.
What can we expect the economy to do?
Bill Gates is a man who knows a thing or two about a thing or two. Not only did he predict the outbreak of a new virus years ago, but his Foundation has been leading the efforts to finance research into finding a vaccine. In an interview with the Economist in August he forecast that wealthier countries would be back to normal by the end of 2021 and the Pandemic would be under control globally on a similar time frame.
In September 2020 PwC produced an Economic Update for the UK. Their forecasts were based on two scenarios, the more optimistic was contingent on a ‘contained spread’ scenario, in which the R rate remained slightly above 1.
At the time of writing we are seeing a significant spike in new cases in the UK, however, even now the R rate is believed to between 1.3 and 1.5, far lower than the rate of 3 we saw in the Spring.
If we remain optimistic and believe that the UK can manage to keep the R rate just above 1, then we will see even the hardest hit industries return to growth by mid 2021, albeit some sectors will be starting from a low base. In this scenario we would even see the economy returning to pre-lockdown levels by the end of 2021.
How will changes in workplace and benefits trends play out?
There are of course the obvious ones, we know that the lockdown has rapidly accelerated the adoption of flexible working, and it is likely that this will continue to some degree post Covid-19. With 50% of companies saying they intend to improve internal digital channels, to increase flexibility.
The increase in flexibility has had many positive impacts, however, many miss the social interactions of the office. Meaning that instead of a wholesale shift from office work to home working, we are more likely to see an increase in choice for both employees and employers.
Therefore we are likely see successful companies adopting a hybrid approach, allowing employees to choose more flexible options but provide regular opportunities for team interactions.
According to Gallagher’s Benefit Strategy and Benchmarking Survey Report 2020. Whilst many companies increased their provision of health benefits, it is less likely this will continue post-Covid, with some providers indicating they will need to increase rates, and benefits managers struggling to balance the financial burden. Therefore as household budgets are also tightened it is likely that these will fall back closer to pre-Covid levels.
The Pandemic also saw the delay of proposed changes to IR35 legislation relating to ‘off-payroll’ workers. It is unlikely that there will be further delays, meaning that employers who put off payrolling these workers will need to make decisions about them in the early part of 2021.
Another positive trend that has surfaced in 2020 is unrelated to the pandemic, we have seen spotlight on Diversity and Inclusion, spearheaded in part by the Black Lives Matter campaign, that has highlighted to many the need for real change. Anyone looking at a job advert will see that companies are taking note, and are promoting diversity and inclusion in their selection process, and hopefully this will continue to spread and filter into all aspects of work.
The fall in commuting, industrial output and travel have also highlighted the need for action on climate change, with many organisations reducing company car schemes in favour of season ticket loans. Anyone trying to buy a bike this summer will have been all too aware of the spike in popularity of Cycle to Work schemes. However, as the nation asks itself how many bikes they really need clogging up their garden sheds, employees will look for new benefits to help them reduce their carbon footprint.
What have we had taken away that we have missed?
2020 has been the year when we have had many of the freedoms we take for granted restricted or taken away from us all together.
We have had to lock ourselves indoors and we've not been able to enjoy leisure activities, whether that’s meeting up with friends and family, in our homes or in public, playing sport, going to the gym, visiting the cinema or going on holiday.
Although some have thrived, many have lost loved ones, felt isolated and alone, meaning 2020 is likely to be remembered for all the wrong reasons.
Whatever our experience of 2020, almost all of us are going to be desperate to get back to doing the things we love. It is naïve to think that everything will return to the way it was before the outbreak of the pandemic, sadly some of the businesses that we loved will no longer exist, some jobs will have been lost and will never return. Whether it’s retailers, cinemas, pubs, restaurants, gyms or travel providers, all of them face a challenging time and will need customers back as soon as possible.
We have already seen this trend starting to play out, for example TUI saw an increase in year on year booking s of 145% in August as people are desperate to have something to look forward to.
Initially there are likely to be some good deals available, as businesses try to attract as many customers as possible, however, as VAT is returned to normal levels for the hospitality sector and businesses try to recoup some of their losses, whilst also saddled with additional debt repayments, prices will inevitably rise, which, is likely to be a symptom of the ‘new normal’ especially as taxes are raised to help rebuild public finances.
Let’s look at holidays;
According to Gallagher’s report;
"Annual Leave is growing in importance. Physical health is only one part of the puzzle. Employees’ emotional and mental wellbeing are also crucial to their ability to thrive professionally—‘the whole person comes to work’ every day. Taking time off to reset and recompose has a huge impact on employees’ stress management and feelings of inspiration—and the extent to which employers support employees in disconnecting from their day job also has an influence on how much employees feel they are valued as people."
The travel and hospitality sectors have been hardest hit during the pandemic, and holidays have become a huge source of stress for people in 2020. By the time summer 2021 comes around people many people will have not had a holiday for over two years, during which time they will have endured some of the most stressful experiences of their lives. Meaning they will be long overdue two or three weeks to rest and recompose themselves.
However, with reduced competition and huge losses to try and recoup, the cost of holidays is likely to increase significantly. In recent times when the travel industry has faced difficult trading conditions, such as 2017 following the Brexit referendum in 2016, the travel industry waited until the end of the January sales to put prices up, meaning that holidays in February were often over £1000 more expensive than in January.
Helping employees to make holidays more affordable will help them to make the most of their time off, making them happier, healthier and more productive. We know that employees who use their full holiday allowance are 37% more likely to earn their annual bonus, and after a two week holiday performance reviews improve by 60% and absenteeism falls by a third.
In 2021 it is going to be vital for employers to encourage their employees not only to take their holiday, but also to make the most of it. Employees desperately need to be able to switch off from their normal stresses and recharge if employers hope to regain the productivity losses that go hand in hand with recession.
With 61% of households experiencing a reduction in income in 2020, and with prices set to increase significantly in 2021, what can Employee Benefit Teams do to support their colleagues?
With a recent freedom of information act request reporting that there are in excess of 500,000 redundancies expected in the next 12 months, it is going to be extremely hard for businesses to show they care about their employees.
You only need to spend a couple of minutes on Linkedin to see how many profile pictures have a green circle around them to understand how competitive the labour market is.
During the last recession we saw productivity fall, with fewer jobs available and higher prices, stress and anxiety rise, leading to a fall in wellbeing and increased instances of burn out. When employees start to see colleagues being made redundant and inevitably read negative stories in the press it is not surprising that they will feel reduced job security and increased anxiety.
Employee Benefit Teams are, as usual, in a great place to help.
If cycle to work and technology purchase schemes have been heavily utilised in 2020, where are employees going to look in 2021? What are they going to need vs what are they going to want?
Here are our top 6 benefits picks for 2021;
Gym Discounts; People have been booted out of the gym, at a time when we’re being told that being fit and healthy is our best defence against getting ill. Whilst gyms have re-opened attendance is down on pre-Covid levels, people will be eager to get back into the gym as soon as they feel safe to do so.
Travel Accounts; One of the big focal points of the summer of 2020 was the restriction on travel, the ever-changing travel corridors and whether or not people should risk quarantine to get some much needed respite from the stresses of 2020.
Many employees will have carried over some of their holiday allowance from 2020, meaning that they will have more time to take holidays. However, as stated above there is a very strong likelihood that holidays will increase in cost and they will have suffered a decrease in income.
To avoid people resorting to credit cards and loans, employers can offer Travel Accounts, which enable employees to spread the cost of their holiday interest free, taking advantage of early booking discounts, season sales and other exclusive discounts.
Travel Accounts are zero cost, and provide a positive story at renewal.
EAP; a much overlooked benefit, however, if implemented correctly, EAP programmes can provide much needed support to employees from an independent provider.
You may already have access to an EAP as part of you Group Risk benefits, however, enhanced offers are available for relatively low cost, and there have been a number of introductory offers as a result of Covid-19.
POWR provides fantastic wellbeing assessments, support and improvement programmes, that support total wellbeing, including emotional physical, financial and social.
This is something that employees can use to assess their own wellbeing, and will provide ideas, and programmes to help them improve their score. Thee are blogs and articles even social competitions to help provide a complete wellbeing solution.
As well as supporting employees’ wellbeing, it also provides anonymised data to employers, to help you to understand wellbeing at an organisational level and give you the data you need to implement schemes and initiatives to try and increase overall wellbeing.
Financial education and Workplace Savings from companies such as Cushon. Covid-19 has seen the biggest switch of habits for employees from debtors to savers, however, with inflation likely to rise over the next few years, employees are likely to slip into bad habits, and rely on debt. There has never been a better time to implement enhanced savings products and education to help them through the tough times ahead.
Pawprint is an excellent new tool to help employees measure, understand and reduce their carbon footprint from the palm of their hand. It's about making small incremental steps to help reduce an individuals carbon footprint.
It can also be implemented at an organisational level, companies such as Brewdog are already using it as pioneers to help them make a positive difference to fight climate change
Although not a specific benefit, an honourable mention has to go to Reward and Recognition; with Christmas parties being unlikely this year, and teams having few opportunities to get together to celebrate, small tokens can go a long way.
How about a Deliveroo or Just Eat voucher, that employees can have delivered at the same time combined with a group video call, with a playlist and party games, in place of the traditional holiday party? It won’t require as much effort and will cost a lot less, but will be appreciated, and will cause a talking point amongst social groups.
Providing employees with the tools, support and education to help them reduce the cost of debt, increase savings and support their wellbeing will enable employers to show just how much they care about their employees, even if they are having to make some of them redundant.
Employers who manage to successfully show their employees that they care will be best placed to thrive over the next two years as we recover from the impacts of the Pandemic.
These initiatives don’t have to be costly, and shouldn’t be put off because of potential redundancies, or other tough decisions. In fact they should be accelerated to support your business’s and your colleagues’ bounce back.
To find out more about Travel Accounts, and why they are so valuable to employees get in touch.