Six in ten (61 percent) small to medium-sized employers (SMEs) plan to change their approach to benefits as a result of rises in employer national insurance on 6 April, 2025.
This was the key finding of research from Canada Life, which showed that more than three-fifths of SMEs may cut back insurance-based employee benefits or reduce which workers can access them.
Almost a quarter (23 percent) intend to make employee benefits work harder as they plan to boost employee awareness of what’s already available, according to the research with 550 HR decision-makers at UK micro (1-9 employees), small (10-49 employees) and medium-sized (50-249 employees) private sector employers.
More than a fifth (22 percent) of SMEs plan to cut the employee benefits available, 18 percent will change what’s offered to reduce costs, and 15 percent will encourage employees to pay for insurance health-related support services themselves through salary sacrifice. But 5 percent of SMEs will stop providing any employee benefits.
The changes are related to rises in employer NI, which increase from 13.8 percent to 15 percent from 6 April 2025. The level at which employers start paying NI (the secondary threshold) has also been reduced from £9,100 to £5,000 per year.
Further results showed that that medium-sized companies are more likely to reduce or change benefits.
Among micro employers, only 27 percent reported that they offer insurance-based employee benefits.
Across all respondent groups, the most popular employee benefits employers offered are group life insurance (29 percent), private medical insurance (27 percent) and annual health checks (26 percent).
A fifth of employers (20 percent) provide employees with group critical illness, 16 percent offer access to an occupational health service that supports people back to work following sickness absence, and 14 percent cover employees in the event of ill-health for group income protection.
Canada Life said the findings that SMEs plan to change their approach to employee benefits come as the government is already concerned about employee health and employers’ roles in relation to it.
In a document published on 20 March, 2025, the independent Keeping Britain Working Review set out the government’s interest in employee health, the factors behind the UK’s high economic inactivity, and how government and employers can work together.
Chris Morgan, head of product and proposition strategy, protection at Canada Life, said: “Our findings show that under increasing cost pressures, many SMEs are reviewing the employee benefits they provide to find savings. Given their knowledge of the positive impact these benefits have on employee health and business productivity, workplace protection advisers are well-placed to support firms and ensure any changes are carefully considered.
“We know as an industry what a positive impact employee benefits can have on financial, physical and emotional wellbeing. It’s important that insurers and advisers work together to demonstrate this value and bring it to life for SMEs, so they can see why continuing to invest in employee wellbeing should remain a business priority.
“It is encouraging that some employers already recognise the importance of employee benefits in business success, as 39 percent are not planning to make any changes. Of the six in 10 who are planning changes, more than a third plan to boost awareness and engagement in the benefits provided, rather than reduce provision.
“With the Mayfield Review underway, the need for government, insurers, experts and businesses to work together to solve health challenges in the workforce has never been greater.”
