Mid-market businesses are increasing their investment in employee reward and benefits following the introduction of the Employment Rights Bill to parliament last week (10 October).
The shift in investment intentions was revealed in the October Business Outlook Tracker from Grant Thornton UK. Experts at the firm said that reforms in the bill might make certain reward and benefits policies “feel out of date”, encouraging employers to revisit and ramp up their offering.
Another factor driving investment plans is the rise in employee demand for flexible benefits that support balance and promote wellbeing. Such demand has grown rapidly in recent years and aligns with the aims of the government’s new bill.
Significant increase
The bill, as it stands, supports greater access to flexible working and help for working families. It also outlines new standards and protections for workers, such as changes to statutory sick pay (SSP), greater protection from sexual harassment and the removal of the two year qualifying period before employees can bring an unfair dismissal claim.
The survey of 603 decision makers from UK mid-market businesses, which are defined as firms with a turnover of between £50 million and £500m, revealed that 46 percent of respondents expect to increase their investment in employee reward and benefits. This is a rise of 7 percentage points from the last tracker survey and is 10 percentage points above the tracker’s rolling average since 2021.
Wellbeing is also expected to receive an investment bump as findings showed that more than two-fifths (42 percent) expect to increase investment in employee wellbeing. This is the highest level since August 2022 and is 6 percentage points above the tracker’s rolling average.
Prompt to review benefits
Laurie Eggleston, associate director in Grant Thornton’s Employee Benefits practice, said: “The Employment Rights Bill reforms are focussed on strengthening employee rights from day one, so for business leaders it represents a clear opportunity to review existing benefit schemes to ensure they remain relevant. For instance, the changes to SSP should prompt employers to review existing group income protection arrangements, while the zero hours reforms could also have an impact on their pension scheme membership and associated costs for the employer.
“Many employers currently operate benefit schemes with probation periods (where employees only become eligible for things like healthcare after 12 months). The reforms make these policies feel out of date and arguably against the spirit of what the bill is trying to achieve.
Smart employers
“Collectively though, the package represents a shift in employee expectations and rights. Smart employers will embrace this and demonstrate how they go beyond simply what’s necessary, to stand out as an employer of choice. Having a package of benefits that supports employee wellbeing is increasingly seen as ‘must have’, and doing so rewards employers with a healthier, engaged workforce.
“This bill brings greater job security to complement the financial, physical and mental wellbeing strategies employers should already have in place for their people. It’s great our research shows that a significant proportion of employers plan to go further, with many expecting to increase their investment in this area over the coming months.”
