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Salary and benefits – can perks ever replace pay?


Partner Simon Whitehead gives the legal perspective on employers wishing to stand out in a crowded marketplace:

“In summary the perks on offer all relate to engagement – how do employers stand out in a crowded market where we have a skills shortage?  They look at what perks they can offer which make them look different, enticing new employees or making employees want to stay rather than move to a competitor.  They only really work if the basic package, including pay is competitive – the success of offering perks instead of pay is unlikely to achieve better engagement or make an employer more attractive but it could be the glue that makes the employee stick to them, especially if they’re good perks and the pay is competitive.

“There’s nothing they can do if they want a pay rise over perks other than negotiate – legally there’s no pick and choose rights  – the package is just that and there is no legal ability to pick and choose or amend so that it reflects what works for you individually.  That said some employers are flexible but it’s unlikely that this flexibility will be built into a contract or be made legally binding and will just be discretionary.

“Employers need to be careful that the perks on offer don’t discriminate against someone with a protected characteristic but that would be rare.

“Perks play a massive role in the US where a concept called co employment exists – especially around healthcare.  Healthcare in the US is a perk that historically all employees want and will have a significant financial value to them.   The problem was how does an SME IT business compete with IBM – IBM has much greater buying power and is able to buy healthcare a lot cheaper than the SME.  In practice that meant that employees would chose or stick with IBM rather than make a move to an SME if the SME couldn’t afford to offer the benefit or the SME wouldn’t be competitive if it had to buy the healthcare and offer it as a perk because their overheads would be greater.  Co employment is when a group of SMEs get together and employ someone, together with a benefits provider and the collective of SMEs then have the increased buying power to get a better price on the perks and allows them to be competitive.  We’re starting to see some co employers in the UK offering the perks on the same basis – the only problem is that UK legislation is not set up for co employment and provides that there can only be on employer so they don’t really work but they have been introduced to allow employers to buy perks cheaper together so that smaller employers can compete.  Not as big a draw as in the US because we have the NHS so the cost of healthcare plays less of a part to play but a concept of our times to deal with the increase in the importance of benefits packages.”


© The Telegraph 2019

Simon’s comments originally appeared in The Telegraph. Read the full article here.