Zoe Woolacott | 24 Jun 2021

Employers hesitate to change staff benefits in uncertain climate

The uncertainty caused by the pandemic and its effects on the economy and labour market is leading employers to be cautious about changing benefits, according to a poll of employers by IDR. Our research on the effects of the pandemic on pay and reward in March 2021 attracted responses from 82 mostly large, private-sector companies, together employing over 620,000 workers. The results found that over two-thirds of employers will not be changing their reward and benefits this year. Only a minority (15%) are altering elements of their reward packages this year, with the majority of these intending to improve what is available to staff, rather than to remove or reduce benefits. But some (17% of respondents) were considering changes in the wake of the pandemic and its effects on business and work.

Around 5% of the sample intend to improve their maternity and sick pay provisions this year, while the most common reduction in benefits relates to car allowances, as the rise in home working makes for less travel. Some employers expressed their hesitancy to make permanent changes to existing reward packages and schemes until the business outlook is clearer. A couple of organisations, who are making no changes to existing benefits, are nevertheless looking at adding new areas such as health and wellbeing initiatives. The blurring of work-life boundaries for many over the past year has prompted renewed concerns around these issues for employers and employees alike. For example, a recent employee survey by Aviva provides an insight into the work-life satisfaction of their employees.

Travel and homeworking

These findings echo results from an earlier IDR poll, conducted in January 2021, that focused on what happens to travel benefits and location allowances in a pandemic. This poll received responses from 102 mostly large organisations employing a combined workforce of 786,759. Of the 30 respondents that have staff in different locations and have some form of location payments, none had made any permanent changes to location allowances in light of the pandemic and just three had implemented a temporary change. However, a further six respondents told us they were considering removing or suspending location payments. Four were contemplating reducing such payments, but the same number were considering increasing them. This earlier poll also found that most changes to travel benefits were focussed on company cars/allowances.

The earlier poll also found that most employers were revising existing expenses policies to cope with the spread of home-working rather than introducing new homeworking allowances, though some organisations have brought these in, mostly on a temporary basis. Overall, 10% have implemented a temporary homeworking allowance and just 1% made the change permanent. However, the findings suggested that homeworking allowances may become more prevalent, since 22% of respondents were considering introducing such a payment or allowance.

Looking ahead

All those making decisions on reward for the coming year will have to consider the changes that the pandemic has wrought. The lockdown and restrictions on trading in some parts of the economy have led employers to take stock and begin to look at how they might shape their benefits to suit the new, more flexible working styles that have emerged. Some organisations, such as BP and HSBC, have already announced permanent flexible working and it is possible that many others will do the same.

Our annual pay planning survey for 2022, about to be in the field, contains a number of new questions that are designed to gather data on how organisations have been reshaping, or may be considering reshaping, their pay and benefits packages in relation to the most significant health crisis the world has ever seen.

The survey will open on Wednesday 30 June, closing on Friday 6 August 2021, and all participants will receive a free summary of the findings, providing a timely insight into how other leading organisations in the UK are reacting to these different challenges, as well as gaining insights into how the picture on pay awards and pay pressures is shaping up for 2022. 

For more information, and to take part in the research, please click below: