There’s more to retaining good employees than paying a competitive salary. Providing a few fringe benefits can go a long way towards attracting and retaining high calibre people.
Here are some of the employee benefits – both monetary and non-monetary, that you may choose to offer as part of performance management.
Why offer fringe benefits?
“Fringe benefits” typically refer to non-salary perks available to your employees. These sorts of employee benefits can help to make your staff feel valued, which can boost productivity and employee engagement, and make your company more attractive to jobseekers.
However, from a tax perspective, the provision of fringe benefits is one area where care is required. Non-salary benefits can come under the Tax Office’s description of “fringe benefits”, and these can be subject to fringe benefits tax (FBT).
Some employee benefits fall outside the scope of taxable fringe benefits. Yet they can still have immense value for your staff, and so are worth considering as a means of attracting and rewarding employees.
Taxable fringe benefits
Common types of fringe benefits that can attract fringe benefits tax (FBT) include:
- Private use of a company car
- Paying an employee’s private expenses, such as health insurance, gym memberships or school fees
- Some types of entertainment such as reimbursing a staff member for theatre tickets
- Low interest loans used by the employee for private purposes
Providing these types of fringe benefits can leave your company liable to paying fringe benefits tax. Unlike the financial tax year, which runs from 1 July to 30 June, the FBT year runs from 1 April to 31 March. While it is the employer who is responsible for remitting FBT, the cost is often passed on to employees as part of their salary package.
FBT can be a complex area, and it is worth seeking professional accounting advice to understand whether providing non-monetary benefits could impact your company’s tax obligations.
Using employee benefits to increase tenure
Attracting and retaining quality employees doesn’t have to involve paying fringe benefits that are taxable. Sometimes it helps to think outside the box, and understand what each staff member really wants – what they value, what makes them feel valued, and what can set you apart from other employers.
Many of today’s professionals have a strong desire to achieve work-life balance coupled with a preference for career growth and professional development. This being the case, it can be worth focusing your employee benefits in these areas.
Providing opportunities to work remotely or other flexible work arrangements can help your team regain a balance between work and personal time. Allowing employees to work from home one or two days a week can also demonstrate a sense of trust in your staff. Other non-cash benefits that can support work-life balance include birthday leave or generous parental or study leave provisions.
Demonstrate support for career progression
Beyond this, high quality job candidates are often looking for ways in which your company can support their career. This makes it important to provide career development plans for each employee including a clear program of training and development that allow staff members to reach their full potential.
Investing time towards speaking with your team about what they really want in the way of employee benefits can help you fine-tune the non-monetary benefits that appeal to your employees while fitting within the company’s budget. A little creative thinking can go a long way to making your organisation stand out from others in your industry.