Why employee benefits matter more than ever in 2025

Many businesses found 2024 a challenge when it came to recruitment and retention. There were widespread talent shortages – particularly in specialist areas such as technology, engineering, healthcare and human resources – and businesses had to grapple with competing for talent in an increasingly global job market, whilst managing employee expectations and demands around working preferences and priorities (such as work/life balance, remote and flexible working). Furthermore, the development of automation and technology was changing the nature of many familiar job roles.

These challenges look set to remain for 2025, with the addition of post-budget affordability concerns and adjusting to new and evolving employment legislation. Employers increasingly need to do more with less and employee benefits provide opportunity for employers in 2025.

The importance of employee benefits

A growing trend over the past decade, which accelerated post-pandemic when so many norms were suddenly changed, is the increased emphasis employees and jobseekers place on the total reward package on offer and how much they consider more holistic factors. Whereas traditionally it has been enough for employers to offer a tempting salary and good professional prospects, employees now want a job that offers a wider range of direct and indirect benefits. These can be valued as much – if not more – than the basic salary.

Studies show that over 80 per cent of employees cite work/life balance as a factor in choosing a new role (and 63 per cent say they don’t currently experience a balance they are happy with). That is slightly above the pay and benefits package as a ‘pull factor’ for choosing and staying in a job. Other highly valued factors include a positive workplace culture, an employer that cares for employee health and wellbeing and a sense of performing meaningful work. An absence of these things can ‘push’ people away, creating retention problems.

While 2025 is not expected to see a return to the ‘great resignation’ seen immediately after the pandemic, where employees reevaluated their priorities and changed jobs (or left employment altogether), evidence is that the willingness to change jobs to seek better working conditions and corporate cultures remains. Employees will always evaluate how their reward package stacks up to their requirements – and this is where the right employee benefit plan becomes a key recruitment and retention asset.

What benefits are employees looking for in 2025?

Benefits encompass far more than just salary and pensions, and challenges around meeting employee expectations look set to remain in 2025. There are some common employee benefit ideas that will still be effective in the year ahead.

Health and wellbeing related benefits continue to be highly valued. As well as healthcare coverage (such as subsidised or contributory membership of a private health insurance plan), things like an effective and meaningful commitment to mental health is also important. This can take the form of access to out-of-work counsellors or therapists. Women’s health issues are also increasingly understood and supported, so benefits such as fertility treatment support or policies covering menopause have become more common. Help with the cost of things like gym membership can also be added as a desirable benefit.

As we have seen, the work/life balance is now a key consideration for employees. Time is one of the major components of this. Hybrid working (combining remote and in-office work) and flexible working hours are now seen as vital and often non-negotiable parts of a benefit package by many employees – especially those who know they have valuable and scarce skills and experience. More and more businesses are experimenting with shorter working weeks (such as late starts on Mondays and/or early finishes on Fridays) or even trying out four-day working weeks. Flexible approaches to holidays, or even unlimited time off systems that allow employees to balance their work commitments and annual leave as they see fit, can help achieve this balance.

The obvious desire among employees is to have work that is fulfilling, well remunerated and supports their core values; the benefits package provides a positive way to supplement and reinforce this. Values can be reflected in an employee benefit plan by including things like time off for volunteering projects, cycle to work schemes or assistance for using public transport (either financially or adapting work schedules to suit timetables) and other benefits with an ethical, values-driven aspect.

Generally low cost, many of these are viable employee benefits for the majority of employers, including smaller companies.

The solution to the challenges of employee benefit

No employee benefit plan exists in isolation – the job market is increasingly competitive and jobseekers (and employees keeping an eye on opportunities) will weigh up their present position against what is on offer elsewhere.

This means that an employee benefit package, whether that’s small business employee benefits or the offering of a large enterprise, has to be attractive when compared to others in the sector, industry or region.

This can be hard for recruiters or HR personnel in any one business to gauge, but it’s where Paydata’s pay and benefits benchmarking service comes in. We can compare what you are offering to the national, regional, industry and sector averages to see how it compares, which in turn can be used to help inform your reward approach and support finding and keeping the right people.