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What Is An Employee Benefits Scheme?

An Employee Benefits Scheme is any benefits you provide to employees over the course of their employment, that are given to either a department or the whole business. But we can explain better than that...


Everyone loves employee benefits. After working hard 5 days a week for an average of 48 weeks of the year for between one and 40 years, it feels good to get 10% off at Topshop at the weekend. But that 10% itself isn't a benefit scheme - though it is a benefit - so let's delve into what separates a benefits scheme from the benefits themselves.

Biscuits, both ordered and disordered

Benefits on the left, Benefits Schemes on the right. A mild distinction, but important.

An Employee Benefits Scheme Definition

An employee benefits scheme is a scheduled benefit or benefits given to employees, outside of their salary, that is applied to all of - or a defined part of - a business's workforce

If you give your employees £50 every Christmas to buy themselves some presents and leave out mince pies in the break room in December, boom - you've got yourself an employee benefits scheme. They don't need to be complicated to qualify as a scheme, and they don't need to be expensive either - all you need to do is make sure it applies to a group of your employees, and is applied on a regular basis.

This can be yearly, weekly, monthly: whatever works for your business and budget, but it has to be something consistent. And extra to salary. Just paying everyone on time isn't a benefits scheme!

Calendar with 'Benefit Time!' written on it

This calendar looks awfully familiar...

What isn't an Employee Benefits Scheme?

Benefits that are applied inconsistently, unequally or singularly

Let's say you've got an excellent employee called Jim. Jim does some good work, and you reward his efforts by buying him a pack of biscuits. Then your other employee Gemma does some good work, and you say 'good job Gemma'. This isn't a benefits scheme, as it isn't applied equally, and would be likely to get you in trouble due to accusations of favouritism. To make it a scheme, you'd need to buy every employee who does a good job biscuits, for a month, and tell them beforehand biscuits are on the agenda. You'd probably do well to have a quota/limit too, otherwise your biscuit-based benefits budget could rapidly get out of hand!

Similarly, if one year you give everyone £50 at Christmas and next year you don't give them anything, this wouldn't be a scheme as it has no set frequency or schedule. The £50 in year one could be said to be part of employees' benefits package (salary+), but as it's applied singularly and inconsistently it couldn't be said to be part of a scheme.

Two women, one with a biscuit one without

Uneven benefits = bad and not a scheme*

Benefits Schemes vs Benefits Packages

Benefits given in a Benefits Scheme form part of an overall Benefits Package

To make an awkward analogy: if the Benefits Package is a house, then Benefits Schemes are the rooms within it. And Benefits are the bricks, and fixture and fittings and things. The details. You could make a house just with bricks and fittings, but it needs rooms to make it interesting. We'll ignore that open plan houses are a thing.

For example:

  • 10% off at Topshop for all employees is a Benefit
  • Giving £10 to employees every time they do a good job is a Benefits Scheme
  • The two together make a Benefits Package

If you swapped the middle one to just £10 for customer service employees, it's still a Benefits Scheme, but it would then mean customer services have a different Benefits Package than the rest of the company, and you'd have to bear this in mind when communicating benefits to employees.

A white house

A classic benefits package house

If you were unsure about some benefits scheme-related things before now, hopefully this post has helped you along the way to becoming a benefits pro! If you're after more benefits knowledge, why not take a look at our other posts How to Run a Simple Benefits Scheme and When's The Best Time to Roll Out a New Rewards Scheme?

Beyond that, if you'd like to know more about what benefits, rewards and more we can offer your company and employees, get in touch at at contact@virginincentives.co.uk or call us on 0330 111 3030 and we can talk about everything you need to get benefits, a scheme or package for your business. Or you can let us know if you take issue with the contents of this post, as we're always after feedback!

Header photo by unsplash-logoEunice Lituañas

Other images by:

unsplash-logoGreg Jeanneau

unsplash-logoAlex Loup

unsplash-logoBanter Snaps

*P.S If you'd asked us before writing this blog post if we could find an image of someone who has a biscuit and someone who doesn't, we'd have said it couldn't be done

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