As a team at HRTorQue, we were discussing fringe benefits and both employees’ and employers’ perspectives on whether to introduce them into their organisations.
After some back and forth, a couple of related themes emerged:
- Fringe benefits and insurance are grossly misunderstood. Explanations of how these products work are mystified further with jargon, and there is considerable mistrust around something that is reducing the employees’ take home pay each month.
- Employees tend to be far more focused on the present and, given the choice, the majority of employees, prefer to receive money in the bank rather than some future, uncertain outcome.
- Fringe benefits are most beneficial for employees when they are no longer the direct responsibility of the employer or perhaps differently put, when employees are not on site and front of mind e.g. when they are retired or impacted by a life or disability event.
So, what do these insights mean for employers?
Whether the employer likes it or not, this places a burden on employers to try and make wise decisions on behalf of employees. In our experience, while better education is always important, it doesn’t bridge the trust gap and even with more sophisticated work forces, lack of knowledge remains.
Consider the following common scenarios:
- In South Africa, Black Tax is widespread with considerable pressure placed on an employee earning an income to contribute financially to a wider family group. There is considerable personal pressure on the employee to take home as much as possible each month with little thought to future plans. Should something happen to the employee and they are unable to earn an income, then this broader group is directly impacted.
- When offered the choice of an employer group life policy or opting out in favour of a personal life policy, employees will often select a cheaper personal policy because this increases their take home pay without considering that the group policy (because it is done as a group with spread risk) gives them far more bang for their buck.
Next steps for employers
Please give us a call to discuss the benefits you offer employees. We work with employers to implement fringe benefits that add real value to both the employer and employee without increasing the employer’s overall payroll cost. Contact us on [email protected].
HRTorQue Financial Services is a registered financial service provider – FSP number 52068