What US firms should know about UK employee benefits

UK and US Flags Stuck in Dart Board

For American SMEs looking to cross the pond, the world of UK employee benefits can seem confusing. But understanding the state of play is vital.

Startups and other SMEs from the USA are right to see the UK as a natural site for expansion. A shared cultural understanding and language makes the two an obvious fit.

But expansion also means getting to grips with an entirely new set of employment laws, regulations – and expectations. For example, employee benefits and what support UK workers want from their employers.

To American eyes, the UK’s state benefits system can seem comprehensive and far-reaching. But while it’s true the benefits offered tend to be greater than in the US, UK state benefits couldn’t perhaps accurately be described as generous.

The simple truth is that an employer looking to support and motivate its workforce might need to go further than the bare minimum.

Let’s look at a few examples.

 

Sick Pay

In the UK, Statutory Sick Pay is £89.35 a week, paid by the employer for up to 28 weeks.

Beyond that time, those too ill to work can apply for Employment and Support Allowance (ESA). There’s more information on ESA and how to apply here.

It’s worth mentioning a potential area of confusion for US businesses considering the UK.

Whereas in US benefits, the term ‘disability’ means quite literally the inability to work (for example through pregnancy, injury or cancer), in the UK, disability refers to a more permanent state of incapacity.

So Short-term Disability Insurance (STD) in the US is comparable to Sick Pay Insurance in the UK, while Long-term Disability Insurance (LTD) in the US is closer to the UK’s Income Protection. You can find out more about protection planning here.

 

Parental Leave

New mothers in the UK are entitled to up to 52 weeks of maternity leave.

Statutory Maternity Pay (SMP) can be paid for up to 39 weeks, the remaining weeks are unpaid. For the first six weeks, employers must pay 90% of average weekly earnings. The remaining 33 weeks are at £140.98 a week or 90% of average weekly earnings (whichever is less).

Paternity leave is one or two weeks with Statutory Paternity Pay of £140.98 a week or 90% of earnings (whichever is lower).

There is also an option of Shared Parental Leave, where the 52 weeks of leave is split between the two parents.

See MRA’s article on parental leave FAQs for more information.

 

Dental

For dental treatment in the UK, it’s a simple choice – go private or go NHS.

NHS dental treatment is split into three bands. Band 1 (costing £20.60) covers the basic check-up measures, Band 2 (£56.30) includes treatments such as fillings and root canals, and Band 3 includes crowns and dentures (£244.30).

The challenge, however, can be finding an available NHS dentist. It’s not easy – one report suggests that 48% of NHS dentists say they’re not accepting new adult patients1.

Going private can mean increased prices for employees. It’s unregulated, so prices can vary massively. Which? research compared prices from a variety of private dental chains, finding Band 3 can range from £220 to £1,3002.

Such prices, and the relative difficulty of getting NHS treatment, can make corporate dental coverage an attractive proposition for employees. A recent survey saw dental insurance placed in the top five health and wellbeing benefits offered by respondents’ organisations3.

 

Benefits and salary

A responsible employer might wish to see state benefits as a starting point – not a solution. This is put into stark perspective when you consider a full-time UK employee earns an average £510 a week4. SSP at £89.35 leaves sick employees struggling to get by on less of a fifth of this figure.

Today’s employees understandably demand far more than the minimum. And a targeted employee benefits package can be the boost workers want.

A recent survey of 13,650 employees showed that when it comes to deciding whether to accept a job or stay in their current role, 55% based the decision on factors other than pay – such as culture, career progression and employee benefits. Of that, 61% said they would even consider a pay cut if it meant these elements were improved5.

 

Benefits package

Building a successful benefits package relies on understanding the needs of the workforce and tailoring the benefits accordingly. So the first step could be to speak to the people within the business to uncover what they value most.

Typically, any employee benefits package will offer a choice of complementary protection and softer benefits aiding well-being.

For example, Group Income Protection can pay a percentage of an employee’s income when they’re off work through illness or injury, while also providing rehabilitation support to help them return.

Group Life Insurance is another option – offering peace of mind and a tax-free lump sum for an employee’s loved ones in the event of an untimely death.

And with NHS dental costs spiralling, corporate dental cover can help towards the cost of regular check-ups and essential treatment.

 

Conclusion

Most likely, any business stepping across the Atlantic is showing signs of growth – something that necessitates a change in approach to looking after employees.

Employee benefits are a welcome, valued and necessary proposition for all employees – and can help any US company to hit the UK ground running.

 

Business Consultants based in East Sussex we service clients across the South East, Sussex and Kent, including smaller towns such as Ashford, Battle, Bexhill, Bodiam, Brighton & Hove, Cranbrook, Crowborough, Eastbourne, Hailsham, Hastings, Heathfield, Herstmonceux, Lewes, Mayfield, Newhaven, Rye, Seaford, Sevenoaks, Tenterden, Tonbridge and Tunbridge Wells.

 

Sources:

1 BBC. (2017). ‘We couldn’t see an NHS dentist so we pulled out our own teeth’

2 Which?. (2017). Private and NHS dental charges

3 Employee Benefits. (2017). Employee Benefits research May 2017, p7

4 ONS. (2017). Earnings and working hours

5 Hays. (2017). What Workers Want Report 2017, p4