Employee benefits: Making sure your employment deal lands

Where the real risk sits 

A pension scheme can be well-priced and still poorly governed. A private medical policy can renew on time and still leave employees unaware of what it covers. A salary sacrifice arrangement can save money on paper while quietly falling out of step with payroll and HMRC practice. Staff entertainment can end up bundled into a PAYE Settlement Agreement because it's simpler for payroll to administer, without anyone checking whether that's still the most tax-efficient way to provide it. None of these show up as a problem within the function that owns them. HR sees a renewal go through smoothly. Payroll processes what it's told to process. Finance sees a stable premium. The risk isn't inside any one of those views, it's in the gaps between them, and nobody's job is to look at the gaps. 

That's not a criticism of any team. It's a structural feature of how most organisations are set up. Benefits, tax treatment, payroll administration and internal communication are usually owned by different people, working to different priorities, on different timelines. Each does their part well, it's just that the connections between those parts don't naturally belong to anyone. 

Reviewed in isolation, or reviewed as a system 

The difference shows up clearly when you compare the two approaches side by side. 

Most organisations already do the left-hand column well. Moving to the right-hand column isn't about doing more, it's about empowering someone to take control of the full system. 

The gap between spend and appreciation 

The consequences of that gap are measurable. GRiD, the industry body for group risk providers, found that 66% of employers believe their staff very much appreciate their benefits, against only 21% of employees who say the same. That's not a communication failing you can fix with a better booklet. It's what happens when a benefit is designed, funded and administered without anyone checking whether the system delivering it works end to end. 

Two changes now underway make this harder to leave unexamined. New rules requiring benefits in kind to be reported and taxed through payroll touch benefit design, payroll process and employee communication simultaneously, not sequentially. Separately, reforms to how pension salary sacrifice is treated for National Insurance mean arrangements set up years ago purely for their tax efficiency need a fresh look at exactly the mechanics a policy-only review would skip past. 

Underneath both of those sits a more constant pressure. Employee expectations of what a benefits package should deliver have never been higher, at exactly the point when the cost of employing people is rising fastest. That squeeze leaves far less room for benefits to be reviewed once a year on autopilot, or for value to go unnoticed. 

Where hidden risk and untapped value tend to hide 

In practice, the gaps cluster in predictable places: a salary sacrifice arrangement that's drifted from payroll practice, legacy schemes that are outdated, pension governance that's never been checked against member understanding, a protection benefit nobody connected to absence data, or a benefit newly brought into payroll under the 2027 rules and treated as a payroll task alone, with nobody checking what it does to net pay or how it needs explaining to staff. 

Each looks fine from inside its own function. It's only visible as a problem once someone looks at how the pieces connect. 

The same blind spot works in reverse. Benefits and share schemes are usually designed by different teams, benefits for wellbeing and cost, share schemes for performance and retention, even though used well together they can do more for engagement than either does alone. That upside gets missed for the same reason the risk does: nobody's looking at both at once. 

Does this sound familiar? 

A handful of questions tend to separate organisations that have joined the dots from those that haven't: 

• Are we getting enough value from what we spend on benefits?
• Do our employees understand what they have, and how to use it?
• Are our salary sacrifice arrangements properly documented and controlled?
• Is our pension scheme well governed?

A confident yes to all four is rare, even among organisations doing everything else right. Getting there isn't about fixing what's broken, it's about joining up what's already working. 

The prize for joining the dots, and why now 

The prize is rarely a dramatic overhaul. More often it's value already paid for and never realised, savings sitting unclaimed, a benefit nobody connected to the data that would prove it, a scheme that was compliant at launch and has since drifted. That value appears only when someone looks at the whole system, not the next renewal. 

Two regulatory changes, rising employment costs and higher employee expectations are converging at the same moment, and that combination won't hold still. Arrangements that are merely adequate today become expensive or non-compliant tomorrow. The organisations that look now, while there's still time to act deliberately rather than react, are the ones who capture the value rather than absorb the cost. 

At Grant Thornton, we manage employee benefits in the context of the wider connected system, bringing tax, payroll, global mobility and reward expertise to our guidance, alongside specialists who can provide in-depth support when needed.

To talk through how this applies to your own benefits arrangements, contact Laurie Eggleston.