Article
Employee benefits: The comprehensive guide (+100 Ideas)
By offering attractive employee benefits – also known as corporate benefits or incentives – employers can specifically boost their staff’s satisfaction and loyalty. Find out here what benefits are available to employees and what needs to be considered when implementing them within a company.
Table of Contents
Key points at a glance
- Employee benefits are voluntary additional benefits provided by employers in either monetary or non-monetary form.
- Employee benefits boost staff motivation, commitment and satisfaction.
- In times of skills shortages, corporate benefits are an important tool for improving recruitment and staff retention.
- Employers can offer benefits in categories such as health, mobility, further training, pensions and many other areas.
- The type of employee benefits should be tailored precisely to the composition of the workforce.
- The provision of tax-free or tax-advantaged benefits results in cost savings for the company and income benefits for employees.
- Among the most important future trends in employee benefits are sustainable mobility and flexible working time arrangements.
Introduction to Employee Benefits
Employee benefits are special advantages that companies offer their staff. These so-called incentives represent a voluntary additional benefit provided by employers and are a popular means of optimising remuneration. The aim of this approach is to partially replace or supplement employees’ pay with tax-free or tax-advantaged benefits. In this way, companies can increase their employees’ take-home pay – without having to resort to the time-consuming and fiscally disadvantageous route of a conventional pay rise. Carefully selected and thoughtfully tailored employee benefits therefore benefit both employers and employees alike. You can find out exactly what advantages they offer both sides in the following section.
Why employee benefits?
Until a few years ago, corporate benefits were found almost exclusively in large companies with several thousand employees. Since then, the importance of incentive schemes for staff has risen sharply – regardless of the size or sector of the company. A representative study by the “Deutsche Gesellschaft für Personalführung e.V.” (DGFP) in collaboration with Kienbaum in 2023 confirms this. According to the study, more than half of companies are investing more in employee benefits than they did three years ago. Given the following advantages, this is hardly surprising.
Improving staff satisfaction and motivation
The shift in values within society is having a lasting impact on people’s working lives. A healthy work-life balance and opportunities for personal development are becoming increasingly important. A high salary alone is therefore no longer sufficient to motivate and satisfy employees. By offering appropriate employee benefits – for example, in the areas of work-life balance or further training – employers can adapt to this trend.
Improved staff retention and reduced staff turnover
Offering corporate benefits requires in-depth knowledge of employees’ interests and needs. Taking these into account and providing suitable incentives demonstrates recognition. If employees feel noticed and valued, their loyalty to their employer increases. They are less likely to leave, which noticeably reduces the company’s staff turnover rate. In this way, benefits contribute to stronger employee retention .
A competitive advantage in the battle for top talent
The shortage of skilled workers in (almost) all sectors is leading to a ‘war for talent’, with numerous companies vying for the same candidates. Employee benefits can be a decisive competitive advantage in this context. For experienced professionals and young professionals, incentives are a key factor when choosing an employer – particularly when they are weighing up two comparable job offers. An employee benefits programme therefore enhances the attractiveness of the employer brand and makes recruitment easier.
Options for customisation in terms of the type and scope of benefits
A major advantage of employee benefits is the scope for individual customisation. Employers can choose from a wide range of different options, allowing them to freely tailor the breadth and depth of their incentive programme. This means that even small and medium-sized enterprises have the opportunity to set up a workable scheme. This is evident, amongst other things, from the large number of young start-ups that are actively incorporating employee benefits into their corporate strategy.
Categories of employee benefits: these are the most popular
When designing a suitable incentive programme, employers can choose from a wide range of options. According to a survey by voiio and kununu, company pension schemes and vaccination programmes are currently the most common benefits offered by German companies. However, there are many other potential benefits for employees that could serve as inspiration for your company’s benefits programme.
Financial benefits
This category includes the traditional employee benefits now offered by most companies. Other incentives have an indirect positive impact on employees’ salaries. Financial benefits, on the other hand, have a more direct effect and serve to optimise remuneration in the strictest sense.
The benefit does not necessarily have to be paid out to employees immediately, as is the case with bonus payments, for example. It can also be paid out at a later date. A well-known example of this is the company pension scheme, which can take various forms.
In the traditional model, employers make a voluntary contribution to their employees’ pension scheme. Another option is for employees to convert part of their salary into a monthly savings instalment. This later serves as a supplementary pension. Employers contribute a certain percentage towards this occupational pension. Both sides benefit from tax advantages in this arrangement.
Due to the rising cost of living and a high rate of inflation, the state pension is already insufficient for many people to live comfortably in old age. Company pension schemes are therefore a popular benefit, as they can bridge the gap and alleviate employees’ fears about the future.
An overview of ideas for employee benefits in this category:
01. occupational pension scheme
02. Bonus payments
03. Meal allowance
04. Staff discounts
05. Workwear
06. Accommodation costs
07. Company mobile phone
08. Company laptop
09. Event tickets
10. Internet allowance
11. Other benefits in kind
12. Share options
13. Bonuses for special occasions
15. Staffrewards shop
Health and Wellbeing
Employees’ willingness to perform and their motivation depend heavily on their state of health. It is therefore beneficial for employers to look after the mental and physical wellbeing of their staff. A range of health-related benefits are available for this purpose. In practice, it is common to combine several of these into a comprehensive programme. This makes it possible to reduce the frequency of sickness-related absences within the company.
A typical example of an incentive in this category is a gym membership paid for by the employer. Many providers offer special corporate rates where the monthly fee falls below the tax-free threshold of 50 euros per month per employee. This means that neither income tax nor social security contributions are payable on this additional benefit.
The advantage of health and wellbeing benefits is that they can be seamlessly integrated into the day-to-day working routine. Ergonomically designed workstations or a weekly meditation session at work are small adjustments with a big impact.
The nature of employees’ work should be taken into account when putting together the package. For example, if employees sit at a desk all day, health benefits that promote an active lifestyle are well suited. If employees carry out heavy physical work, a back care programme or massage service may be the better option.
An overview of ideas for employee benefits in this category:
16. Gym membership
17. Workplace health promotion
18. Return-to-work support following illness
19. Company doctors
20. Company health and accident insurance schemes
21. Meditation courses
22. Yoga classes
23. Back care classes
24. Provision of ergonomic office chairs
25. Height-adjustable desks
26. Counselling sessions to promote mental health
27. Vaccination programmes
28. Setting up a relaxation room
29. Smoking cessationcourses
30. Counselling to help manage stress more effectively
31. Workplace social counselling
32. Massages
33. Preventative health check-ups
Flexibility and work-life balance
If there is hardly any time left for a private life alongside work, this can significantly reduce employees’ motivation and job satisfaction. Employees are increasingly seeking greater flexibility and freedom to shape their own working lives. This applies not only to young employees but can be observed across all generations.
Employers can meet employees’ need for a better balance between work and leisure by offering work-life balance benefits. This category includes all employee benefits aimed at enabling a more open and flexible approach to working hours. This encompasses the traditional sabbatical, as well as the four-day week, which is already being trialled in many companies.
A new idea among employee retention measures is the introduction of unlimited holiday entitlement, which the streaming service Netflix, for example, offers its staff. This model gives employees greater say in planning their time off work. They no longer have to spread a limited number of holiday days as effectively as possible throughout the year, but can also treat themselves to spontaneous days off. This incentive is currently only used by a handful of companies and is therefore highly attractive to qualified talent.
An overview of ideas for employee benefits in this category:
34. Sabbatical
35. 4-day working week
36. Flexitime
37. Working from home days
38. Part-time work
39. Job-sharing
40. Recovery periods following challenging projects
41. Unlimited annual leave
42. Permanent option to work remotely
43. Overtime compensation
Innovative benefits and their implementation
In addition to the aforementioned supplementary benefits, there are many other benefits that companies can offer their staff. These innovative approaches reflect the current trends in the labour market, which are characterised, for example, by an increased focus on personalised development opportunities. The ever-present issue of sustainability is also having an increasing influence on companies’ incentive programmes. These contemporary ideas fall into the following three categories.
Individual professional development opportunities
In modern companies, work processes are complex and require a high degree of expertise and adaptability. Through coaching and training, employers can help their staff acquire the necessary skills. Such employee benefits meet the growing desire among staff for professional and personal development.
The most effective programmes are those that are precisely tailored to the individual. This enables employees to further develop or meaningfully expand their individual strengths. Thanks to their newly acquired knowledge, they perform their work with greater confidence, are more balanced and feel less overwhelmed. Employers benefit from this in the form of increased productivity, performance and staff satisfaction.
An overview of ideas for employee benefits in this category:
44. personalised learning pathways
45. in-house training
46. external coaching sessions
47. creative workshops
48. individual development programmes
49. Knowledge and learning sections on the intranet
50. mentoring programmes
51. job rotation
52. Trainee programmes
53. Workshops on specific topics (e.g. soft skills)
54. Opportunities to attend seminars
55. Access to subject-specific conferences
56. Grants for work-related degree programmes
57. Language courses
58. Study groups
59. Leadership programmes
60. Additional holiday entitlement for further training
61. e-learning programmes for staff working from home
62. job shadowing
63. Reimbursement of costs for subject-specific literature
Mobility solutions
Among the innovative employee benefits, modern mobility solutions are among the most commonly used incentives. On the one hand, they ensure that employees can get to work safely, on time and without stress. This allows them to start the day feeling more relaxed – an important prerequisite for motivated and productive work.
On the other hand, companies can introduce mobility-related employee benefits to demonstrate their commitment to greater sustainability. An increasing number of people are giving up their cars for the sake of the environment. In metropolitan areas in particular, public transport and cycling have largely replaced private cars. If employers offer appropriate benefits, employees are better able to identify with the company’s values.
An overview of ideas for employee benefits in this category:
64. Jobticket
65. Public transport subsidies
66. Company car
67. E-bike leasing
68. Car-sharing
69. Electric carcharging point
70. E-scooters
71. Fuel vouchers
72. Bicycle parking spaces
73. Car-sharing
74. Subsidies for cycling equipment
75. Cycling courses for beginners or to refresh skills
Social, family and creative activities
Fostering team spirit amongst staff or addressing socially relevant issues – this, too, is possible with the right employee benefits. As with all incentive programmes, it is important to take the needs of the target group into account when offering benefits in this category. Furthermore, the benefits should be in line with the company’s core philosophy.
Socially and culturally oriented benefit schemes are suitable for employers of all sizes. They enable companies to specifically address the interpersonal aspects of working life. For example, team-building events can help maintain – or establish for the first time – a spirit of cooperation and a sense of unity among staff. Family-related incentives also fall into this category.
Start-ups are leading the way when it comes to creative approaches. They possess the open structure and willingness to experiment that are necessary for unconventional ideas. One example of such an incentive is an official ‘nap time’ during working hours. This 15-minute nap is intended to boost cognitive performance and usually takes place in rooms specially equipped for this purpose.
An overview of ideas for employee benefits in this category:
SOCIAL
76. Team events
77. Cross-departmental events
78. Company sports events
79. Support for staff initiatives
80. Staff challenges
81. Corporate volunteering
CREATIVE
82. Bringing pets to the office
83. Concierge service
84. Nap time
85. Entertainment area with table football, darts and more
86. Community garden on the company premises
87. Sustainability programmes
88. Green offices
89. Sustainability bonuses
90. Recycling schemes
FAMILY-RELATED
91. Childcare grants
92. Setting up a company crèche
93. Family support offices
94. Arrangement of babysitters and childminders
95. Support with caring for relatives
96. Parental leave schemes
97. Programmes to facilitate a return to work after parental leave
98. Childcareprovision during the holidays
99. Support regarding adoption or the desire to have children
100. Counselling services for pregnant women and parents
Legal aspects and tax benefits for employers
(As at: Germany)
The positive impact of employee benefits on staff satisfaction and motivation is a key advantage of incentives. However, the tax benefits are also attractive to companies. This applies in particular to the ‘ ’ 50-euro benefit in kind. Since the start of 2022, vouchers, cash cards and other non-cash benefits have been exempt from payroll tax, provided they do not exceed a value of 50 euros per employee per month. Social security contributions are also not payable on such benefits.
The benefits falling into this category are set out in Section 8 of the Income Tax Act (EStG). Accordingly, the prepaid cards or vouchers must be tied to a specific network (e.g. Citycards), a range of products (e.g. fuel cards) or a social purpose (e.g. meal vouchers). To benefit from the tax advantage, the payment must not be made in cash. It must also be impossible to convert the benefit in kind into cash.
The rule on the 50-euro non-cash benefit enables companies to increase their employees’ salaries cost-effectively through an additional benefit. Employees feel the impact of such benefits more keenly than a pay rise, which usually only increases their net salary marginally after all deductions have been made. You can find a more detailed overview of thetax treatment of bonuses and benefits in kind at in our guide. This outlines the legal framework – individual advice from a tax adviser is always recommended when introducing a benefits programme.
Communicating and managing employee benefits successfully
Even the most carefully designed employee benefits programme will fail to have the desired effect if it is implemented incorrectly. In addition to thorough planning, careful implementation is essential to ensure that the scheme can deliver its intended benefits. Bear the following points in mind.
Internal communication strategies
Additional benefits are intended to make staff feel valued, work with greater motivation and develop a stronger sense of loyalty to the company. However, none of this will happen unless staff are aware of the Incentives . Officially present the staff benefits and explain how employees can make use of them.
You could, for example, use your company’s intranet to publicise this information. As not everyone may have access to a computer, it may be necessary to put up an additional notice on the noticeboard. Ensure that all employees are made aware of the benefits on offer at the same time.
Feedback and Adjustment
Check in regularly with staff to find out how satisfied they are with the employee benefits. Ideally, you should incorporate their input as early as the design phase of the benefits programme. Your employees’ needs may change over time. You should therefore remain open to making improvements. This will allow you to expand or adapt your incentive scheme as required, so that it is even better tailored to the needs of your workforce.
Future Outlook: The Next Big Trends
The modern world of work is constantly changing. To ensure that your company’s benefits programme remains successful in the long term, it needs to keep pace with these changes. To achieve this, it is important to keep an eye on future developments and trends in the labour market. These are heavily influenced by the values of Gen Z – the generation born between 1995 and 2010, who are already in the workforce or will soon be entering the labour market.
For Gen Z, achieving a work-life balance is even more important than it was for previous generations. Sabbaticals, a four-day working week and other benefits relating to flexible working arrangements are therefore likely to become increasingly relevant. The challenge for companies lies in reconciling these benefits with their internal processes. Another trending topic is eco-friendly mobility. This is already present in many companies in the form of travel allowances and company bikes. In the near future, employee benefits in this category could become a key focus of incentive programmes.
You should also keep an eye on financial benefits specifically for new employees. These so-called ‘new joiner’ bonuses are already standard practice in the US, but are still rare here – as the study mentioned at the outset shows. In the context of recruitment, this modern incentive is a useful addition to a traditional ‘ ’ employee referral scheme. As one of the first German employers to offer this benefit, your company could further extend its lead in the battle for qualified talent.
Conclusion
Corporate benefits enable employers to meet the individual needs of their staff. This gesture of recognition and appreciation has a positive effect on staff motivation. At the same time, meal allowances, travel subsidies and similar benefits strengthen the employer brand, thereby providing a decisive competitive advantage in the race to attract qualified specialists.
Employee benefits are either exempt from income tax or can be conveniently taxed at a flat rate – depending on the type and amount of the incentive. As such, employee benefits are a more cost-effective and straightforward alternative to a regular pay rise. Employees receive a higher net pay from their gross salary, which boosts their satisfaction and loyalty in the long term.
For incentives to make a positive contribution to better recruitment, retention and motivation of staff, they must be attractive to the recipients. In many companies, the workforce comprises various groups of people with different wishes and interests. Best practice therefore involves setting up a range of incentives that is as varied as possible.
Modern ideas from the fields of remote working and sustainable mobility are a valuable addition to traditional benefits. It is important to regularly adapt the benefits scheme to the changing needs of employees. By doing so, you can fully harness the potential of incentives and benefit in the long term from a productive, committed and loyal workforce. Reason enough to start designing a bespoke benefits programme for your company right now