Sharing the spoils: benefits across borders

If you’ve ever worked in an international organisation you’ll know that pay and benefits is often a ‘no-go’ area of discussion when talking with colleagues from other international locations. What is widely seen as the norm in one nation may be viewed as an extravagant perk in another. Paid time off is a good example. With such variations in voluntary benefits across the world, it is no wonder that global businesses are pleased when an opportunity arises to offer a perk across the board.

Employee benefits is a widely-used concept in the western business world, describing those benefits that employers offer over and above pay to help attract, retain and motivate employees. However, while the concept may be well understood, different countries include different benefits, and the terminology is used differently by practitioners.

In the UK, HR professionals are fairly comfortable about what a benefits package may look like. Voluntary benefits (VB), that is benefits which employees pay for themselves but which they get access to by reason of their employment, are becoming increasingly popular in the UK with results from the CIPD annual reward management survey finding that around 28% of firms surveyed now offer VB in some form¹. Recent focus on VB reflects the tools businesses are using to reward staff when flexibility in remuneration packages is limited.

Our colleagues in the US, however, have a head start in the employee benefits field. In a survey conducted by the International Foundation of Employee Benefit Plans², 84% of the companies polled offered VB with a further 5% planning to introduce them in the future. Typically, a benefits scheme in the US looks completely different to one in the UK reflecting the different employment legislation and mix of mandatory and voluntary programmes. Often referred to as ‘fringe benefits’, the cornerstone of any US scheme will almost certainly be healthcare provision. While this private medical insurance might be nice to have in the UK (where healthcare is state funded), to date it has been seen as a must in the US. How the recent healthcare reform in the US will impact the shape of US healthcare benefits going forward will take a while to digest and understand. Dental and optical insurance, life insurance or long-term care insurance also frequently come under the healthcare umbrella.

There are some examples in the US of employee discounts and these sometimes form part of a VB package. However when compared to the employee discount services found in the UK, US provision tends to be localised and supplier-funded, resulting in less attractive discounts and lack of choice. In some cases it is the employer who sources the discounts keeping a percentage of the achievable savings for themselves thereby creating an income stream for the business, with the downside of essentially using employees as a sales channel.

Businesses in Australia have a different focus again in their benefits packages. There are no equivalents to the UK system of childcare vouchers or cycle to work but there is emphasis on Reward and Recognition (R&R) which is well established. This comes in part from the tax benefits which allow employers to give gift vouchers to employees up to a value of $300 tax free per annum. The incentive to use tax efficient benefit schemes is enhanced by the fact that benefits in kind are all taxed at the top rate of income tax regardless of personal tax rates. To date, very few if any Australian employers offer an employee discount service but this has been due to lack of choice, no credible discounts providers and low awareness. With its well-established R&R programmes, employee discounts are a natural extension for benefits in Australia.

Will globalisation reach the voluntary benefits market? In lots of areas, the answer is ‘no’ because of tax legislation, country-specific cultures and long-established local practices. When it comes to employee discounts, however, it just might.

Asperity has established its multi-currency functionality for users of its discount platform in Ireland and Australia., and continues to look at other locations that will enable it to offer clients a truly global voluntary benefit. “While we can’t do anything in terms of variations between holiday allowances, remuneration or pension contributions, we can help clients with employees in Ireland and Australia bring some excitement and uniformity to their employee discount offering” said Glenn Elliott, MD of Asperity. “Our product has been very well received in these new markets”.

This is surely a good thing. We don’t need to understand consumer theory to know that the world over, people like a bargain. Exclusive access to discounts, savings, rewards and Cashback will be viewed as a valuable benefit no matter where you reside.

1 CIPD annual survey of Reward Management: February 2010
2 Top Trends in Voluntary Benefits Survey was conducted in 2009 and included responses from 833 individuals in US (91% of which represented corporations)