All your pay and benefits questions – answered

From flexible working and bonuses to fertility treatment and the gender pay gap, People Management's panel of experts tackles readers' most pressing reward problems

All your pay and benefits questions – answered

Meet the expert panel

  • Charles Cotton, senior policy adviser, reward at the CIPD
  • David Dodd, partner and UK mid-market leader at Mercer Marsh Benefits
  • Eva Jesmiatka, rewards director at Willis Towers Watson
  • Chadi Moussa, principal consultant and senior business psychologist at Peoplewise

Given a large chunk of the world’s working practices have changed unrecognisably in the last two years, it’s only natural that HR’s pay and benefits practices should change to reflect those. But with many organisations still grappling with what exactly their new ‘flexible’ model looks like beyond Covid and the demise of the five-days-a-week commute, as well as an increasing number of employers upping their benefit game with family-friendly perks like fertility treatment, and younger workers looking for their employer’s reward offering to put sustainability high on its agenda, it’s no surprise many people professionals are unsure where to go next. To help allay some confusion, People Management asked our team of reward experts to answer readers’ most pertinent questions.

How can I work out how much enhanced maternity/paternity pay to offer so we can remain competitive? 

David Dodd: Interestingly, as businesses change and transform, we are seeing companies in certain sectors now competing with non-traditional competitors and needing to enhance their benefit offering to remain competitive – an example being a UK bank that is competing for tech talent. Part of this review to attract and retain is heavily based on maternity/paternity leave, so it’s an important consideration.

Chadi Moussa: The business case for going above and beyond statutory should lie somewhere between motivating and retaining employees and being a good employer, and affordability. Start by reflecting on what kind of employer you want to be and how you can reflect this in your people policies.

Most people now expect flexible or remote working – is it still worth offering as a ‘benefit’? 

Charles Cotton: It’s important to remember that home working doesn’t equal flexible working and employers should look at all forms, eg. job shares, part-time hours and compressed hours, to see if they could help attract and retain talent. All employees, regardless of whether they can work remotely in their role or not, should benefit from greater flexibility and choice. Flexible, hybrid and remote working should still be advertised as part of the overall job offer. While many organisations are starting to offer these arrangements more commonly as standard, there are some that don’t and so it’s always best to be upfront with potential candidates about the options that are available

Eva Jesmiatka: Flexible working is seen as an important part of the employee experience. The pandemic has accelerated companies’ abilities to offer remote and flexible working and most employees expect this going forward. It can support employees with their mental wellbeing, their ability to better balance work and family commitments, or other personal circumstances. Showing that flexible working is part of the package and is something that the employer supports and believes in is typically considered as a positive sign, not only for potential future employees but also existing employees.

CM: The pandemic has turned flexibility from an expectation to a demand, and weighing up business needs and employee contracts (physical and psychological) when deciding on the extent of flexibility offered is sensible. However, policies should balance what is practical and expected, and what the market is doing. The risk, for example, of allowing one executive’s personal view about presenteeism to overshadow the sentiment of a whole organisation is risky business.

More companies seem to be offering family-friendly benefits like fertility treatment. Is this worth considering, and how do we get it right? 

DD: Definitely – this is a core component of any wellbeing strategy. The recent emergence of providers in this space has been positive and take-up has been strong, recognising the impact this can have on the physical and mental health of the workforce. In terms of getting it right, it would be prudent to do due diligence on the providers in this space, work out how it aligns to your existing wellbeing strategy, how it can be delivered and how it would be communicated effectively.

CM: Jumping on a bandwagon is dangerous. Consulting employees on their changing needs and sensible, data-driven benchmarking is hugely beneficial. There are lots of reliable sources that can offer impartial and useful advice. None more so than organisations who have implemented the benefits in question. Also, surveying suppliers on the client success stories that they collect will help you match the right benefits to the needs of your people.

Some staff have asked whether we can pay their commuting costs now they’re required to come into the office three days per week. Are we obliged to cover this? 

DD: This will depend on the contract of employment – if this still states that the primary place of work is the office, then businesses would not be obliged to fund the commute to work. If employees are on home-based contracts, then typically travel to an office would fall under the travel policy and be reimbursed. This is a challenge at the moment as the cost effectiveness of commuting is being challenged as there is little value in once valuable benefits such as season ticket loans. 

How should organisations be setting pay bands now that geographical differences (eg. London weighting) don’t matter as much and we’re hiring people who are remote only? 

CC: As the economy continues to recover and organisations look to recruit more, salaries based on location could be something that is considered. It’s unlikely that existing staff will have their location top-up taken away, but new staff might be offered a salary that reflects the new realities of remote working. The CIPD’s Reward Management Survey found only half (49 per cent) of companies vary pay by geographical location, such as through London weighting, and only 7 per cent of those are changing pay to reflect home working or have plans to do so.

Offering new staff a salary to reflect remote working could potentially have ethical and legal consequences, especially if some jobs are done by workers based overseas. As well as the cost of living, pay tends to be higher in certain UK locations, such as London or Edinburgh, because of the kind of jobs that tend to be located there. Pay in these regions would only fall if these jobs were spread more evenly across the country, something that flexible working may facilitate, but the ‘going rate’ for the job is likely to remain broadly the same.

With the increase in working from home, should we be contributing towards people’s internet and heating bills? 

CC: The cost of living is going to be a huge issue for many employees going forward. There is no obligation for employers to contribute to energy bills. However, as part of your organisation’s financial wellbeing strategy you should consider offering advice and support to employees on how to reduce their energy bills, which will be helpful financially and from an environmental perspective.

EJ: At the start of the pandemic, we saw a number of companies making one-off payments to contribute to office equipment as a way to support employees with setting up their home offices. Yet we haven’t really seen any companies making ongoing payments to contribute to internet and utility bills in response to the increased level of home working. But this could likely be due to the availability of home working tax relief from the government.

It’s difficult for us to award bonuses after such a difficult two years, but  we still want staff to feel valued –  what could we do instead?   

CC: It’s important to be upfront with your staff about your organisation’s financial position and why bonuses are not possible. Early and clear communication can make a huge difference to how people feel and react to news like this, as well as giving people the chance to ask any questions they might have. Think about the non-financial benefits you can offer, such as flexible working, additional leave, educational or wellbeing workshops or social activities.

EJ: There are a range of ways in which you can make people feel valued, beyond paying bonuses. Among my clients I have seen some very successful examples of recognition programmes that made people feel valued at relatively low cost. Initiatives have included things like ‘thank you’ notes, public recognition, gift vouchers, and an extra day off.

CM: I would start by asking employees what benefits they would value. Increased flexibility, early Friday finishes, days off on your birthday, learning and development opportunities are just a few examples of free benefits that employees value.

Some employees are (rightly) upset at the firm’s executive salaries, especially after the pandemic. How can we start rectifying the huge discrepancies? 

CC: Organisations should be open and transparent about how pay is determined for all staff to help put CEO pay in context, as crude comparisons between figures is unlikely to be useful. An organisation’s financial wellbeing strategy should outline its commitment to paying a fair and liveable wage and any opportunities to share in the success of the organisation, such as employee shares or profit sharing. It’s worth re-communicating this information with your staff.

Take-up of some perks we offer (like cycle to work) have dropped off because of the pandemic. What’s the best way of reassessing what we’re offering and avoiding upsetting the people who use them?

CC: It’s good practice to review your benefits package regularly to ensure the business is getting the best value for money and you’re offering a range of benefits to suit your staff. To get an overview of which benefits are being used and which would be most valued by your staff, you could run a survey. This will provide an evidence base to support any decisions to withdraw certain benefits if they are no longer financially viable or wanted by the majority of your staff. Decisions to withdraw any benefits should be clearly communicated to your employees.

EJ: Companies need to assess which of their benefits might have become redundant due to the pandemic, but also assess which benefits might see a resurgence in uptake, now more people have started to return to the office again. Taking away a benefit can be upsetting but the actual impact often depends on what you might offer in return. It can help by providing clear communications around any changes, such as explaining why benefits offerings are being revisited and reinforcing that you’re acting with your employees’ best interests in mind and that it’s not just a cost-cutting exercise.

We’re keen to be transparent and put salaries on all our job adverts, but are concerned about highlighting discrepancies. Is this a good idea? 

CC: Displaying salary on job adverts is good practice. It shows that you’re being upfront, helps to reduce the risk of pay gaps and also meets younger generations’ growing calls for openness and transparency. There are of course some reasons why employers might not wish to disclose salaries, such as commercial sensitivity and the possibility of scaring off candidates who have a real passion for the job. However, on balance the pros outweigh the cons and transparency is vitally important for businesses.

EJ: We see the pressure for greater pay transparency increasing from many different angles, including through increased legislation, expectations from shareholders and investors but also employees themselves. More countries are introducing legislation that requires employers to provide greater transparency around pay equity. Many companies might not be where they want to be when it comes to their fair pay agenda, but it’s necessary to take action and define how you are going to deliver fair pay to all employees in the organisation. Most companies have the intention to become more transparent, but they recognise this can’t be achieved overnight.

CM: Stop right there – prioritise addressing those discrepancies. Pay and benefits vary in roles that cannot be compared like for like, for example a senior lawyer can earn multiples more than a junior lawyer. However, reading that your new team mate is being rewarded significantly better for performing exactly the same role is a recipe for disaster.

We’ve put initiatives in place to reduce our gender pay gap, but of course it’s a marathon not a sprint, and it looks like we’re not working hard enough to fix it. What else could we be doing? 

CC: Identifying gaps and bringing in initiatives is a great place to start, but what’s really important is that there is genuine commitment from senior leaders to address gender pay gaps and that you clearly communicate the reasons behind any gaps, plus the steps you’re taking to reduce this, with your staff and external stakeholders. Highlighting that there are initiatives in place and consistent reporting on progress, including the reasons behind failure to meet targets, can make a huge difference in helping people to understand the work that is going on. The government also offers advice on actions to close the gender pay gap, which could be worth reviewing.