Higher pay means improved cash flows and buying power for immediate purchases or investments. Greater benefits, which may be challenging to put an exact dollar amount on, often provide a security net for a health event or during retirement.
Why might an employer offer benefits in lieu of a higher salary?
Employees often will accept better benefits in lieu of a higher salary, which can be a savings to the business. Offering benefits to employees also can be advantageous to a business owner, who may be able to get personal benefits for less money than if he or she purchased them privately.
Do employee benefits really matter?
Offering benefits to your employees is important because it shows them you are invested in not only their overall health, but their future. A solid employee benefits package can help to attract and retain talent. Benefits can help you differentiate your business from competitors.
Why do employers offer cash in lieu of benefits?
Employers should always include “cash in lieu of benefits” polices in their employee handbooks. This allows for transparency and equal treatment of all employees across the board. It also helps protect the employer against potential ERISA violation concerns because of this transparency and fair treatment.
Can you get cash in lieu of health insurance?
According to Group Health Solutions, cash in lieu of health insurance: Is taxable. Should not be provided to enable an employee to purchase an individual policy. Must be offered to all eligible employees, not just a select few.
Can a salary increase be paid out as a lump sum?
OR the person is a high performer with an already high salary in which case basic pay may be frozen and instead a lump sum may be paid out. No increase on long-term costs, while at the same time the employee receives the same amount recognising their performance. In both cases, only the allowances change and there is no change of basic.
Can a broker offer cash in lieu of benefits?
However, there are compliance aspects brokers need to be aware of when guiding an employer through this option.
