Reviewing and optimizing benefits packages in the face of rising employment costs

Employment benefits include a variety of incentives given to employees in addition to their regular salaries or wages and benefits mandated by law. These benefits can include health insurance, pension plans, additional paid time off, enhanced parental leave and/or pay, discount schemes, flexible working, professional development, and wellness programs.  

However, at a time when employment costs are high and still rising, now may be the time to review benefits packages and ensure that they are cost effective.  

Why are employment costs increasing? 

Whilst there has been some impact from skills shortages, training cost increases and reactions to global events, one of the key reasons in 2025 is the increase in minimum wage rates, as well as more region-specific payments such as National Insurance employer contributions in the UK. 

In the UK, in addition to a historically high increase in minimum wage, an increase in National Insurance contributions will significantly affect employment costs. Employer National Insurance increases are from 13.8% to 15% on 6th April 2025, whilst the threshold for when organization's start paying NICs will drop from £9,100 to £5,000 per year. 

Why should you review your employment benefits packages 

Benefits packages can be a significant expense for employers, as they not only involve the direct costs of the benefits themselves but also the administrative overhead associated with managing these programs.  

This expense can pay off though, as these benefits can attract, retain, and motivate top talent, therefore boosting the organization's productivity and success. For this goal to be achieved, the benefits have to be relevant and attractive to the right candidates and employees. Reviewing employee benefits packages ensures they meet current employees' needs, stay competitive, and are cost-effective. 

Strategies for reviewing your employment benefits packages 

Assess employee satisfaction levels 

One effective strategy for reviewing your employment benefits packages is to conduct a comprehensive employee survey. This survey should assess the current satisfaction levels with existing benefits and gather feedback on what additional benefits employees might find valuable.  

By directly involving employees in the review process, employers can ensure that the benefits offered are aligned with the actual needs and preferences of their workforce. This provides valuable insights into which benefits might be underutilized and so cost you money without provoking the desired reaction in candidates and employees. 

Benchmark your benefits packages against industry standards 

Another key strategy is to benchmark your benefits packages against industry standards and competitors. This involves researching what other companies in your sector are offering and how your benefits compare in terms of scope and value.  

Working with partners to get an accurate picture of what competitors are offering helps you to identify gaps in your current offerings. However, it also highlights areas where you might update benefits in a way that ensures you remain competitive whilst reducing spend, for example a greater emphasis on valued aspects such as flexible working and mental wellbeing, and less focus on in-person events which rank further down in what candidates are looking for. 

Leveraging technology 

Implementing management tools and software can help reduce administrative overheads associated with benefits packages, make processes more time efficient, and improve accuracy in tracking and reporting benefits costs.  

This technology can also provide employees with easier access to information about their benefits, enabling them to make more informed decisions.  By adopting digital tools, employers can better manage costs and enhance the overall effectiveness of their benefits programs. 

Evaluate existing suppliers 

Evaluating existing suppliers is a crucial step in ensuring that benefits packages offer the best value. This process involves a thorough review of the performance, cost-effectiveness, and reliability of the suppliers providing various employee benefits.  

Comparing the prices and services of current suppliers with those of potential new providers can reveal more competitive options that could improve benefits packages while controlling costs. Ensuring strong relationships with suppliers, negotiating favorable terms, and holding them accountable to exacting standards of service can significantly contribute to the overall success and appeal of an organization's benefits program. 

In conclusion, the rising employment costs in 2025, driven significantly by increases in minimum wage rates and region-specific contributions such as National Insurance in the UK, necessitate a careful review of employment benefits packages.  

By assessing employee satisfaction, benchmarking against industry standards, leveraging technology, and evaluating existing suppliers, organizations can ensure that their benefits packages are not only cost-effective but also attractive and relevant to their workforce.  

Taking these steps can help mitigate the financial impact of increasing employment costs while simultaneously enhancing employee satisfaction and retention, ultimately contributing to the organization's success and competitiveness in the market. 

Next Steps 

Get in touch to navigate these changes and optimize your employment benefits packages effectively. At Guidant Global, our experts can help ensure your benefits packages are cost-effective, competitive, and tailored to meet the needs of your workforce. Together, we can secure your organization's success in the evolving employment landscape.