Smart employee benefits for SMEs: how to do more with less

In a world of increasing costs and constricting budgets, employee benefits can become a strategic advantage for SMEs in a competitive market.

Small and medium-sized businesses are facing a perfect storm. NHS delays are driving up sickness absence, while rising payroll costs including a hike in employer National Insurance (NI) contributions, are squeezing budgets.

At the same time, employees are looking to their employers for more support with their health, wellbeing and finances.

For SMEs, this can feel like a lose-lose situation. But it doesn’t have to be.

With the right approach, employee benefits can become a strategic advantage by helping businesses reduce absence, improve retention and stand out in a competitive market. And it doesn’t require a big budget. Just smart thinking.

Pressure is real - so is the opportunity

Sickness absence rates are at a 15-year high, with long-term health conditions keeping employees off work for longer, according to the Office of National Statistics. NHS waiting lists are contributing to the problem, leaving many without timely access to treatment or support.

Meanwhile, employers are absorbing higher costs. Since April 2025, the employer NI rate has risen from 13.8% to 15%, and the earnings threshold has dropped to £5,000. These changes mean more of the payroll is subject to NI.

For SMEs, this adds up to a significant financial burden. But it also creates an opportunity to rethink how benefits are delivered and how they’re funded.

Turn constraints into creativity

Rather than seeing employee benefits as a cost centre, SMEs can treat them as a tool to:

Reduce absenteeism caused by NHS delays
Improve employee wellbeing and loyalty
Attract and retain talent in a competitive market

And it doesn’t require a complete overhaul. Often, it’s about making better use of what’s already available and communicating it more effectively.

Four ways to offer more without spending more

1. Use salary sacrifice to unlock savings

Salary sacrifice schemes allow employees to exchange part of their salary for benefits like pensions, bikes or electric vehicles before tax and NI. This reduces the employer’s NI liability and increases the employee’s take-home value.

The savings can be reinvested into benefits that matter, like virtual GP access or mental health support. It’s one of the most underused tools in the SME toolkit and one of the most effective.

2. Audit current benefits

Many SMEs pay for benefits that employees don’t use or even know about. A simple audit can help identify:

Underused services
Duplicated or outdated offerings
Gaps in support, especially around health and wellbeing

Redirecting spend from low-impact perks to high-value services can dramatically improve wellbeing and ROI.

3. Focus on high-impact, low-cost perks

Not all benefits require big budgets. Some of the most valued perks are surprisingly affordable:

Cash plans for everyday healthcare
Employee Assistance Programmes (EAPs) for mental health
Flexible working options
Cycle to work and season ticket loans
Financial wellbeing tools
Childcare support

These benefits show empathy and understanding; qualities that build trust and loyalty.

4. Communicate clearly and consistently

Even the best benefits fall flat if employees don’t know about them. Use simple, tech-enabled tools to centralise information, provide interactive guides, and track engagement.

Clear communication helps employees see the full value of what’s on offer, especially when NHS alternatives are limited.

Power of partnership

Working with a specialist employee benefits adviser can make a huge difference. The right partner will:

Benchmark your current offer
Identify cost-saving opportunities
Recommend scalable, tech-driven solutions
Help you communicate benefits clearly and effectively

A unified digital platform can also reduce admin for HR teams and make it easier for employees to access support when they need it.

Don't spend more; spend better

In a world where NHS delays and rising payroll costs are the new normal, SMEs need to be smarter about how they support their people. By focusing on strategic, cost-effective benefits and improving communication, you can reduce absenteeism, boost morale and gain a competitive edge.