In today's job market, employees want more than just a salary: they’re looking for employee benefits that improve their daily lives, now and down the line. It’s why financial wellbeing is such a buzzword right now, and the reason that future-focused employees are looking for opportunities for upskilling. And, as the current economic climate continues to crunch household budgets, simply reducing regular expenses is high on the priority list. In this article we look at how HR can turn the dial in three key areas with benefits that you may already have on offer.
Key takeaways:
• Employees can access potential savings (and have the opportunity to boost their disposable income) through salary sacrificing
• Upskilling can support long-term financial wellbeing and is made easier with self-education salary packaging
• There are a range of opportunities for salary sacrificing that can be matched to employees’ life chapter and employment stage
Financial wellbeing at the forefront
Times have been tough for Australian households for some time now, thanks to continued rising inflation and housing costs. It’s no surprise, then, that money is on the mind for most: according to recent research Australian employees are now rating their personal finances as equally important as their mental health.1 Yet, when looking at different aspects of workplace wellbeing, research shows the largest gaps between importance and satisfaction are in base salary, incentives and employee benefits.2
This means there is a distinct opportunity for HR to boost financial wellbeing in the workforce. And the solutions available to HR teams have evolved: research shows use of financial wellness benefits like coaching, workshops or webinars and online tools is growing. In 2012, just 51% of those who said their employer offered financial wellness services had used them compared to 68% in 2023.3 Then there are ATO-approved savings: salary packaging could deliver immediate relief for your workforce and improve their financial wellbeing over the longer term.
Upskilling has become a priority for employees, thanks to a workforce-wide shift towards valuing skills over specific job roles. Advancements in AI and changing demographics mean that highly developed skillsets are becoming more important than simple efficiency. And it’s not only employees that benefit. Enhancing employee skills boosts productivity and efficiency in the shorter term (alongside increased job satisfaction and higher retention rates) while building a more resilient and adaptable workforce better equipped to meet complex business challenges in the future.
The good news is that most employees can salary package self-education expenses. This benefit applies to many forms of education as long as it is related to their job, for example, obtaining a license to operate certain machinery. Self-education initiatives may include courses or seminars, journal subscriptions and new reference books.
Reducing everyday expenses
Finding opportunities to make everyday living more cost-effective is an important way employers can support their workforce's financial wellbeing. A comprehensive salary packaging benefits program can help deliver unrealised financial value for employees at no cost to the employer. Regardless of how much an employee earns, if they pay income tax they may have an opportunity to boost their disposable income through salary sacrificing/packaging.
The average Australian household is spending 17% of its income on transportation, after costs increased by more than three times the national inflation rate in 2023.4 When you couple this pressure with the desire to have greener options and growing awareness around sustainability, Electric Vehicle (EV) Novated Leases are an effective way to deliver more financial value to employees while aligning with their values. Eligible electric and plug-in hybrid cars are currently fringe benefits tax (FBT) exempt when purchased via novated leases, unlike petrol cars. This means all payments are made from the employee’s pre-tax salary, potentially reducing their taxable income and saving them thousands of dollars.
Depending on an employee’s life chapter and employment stage, there may be other opportunities available to them. For example, those starting out in the workforce may need to set up a home office and these new employees might find salary sacrificing electronic devices and other tools of the trade cost effective. For those who have a new family to provide for, insurance may be on their mind. Disability/income protection insurance helps replace earnings if an employee can’t work due to sickness or injury so they can concentrate on their health. With salary sacrificing/packaging employees can pay disability and income protection insurance premiums with pre-tax dollars. Or perhaps they’re relocating for work or life. Employees moving to a remote or regional area may be able to salary package interest on their mortgage, purchase costs of their house or rent payments.
Taking benefits management to the next level
We’re helping employees get proactive with their benefits by providing useful ‘nudges’ so they can do more with their money, with our brand new app that’s coming soon. Employees will be able to easily see how much they’ve saved, add benefits on the go, claim online and manage their benefits budget - providing a regular reminder of the extra value their benefits deliver.
As a premium provider of employees benefits to many organisations across Australia, Maxxia have seen the difference salary packaging can make to the overall financial position of employees. Not only can take up of salary packaging boost net household income for employees, a best-practice program supported by effective communication can also strengthen your employee value proposition as a whole.
Maxxia can offer your organisation a full benefits assessment to measure the effectiveness of your current employee benefits offer. We can also put a dollar figure to the potential savings and efficiencies from running the program and compare overall performance with best practice for your industry.
1&2. Gallagher, Workforce Trends Report, May 2024
3. PWC, Employee Financial Wellness Survey, 2023
4. Australian Automobile Association, Transport Affordability Index Q1 2024
