"Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients."
This quote comes from lifelong mega entrepreneur Richard Branson, founder of the Virgin Group, which controls over 400 companies. He knew the first ingredient of business success: happy, productive employees.
2019 is just around the corner. Now is the time to review your employee benefits program - which will set both your business and your employees up for success in the coming year.
A New Year, a Better Employee Benefits Plan
The importance of employee benefits extends far beyond each individual employee. To set your employees, your clients, and ultimately your business up for success in 2019, start by looking at the following areas.
Review your benefits offerings to meet employee needs
Don't get stuck in a rut! Benefits should change with the times. New laws are introduced, the composition of your workforce changes, and employees have evolving expectations. For these reasons, you should review your current offerings and see if any areas need updating.
Understand your employees' preferences. What types of employee benefits are most important to them? At the same time, be realistic about your budget. Then, meet with your employee benefits advisor to devise a strategy for 2019.
Clarify your business goals for the year so you can put together an offering that makes employees happy, and also makes sense for your business.
Get ready for cost increases and adjust employee benefits accordingly
Employer Health Tax (Click here to learn more)
Beginning in 2019, BC employers must register for the new Employer Health Tax (EHT) if their payroll is greater than:
- $1,500,000 for registered charities and not-for-profit organizations ("NFPOs") or
- $500,000 for all other BC employers.
The EHT will be calculated based on your payroll amount:
- $500,000 or less – no EHT applies
- Between $500,000 and $1,500,000 – 2.95% tax
- Greater than $1,500,000 – 1.95% tax
With the exception of the smallest BC-based businesses, overall costs are likely to increase. So you may want to consider offsetting the costs in other ways, such as providing tax-free forms of compensation, rather than bonuses.
This could look like:
- Contributions to a retirement plan other than a group RRSP, such as a Deferred Profit Sharing Plan (DPSP) or a Defined Contribution Pension Plan
- Increased health and dental benefits
- Retirement Compensation Arrangements (a type of specialized executive compensation)
- Health Care Spending Accounts (HSAs)
For a more in-depth look at the EHT, see BC Payroll Health Tax: What Employers Need to Know.
Canada Pension Plan Increase
In January 2019, the Canada Pension Plan (CPP) will begin a 7-year enhancement process, which will affect both employers and employees. Under the revised plan, CPP benefits will replace 33% of employees’ pre-retirement income, an increase of 8% from today.
To meet this, the amount employees and employers contribute will increase. This expansion will be gradually implemented in two phases over the next seven years.
By the end of Phase 1, both individual and employer contributions will have increased from 4.95% to 5.95% annually. In 2024, Phase 2 will introduce an additional contribution rate, expected to be 4% for both the employer and the employee.
To compensate for this increased cost, you could:
- rethink benefits coverage by creating more tax-efficient cost sharing arrangements with employees, or
- tweak your plan design to maintain your current contribution budget.
For more details on the CPP increase, read Are You Ready for the 2019 Canada Pension Plan Increase?
Promote financial wellness to reduce employee stress
If employees are worried about money, they'll likely be stressed and less effective on the job. A big part of financial wellness is proper retirement planning.
However, the truth is, many Canadians are not adequately prepared for retirement. A survey from Insights West and Credential Financial found that 30% of Canadians have not set aside any retirement money at all.Employers can help by offering an employer-sponsored retirement plan, which can take various forms, for example:
- Registered Pension Plans
- Group Registered Retirement Savings Plans (Group RRSP)
- Deferred Profit Sharing Plans (DPSP)
When employees feel secure financially, they'll have one less stressor to deal with—and will be more engaged and positive at work.
Boost engagement by encouraging healthy habits
If employees are unhealthy, they're often working less than optimally.
The new year goes hand in hand with resolutions. Now's the ideal time to launch an employee wellness program to encourage healthy habits. Your program can be customizable and offer education and resources for various health-related issues, such as:
- Stress reduction
- Weight loss
- Smoking cessation
- Nutrition advice
By participating in your company’s wellness program, employees can improve their health—and you’ll enjoy the benefits of increased employee engagement and boosted morale.
Take mental health seriously to keep employees at work
A rising number of employees are going on short or long-term disability due to mental illness. In fact, 75% of short-term disability claims in Canada are mental health-related. According to Morneau Shepell, complex mental health claims rank very high among employers' disability management concerns.
To support employees' mental health, first take a look at your company culture. For example, promote work-life balance by setting boundaries around work hours, and encourage employees to take vacation.
Encourage employees to communicate openly about their workload. If people repeatedly have too much on their plates, find ways to reduce the excess. If employees feel pressured to overwork for career advancement, cultivate a collaborative atmosphere. Employees should see each other as teammates, not as competitors.
Finally, a great employee benefit to consider is an employee assistance program (EAP). An EAP can help your employees manage a variety of personal issues proactively, including mental health.
Communicate your benefits program to make the most of it
Employees can't take advantage of benefits if they're uninformed. Therefore, clearly communicate your entire employee benefits program—in terms of "total rewards"—to employees. Your benefits advisor can help you by providing education sessions either in person, via webinar, or both.
In addition, put the plan in writing. Let employees know all the benefits available to them, including sick days or educational reimbursement, which may not be in their health and dental plan booklet.
Finally, your employee benefits advisor can help make sure you are prepared to answer any questions employees might have, now and throughout the year.
In the new year, make your employees’ happiness your top priority. Employees care about salary, certainly, but they also appreciate a range of benefits, from employer-sponsored retirement plans to midday yoga classes.
Talk to your team to find out their goals for 2019, and then do what you can to help them achieve them. Create an excellent work experience for employees this year, and you're likely also to reap strong returns for your business.
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