What are flexible benefits - and how can they improve employee engagement?

Flexible benefits are workplace benefits that employees can tailor to their own needs instead of receiving a fixed, one size fits all package.

In a flexible benefits model, staff can choose from a selection of options or use a set flexible benefits allowance to build a package that suits their circumstances. This differs from traditional benefits, where every employee receives the same set of entitlements, regardless of role, life stage or working pattern.

1. Selecting the best employee benefits

The first stage typically involves the company choosing which employee benefit schemes to include in their flexible benefits plan.

The organisation may survey staff to find out what their needs and wants are and how employee benefits can solve these and provide value before deciding which benefits to include.

They may also consider how the working environment has changed, how it is likely to change in future, employee benefits trends and how new employee benefits coming into the market could benefit their staff.

When working with an employee benefits provider, you could have either an off-the-shelf flexible benefits setup or a more bespoke, tailored setup that allows you to include benefits specific to your company, for example.

You may have employee benefits unique to your company or brand that could be included.

2. Flexible benefits allowances for employees

Sometimes a flexible benefits allowance is involved in the flexible benefits scheme set-up.

A flexible benefits allowance is like employee benefits currency and gives employees a set value which they can spend on benefits of their choice.

There are a number of ways a company’s flexible benefits allowance can be set up. For more on this, take a look at our guide to setting your flexible benefits allowance.

3. Enrolment with flexible benefits

Once the benefit options and any flex allowance are in place, employees can tailor their package. Someone who cycles to work may choose the Bike to Work scheme. Someone who wants more time with family might add extra annual leave through Holiday Trading. Learn more about the potential schemes you can offer with our Access flexible benefits platform.

Large employers usually run an annual enrolment window. This is a set period when employees can review and adjust their benefits. Some benefits are only available during this window, so clear communication and well-structured timelines are important.

Organisations also need to account for qualifying life events. Events such as marriage, a new child or a change in working hours may allow employees to update certain benefits mid-year. This ensures they do not miss out when their circumstances change.

4. Employees can tailor their benefits

Once flexible benefits are set up, employees can essentially tailor their employee benefits to suit them.

So, for example, for those who live a little closer to the workplace who enjoy cycling, they could make the most of flexible benefits tech to utilise the Cycle to Work scheme.

Alternatively, those who want to spend a little more time with their family could grab some extra annual leave through the Holiday Trading scheme instead.

It’s important for employers and employees to think about enrolment windows when it comes to flexible benefits. Some employee benefits may only be open for enrolment for a few weeks during the year or during a set period.

So, if you’re a company setting up flexible benefits, it’s worth considering how you structure your scheme enrolment windows.

5. Approval, payroll and reporting

Once employees make their selections, these choices feed directly into payroll. Integrations between the benefits platform and payroll software allow salary deductions, employer contributions and any salary sacrifice arrangements to be calculated correctly. This reduces manual processing and helps maintain accurate records.

Large organisations often have strict compliance requirements. Benefits selections must align with tax rules, internal policies and any sector specific regulations. Reporting is another essential part of the process. Leadership teams need clear visibility of benefit take up, costs and trends across different parts of the organisation.

Flexible benefits are important today because modern workforces are more varied, with hybrid patterns, greater focus on wellbeing and multiple generations working side by side. Employers that offer flexibility can meet these different needs in a way fixed packages cannot. This approach also helps organisations stand out in a competitive labour market, since a personalised benefits package can strengthen employer brand and improve the overall employee experience.

The shift toward hybrid work and a wider mix of generations has changed what people expect from employers. Zoe notes when reflecting on how employee needs have evolved:

“People’s expectations have changed massively since lockdown, and juggling new generations, different kinds of jobs, green jobs, and people expecting companies to be really socially responsible adds another layer of complexity.”

Mastering the Employee Lifecycle | Do the Best Work of Your Life Ep. 1

A flexible benefits allowance is a set pot of value that employers give to employees to personalise their benefits package, allowing them to spend their allowance on the options that matter most to them, including wellbeing benefits, lifestyle perks, or salary sacrifice schemes like Bikes, Tech or Cars. Instead of offering the same benefits to everyone, an allowance gives each employee the freedom to tailor their package to their lifestyle, financial goals and working patterns, while helping employers maintain predictable costs and gain clearer insight into which benefits their workforce genuinely values.

A flexible benefits allowance is one of the most effective ways for large organisations to personalise their benefits offering while keeping costs predictable. When employees are given a clear allowance to spend, they make more intentional choices and employers gain valuable insight into what their workforce truly values.

Flexible benefits can motivate employees[AH4.1] because they provide a degree of choice. Many organisations have found that personalisation plays a direct role in helping people feel recognised as individuals. Zoe Wilson, Director of ReTHink HR, described the challenge of meeting diverse needs in a way that still makes employees feel valued:

“It’s making people feel that they belong—and everybody is so individual and unique. That’s a real challenge. And I think it’s something that’s quite exciting about technology because you can start to personalise things.”

Mastering the Employee Lifecycle | Do the Best Work of Your Life Ep. 1

Tailored choices based on real behaviour

A flexible benefits allowance enables employees to prioritise the benefits that matter most to them, whether that’s health and wellbeing support, lifestyle benefits, or high-value salary sacrifice schemes.
usage trends from our Employee Benefits Impact Report illustrate this clearly; high-value schemes continue to rise where employees have meaningful allowance flexibility.

• Bike Scheme average values increased 42%, with employees opting for premium or e-bike options.
• Tech Scheme engagement reached 83% above average in some sectors, showing strong employee appetite for technology benefits.

Better insight for employers

Allowances also help employers understand the true drivers of engagement. Instead of guessing what employees want, data from allowance usage reveals:

• which benefits different demographics prioritise
• how job families and salary bands make different choices
• which benefits are underused and may need better communication
• where additional options or increased limits might be valuable

For example, employees in higher-earning sectors are choosing higher-value Bike Scheme and Car Scheme applications, while other sectors demonstrate stronger demand for wellbeing and discounts support.

Optimising spend and improving ROI

A flexible benefits allowance also supports cost control and ROI measurement. Allowances cap spend at employee level while still enabling personalisation. Schemes that generate savings, such as salary sacrifice, deliver direct financial value back to the organisation.

Employers now save an average of £142.11 per Bike Scheme application due to NI efficiencies, a 54.6% increase driven by both higher values and NI rate changes.

Our platform data, packaged in our Employee Benefits Impact Report, highlights how employees are engaging with benefits today and the real impact flexible benefits can deliver:

• Bike Scheme values up 42%, with employers saving £142 per application.
• Tech Scheme engagement 83% higher in Transportation & Storage and 69% higher in Manufacturing.
• Public Sector Car Scheme engagement 4× the average.
• Face-to-face counselling usage jumped from 16% to 39%.
• Discount schemes driven by seasonal peaks: 35% of usage occurs in Spring + festive periods.

Download our Employee Benefits Impact Report for more insights and guidance on how to get the most out of your flexible benefits offering.

Large employers need a setup that can scale, integrate with existing systems and support a personalised employee experience.

Align benefits to business goals and workforce insights

The starting point is understanding how benefits support broader business aims. This might include improving engagement, supporting DEI commitments or strengthening your total reward strategy. Large organisations often segment their workforce to account for different roles, locations and working patterns. This approach helps ensure each group receives benefits that feel relevant and accessible, without creating unnecessary complexity.

Ensure platform scalability and integrations

Modern schemes rely on digital platforms that centralise benefits, remove manual tasks and provide accurate data. HR teams need systems that integrate with payroll and existing HR technology, automate eligibility checks and reduce compliance risk. Read more about the benefits of an integrated HR system in our blog.

Catherine Bennett, General Manager of Access Engage, raises this point:

“Integration is key. With modern technology, being able to integrate with existing HR systems is critical. Having a single central data platform that feeds into your benefit solution takes away a huge amount of administration and the headache of wondering where your data is going.”

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Create targeted communication campaigns

Even the most well-designed scheme needs clear communication. Large organisations benefit from tailored messages that speak to different employee groups and explain benefits in plain English. It is helpful to give transparent cost details and show what each benefit offers in practical terms.

Access Engage supports this through integrated communications and recognition tools that help keep benefits visible, increase uptake and maintain engagement through the year. Dianne Hoodless, Head Of Group Compensation and Benefits TFG Brands, stresses the importance of communication for recruitment:

“A lot of businesses would rather retain than recruit. So when our recruitment team looks for talent, we have dedicated benefit booklets to show what we offer. We want to retain the talent we’ve got—and to recruit, we want to be better than our competitors. Communication is key to keeping that talent engaged.”

Reward, Engage, Retain | Do the Best Work of Your Life Ep. 7