Employee benefits face increased scrutiny in 2025 amid rising employer costs

Employee benefits will come under intense scrutiny in 2025 as businesses grapple with the financial impact of measures introduced in 2024’s Autumn Budget, according to GRiD, the industry body for the group risk sector.

With the employer National Insurance tax rise and minimum wage increase coming into effect from April 2025, organisations are being advised to carefully assess the value and utilisation of their employee benefits packages.

GRiD notes that employers are likely to focus on retaining or introducing benefits that demonstrate clear value through high engagement, good utilisation rates, and measurable business impact. Conversely, benefits that lack visibility or perceived utility may be at risk of being cut.

Katharine Moxham, spokesperson for GRiD, urged businesses to prioritise understanding the breadth of their current offerings and to monitor employee uptake closely. She said, “We would urge all employers to ensure they fully understand the benefits that they currently offer, to monitor their use, and ensure employees are aware of the breadth and depth of support available. Where benefits are shown to be effective they will be retained. However, many companies will be looking to make savings to account for the increased costs of employing staff. As a result, benefits will be at risk if there is not sufficient evidence to support their continuation.”

GRiD also anticipates heightened demand for benefits that deliver tangible value. These include group risk benefits such as employer-sponsored life assurance, income protection, and critical illness cover, which provide both financial security to employees and embedded services aimed at prevention, early intervention, and facilitating a return to work in cases of physical, mental, or financial health issues.

Moxham added, “HR teams should start to gather the data they need now, to put forward the business case for the benefits that support the welfare of staff. They need to show not only uptake of benefits, but also the positive impact on the business itself. However, this also represents a great opportunity for the HR department to demonstrate its accountability and commerciality.”