• Blessing Utete, Executive Director

5 tips to streamline your employee benefits for a fighting chance amid COVID-19


According to a notice issued from Stats SA last week, more than 84% of companies have reported lower than normal turnover since March 2020 – and more than a quarter of them have reported laying off staff in the short term to help with cash flow. In this environment, finding ways to manage expenses in order to stay financially viable, may result in many businesses reviewing their employee benefits offering with the reality of needing to reduce costs to stay in business.


But, before cancelling benefits that could have profound ramifications for not only the lives of employees but also for retention of key staff in the business, reviewing your current offering could be a differentiator in managing to stay afloat. Here is some guidance.


Employers belonging to a regulated compulsory benefit scheme can apply for exemption


If a business operates in a sector regulated by, for example, a bargaining council or other regulatory body, the business could belong to a regulated benefits scheme with a compulsory structure.


Employers should remember that they are not tied to one employee benefits structure for life, and they should continuously assess the cost-effectiveness and appropriateness of the benefits they have for their employees. With the challenges of the pandemic and the economic recession, now is a good time to reconsider the overall cost of their current scheme in consultation with a qualified employee benefits adviser to see if there is a way to improve the cost-efficiency of their employee benefits structure.


The option of moving from a standalone retirement fund to an umbrella fund


Employers on standalone retirement funds could consider moving to an umbrella fund. An umbrella fund has numerous advantages, not least of which increased cost-effectiveness made possible by economies of scale and operational efficiencies. Lower costs mean more money goes straight to members’ retirement savings.


Businesses that have undergone fundamental changes should revise their benefits


The first step in analysing an employer’s needs is to understand the nature of the business’s activities, the makeup and needs of its employees, and how any particular benefit structure design will fit into the business’s employee value proposition. As part of the process, factors that will impact the cost of structures, including any insurance benefits, are considered. These factors could include the following:


  • The geographical area of the business – whether the business has a national footprint or is only in a specific province.

  • The nature of the industry in which the business operates and the occupations of the employees to be covered (for example, a mix of warehousing and administration office staff).

  • Any prevalence of certain diseases, illnesses or disability ‘trends’ where the business operates.

  • The age, gender and levels of education of employees.

  • The levels of occupation.


If a business has been forced to downscale or close down branches in certain areas during this time, revisiting the above factors is crucial. If the business has had to change its core structure or operating model, a review of the categories of employees in the business and number of employees within categories is essential. This is because different categories of employees = different types of cover = different cost implications.


Finding a sensible balance between benefit levels and cost


More now than ever before, businesses have to balance the cost of benefits with ben