Definition

Flexible Benefits schemes are also sometimes known as cafeteria benefits. There are three main types of benefits plans: core benefits, flexible benefits and voluntary benefits. These describe the way benefits are offered, and are not types of benefits.

Under flexible benefits schemes, staff can choose their own benefits from a set range of benefits. Often they can choose to upgrade certain benefits in exchange for others. Staff are given a flexible benefits budget that they can use to ‘buy’ the benefits they want. These types of schemes are very popular because staff do not have to take benefits they don’t really want and can get benefits they do want.

Organisations often offer a wider range of benefits under flexible benefits schemes than they would in a core package in order to accommodate the diverse needs of staff. It also allows organisations to offer ‘new’ benefits much more quickly so they are seen as leading employers. Organisations can control costs because if any benefit rises in price then the employee has to ‘pay’ extra.

Flexible benefits schemes usually run for a set contract period whereby staff can opt into or out of employer-paid benefits and select employee-paid benefits. In some cases, if employees do not wish to take any of the benefits on offer, they can choose to keep the cash.