Small Businesses Employee Benefits: How to Compete for Talent by Getting Creative
Offering a competitive employee benefits package is crucial for small businesses in Canada looking to attract and retain top talent. With over 1 million small businesses employing nearly 70% of the private sector workforce, small companies must compete for skilled employees against larger corporations with more extensive benefits.
According to Statistics Canada, as of 2022 there were 1.23 million small businesses with 1 to 99 employees operating in Canada. These small enterprises accounted for 97.9% of all businesses and employed nearly 7 million people. However, larger companies often have greater resources to provide generous benefits packages.
Research shows that after salary, benefits are one of the most important factors for job seekers evaluating a company. By maximizing their benefits offerings within budget constraints, small businesses can boost their employer brand and appeal to talented candidates despite their size.
This article will explore the mandatory and optional benefits small companies can leverage to attract top applicants. With creativity and strategic planning, small businesses can design competitive benefits on par with major corporations.
Overview of Mandatory Benefits in Canada
There are several mandatory benefits that all employers in Canada must provide to their employees. These include:
Pension Plans
Employers must register for and contribute to the Canada Pension Plan (CPP) for all employees over 18 years old. CPP is a mandatory contribution pension plan that provides retirement, disability, survivor, and death benefits.
Paid Vacation and Holidays
Employers are required to provide a minimum of 2 weeks paid vacation per year for employees with less than 5 years of service, and a minimum of 3 weeks per year after 5 consecutive years. There are also 9 paid public holidays that employees are entitled to.
Maternity and Parental Leave
Eligible employees are entitled to up to 15 weeks of maternity leave and 35 weeks of parental leave under the Employment Insurance program. Parents can share these benefits and take up to 61 weeks off work.
Employment Insurance
Employers must deduct Employment Insurance (EI) premiums from employees' earnings to fund benefits like maternity leave, sickness, compassionate care leave, and regular benefits for unemployed workers. The current EI premium rate is $1.66 per $100 of insurable earnings (2024).
Health Insurance
Health insurance is one of the most common and important benefits that employees look for. Providing coverage for health, dental, and vision can be a significant expense for small businesses, but it's an expected part of a competitive benefits package.
According to Mercer's 2023 National Survey of Employer-Sponsored Health Plans, the average cost per employee for health insurance in Canada is $15,797 per year, with costs continuing to rise. Despite the costs, around 60% of Canadians have private health coverage, so employees expect it.
For small businesses, partnering with a benefits provider can help reduce costs through discounted group rates. Offering basic health and dental coverage shows employees you care about their wellbeing. Consider adding vision coverage too. With creative plan design, small businesses can offer solid coverage at an affordable price point.
Wellness programs are another way to promote health without big costs. Offer gym discounts, access to telemedicine apps, or free flu shots. Host lunch and learns on health topics or provide mental health resources. With a focus on prevention and education, small steps can make a difference.
Retirement Savings
Retirement savings plans are a key benefit that can attract top talent. Small businesses have options when it comes to offering retirement plans, including matching employee RRSP contributions, defined benefit pension plans, and defined contribution pension plans.
RRSP matching allows employees to contribute to their own RRSP account, while the employer matches a percentage of contributions. This is an affordable way for small businesses to offer retirement benefits. According to Canada Life, "small business owners can take advantage of significant tax deductions on RRSP contributions."
Defined contribution pension plans have the employer and employee contribute fixed amounts to the retirement fund. The Canada Financial Consumer Agency states defined contribution plans mean "what you get at retirement depends on how much you and your employer put in and how well that money is invested." This shifts some investment risk to employees but is more predictable for employers.
Small businesses should weigh the costs and benefits of these options to maximize their retirement benefits. Matching RRSP contributions can be an affordable starting point, while defined benefit plans provide the strongest guarantees for employees.
Paid Time Off
Offering generous paid time off (PTO) is a key benefit for attracting top talent. Many small businesses make the mistake of offering the legal minimum vacation time. However, to stand out, consider providing additional flexible PTO beyond the standard 2-3 weeks. Some creative options include:
Flexible PTO Policies: Allow employees to use PTO days for any purpose, without tracking vacation days separately from sick days. Give a set number of PTO days and let employees use as desired. According to the Employment Standards Act, employees with 5+ years tenure are entitled to a minimum of 3 weeks vacation.
Paid Volunteer and Education Days: Provide paid days off for employees to pursue volunteer work, community service, continuing education, or professional development courses. This shows you invest in employee growth and support their interests. According to SME Careers, some employers offer paid volunteer days as a benefit.
Family Benefits
Offering strong family benefits is key for retaining employees and supporting work-life balance. Two impactful options to consider are parental leave top ups and childcare stipends.
In Canada, new parents are entitled to take up to 18 months of parental leave and receive Employment Insurance benefits for some of that time. However, the EI benefit amount typically replaces only around 55% of earnings. To make parental leave more feasible for employees, consider offering a supplemental parental leave top up to cover some of the income gap. Even topping up to 75-80% of salary can make a big difference.
Another family friendly perk is providing childcare stipends or reimbursements. With childcare costs being a major burden for working parents, offering even a small monthly stipend of $100-200 can help offset these expenses. Some companies offer Health Care Spending Accounts (HCSA), which includes coverage for dependent children, so long as expenses are eligible. In some cases, businesses are offeringspending accounts of $5000 or more per year. If budgets allow, consider reimbursing some percentage of childcare costs. This shows employees you support them as working parents.
Work Arrangements
Flexible work arrangements are highly desired by today's workforce. Offering options like remote work and flexible scheduling can give small businesses a competitive edge in attracting top talent.
Remote work has become increasingly popular after the COVID-19 pandemic, with many employees desiring continued flexibility. Small businesses can take advantage of modern technologies to offer remote work options, even with limited staff and resources. This allows businesses to access a wider talent pool unconstrained by geography.
Flexible scheduling is another important benefit, allowing employees to have more control over their work hours. This could include options like alternative start and end times, compressed work weeks, or job sharing. Small businesses can get creative with shift swapping, part-time arrangements, and building schedules around employees' needs.
According to a recent survey, over 75% of employees say schedule flexibility is a top factor in job satisfaction. Offering work arrangement benefits can give small businesses a big advantage.
Professional Development
Providing professional development opportunities is key for retaining top talent and building employee skills over time. As a small business, focus on low-cost training programs, conferences, and courses to elevate your employees. According to ISED, employee training is a crucial strategy for small businesses in Canada to adapt to new technologies and improve customer service.
Consider partnering with local colleges or online learning platforms to offer discounted rates on courses for your employees. Encourage participation in free webinars and events like those offered by the Business Development Bank of Canada (BDC). You can also look into government subsidies and tax credits to offset the costs of employee training.
Conferences related to your industry are another great professional development option. Offer to cover the conference fees for employees who will bring back valuable insights for your business. Get creative about low-cost training by having team members share their expertise with each other during in-house brown bag lunches.
Investing in your employees' growth helps boost retention and gives your small business a competitive edge. According to ISED's Key Small Business Statistics, small businesses employed 8.2 million Canadians in 2021, so professional development is key for attracting top talent.
Lifestyle Benefits
Lifestyle benefits that support employees' personal interests and passions outside of work can be a creative way for small businesses to stand out. Offering discounts on gym memberships, for example, promotes health and wellness. Gym subsidies are popular benefits that allow employees to save on fitness costs. Small businesses could partner with local gyms to offer reduced monthly rates or subsidized gym memberships to employees.
Another unique benefit to consider is pet insurance. With many Canadians owning pets, coverage for veterinary bills and pet care can be an attractive perk. Pet insurance is a voluntary or supplementary benefit that shows employees their whole selves are valued.
Employers in Canada are administering Lifestyle Benefits through a taxable Lifestyle or Wellness Spending Account. These programs can be set up as an add-on to core coverage, and are available through several providers.
Key Takeaways
When designing an employee benefits package as a small business, it's important to get creative and focus on unique perks that set you apart from larger companies. Here are some key takeaways:
Get creative with flexible, voluntary, and supplementary benefits like critical illness, wage loss replacement plans, pet insurance or paid volunteer days to offer something unique. Employees appreciate companies that think outside the box.
Focus on culture and non-monetary benefits like remote work options, casual dress codes, and company gatherings/events to make your workplace fun and attractive.
Partner with a trusted consultant to help guide your organization, and negotiate discounted group rates on standard benefits like health & dental insurance. Leverage your small business size for savings.
Promote your benefits clearly during the hiring process and onboarding. Ensure employees understand all the perks available to them and how to utilize them.
By getting clever with your offerings, emphasizing culture, partnering strategically, and promoting your packages, small businesses can design benefits that help them punch above their weight and draw top talent.
About Benefluent Advisory
Benefluent Advisory is a leading employee benefits consulting firm dedicated to crafting innovative strategies tailored for the modern workforce. With decades of combined experience, our experts provide guidance to maximize the value of your benefits program.
Our services include:
Strategic benefits planning
Cost containment strategies
Plan design and administration
Vendor analysis and selection
Employee communication and education
To learn more about how Benefluent Advisory can optimize your benefits program, contact us today:
Phone: 1 888-984-6070
Email: hello@benefluent.ca
Website: https://benefluent.ca/
Our team of experienced consultants look forward to helping you provide exceptional benefits that empower your workforce.