Childcare voucher schemes: Friend of the family

If you knew that there was a way for your organisation to offer your staff a reward without having to pay tax and National Insurance, that would improve your reputation as an employer and could potentially reduce absence, surely you would do your best to get as many staff signed up as possible?

The benefit in question is childcare vouchers, and while three-quarters of companies offer a childcare voucher scheme, half of those companies have less than 5% take-up, according to our research, carried out in association with Sodexo’s incentives and benefits services arm. Only 8.9% had more than 30% take-up.

Free benefit, low adoption

Anyone who earns above the minimum wage is eligible, and HM Revenue & Customs offers a free calculator on its website for both employers and individuals to check if they qualify.

In this article…

Free benefit, low adoption 
Better communication needed
Improving communications channels 
Benefits to employer brand 
Ease of administration 
A win-win for staff and employers 
About Sodexo

“It’s cost-neutral, it saves parents money and it’s also a means for paying for childcare that working parents might not otherwise have,” explains Fay Bliss, marketing services manager at voucher provider Accor. “The money you save goes straight back into your pay packet to spend on what you like.”

So while there is clearly enthusiasm to offer voucher schemes, why aren’t all working parents making the most of them?

Better childcare communication needed

This is largely down to how organisations communicates the scheme, according to Iain McMath, chief executive of Sodexo’s rewards and incentives division.

“In many cases the make-up of the company may mean there are lots of parents with teenagers, for example, who won’t have a requirement for vouchers. But a lot of the time it comes down to how it’s communicated.”

Bliss adds: “There’s a misconception that childcare vouchers are just for mums,. A family could double its household savings so it’s important that all working parents know how to access them.”

Our research supports this view. While take-up followed organisations’ gender split in the majority (45%) of respondents, many organisations alluded to a perception that mothers were more likely to make the most of the benefit as they were largely responsible for organising childcare. In some cases, vouchers are actively offered on women’s return from maternity leave so they are naturally more aware.

Improving communications channels

Suppliers are working with organisations to try and make their schemes more inclusive. Accor recently developed a campaign with one client focusing on how dads could spend their savings on a football season ticket to enjoy with their sons. Sodexo, meanwhile, tailors its clients’ marketing depending on the profile of their employees.

And this appears to be working. According to our survey, 81% of organisations felt that awareness of voucher schemes had increased in the last five years.

Childcare benefits and employer branding

The key benefit of offering childcare vouchers is an enhancement in reputation and employer brand, our research suggests. A strong majority, 91%, either agreed or strongly agreed that offering childcare vouchers improved company reputation, while 88% agreed or agreed strongly that it boosted employee retention.

But while these may be perceived as ‘soft’ benefits (only a third thought offering such schemes reduced absence) McMath insists that there are measurable cost savings attached to these benefits.

“Think about the cost of recruitment,” he says. “You reduce the requirement to recruit new people by retaining those with caring responsibilities, and that’s something that can be recognised.”

A smaller proportion (36%) agreed or strongly agreed that offering a voucher scheme helped reduce absence, but John Woodward, group managing director of voucher provider Busy Bees, says they do, but in an indirect way.

“The vouchers may potentially help reduce the number of occasions when time off is needed by an employee and when it may not necessarily need to be taken if the vouchers were available to them,” Woodward explains.

Despite these benefits, however, the adoption of childcare schemes was more prevalent in larger companies – 88% of respondents with more than 1,500 staff offered childcare vouchers, compared with only 49% in companies with less than 50 employees.

Ease of childcare administration

In organisations that do offer vouchers, the ease of administration for all concerned is a key factor when choosing a provider, our research reveals. More than half of the respondents offer employees an online voucher scheme, and the majority (79%) put this down to these being easy to manage. Organisations also place a lot of value in suppliers that make the administration easy for both employer and carer. “Lots of care providers will be small, even one-person operations, so it’s important to make it easy for them,” McMath points out.

There was a variety of reasons for organisations not offering childcare vouchers, ranging from lack of resource to scepticism about take-up. In some organisations, staff are concerned about how childcare vouchers might affect their overall salary or pension.

A win-win for staff and employers

Ultimately though, McMath argues that the schemes are a win-win for both employers and staff – increasing take-up is simply a question of better communication.

“It’s an incentive from the government that it doesn’t promote,” he says. “Offering vouchers could be your reason for keeping people, or the deciding factor in a potential recruit moving jobs.”

Eldercare – the next wave of reward?

Around half the respondents to our voucher survey expressed an interest in offering a similar reward scheme for staff who look after elder dependants.

Only 1% of respondents currently offer an eldercare voucher scheme, but in the larger organisation (of more than 1,500 employees) that took part in our survey, the percentage of respondents interested in offering eldercare vouchers was 59%.

While the level of interest is encouraging, according to Iain McMath, chief executive of the reward and incentives arm of Sodexo, one of the reasons employers don’t offer it is because eldercare reward does not receive the same government subsidies as childcare.

Last year, a number of employers called on Prime Minister Gordon Brown to offer greater tax breaks for carers, and Personnel Today has backed such a campaign for the past two years.

But it’s not just a case of making a financial case for employers. Some staff feel uncomfortable asking for time off to look after elderly dependants, so employers fear that staff take-up would be low.

“People accept it when you need time off to look after your children as it’s often a positive thing,” explains McMath. “But having to take time off to look after parents with mobility problems is somehow not as acceptable. Employers need to create an environment where staff can be more open about it.”

According to charity Carers UK, within 30 years, more than 25% of the population will be aged over 65, and the number of carers will rise to nine million.

About Sodexo

Sodexo is a leading provider of voucher services in the UK. In November 2004, the company launched an online childcare voucher service called Childcare Choice.

Childcare Choice enables employers to reduce their employees’ childcare costs and also save money for their organisation. Parents receive electronic vouchers, which can be used to pay directly into their carer’s bank accounts via the internet.

The scheme is easy for employers to set up and manage and is fully supported by Sodexo’s experience in voucher services.

Click here for more information, or contact Sodexo on 0800 328 7411.

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