How an employee benefits package for small business can attract top talent

These days, more employers in Canada realize the advantages of offering employee benefits beyond those required by law, like pension plans, vacation leaves, or paid time off. Employee benefits, even for small businesses, are now seen as a form of compensation apart from basic wages. It’s no surprise then, that some employers consider employee benefits as intangible assets, much like the business’s reputation or brand.

Employee benefits are more than the perks they represent or the medical needs they cover; with the right strategy, they can become powerful recruitment, retention, and engagement tools – even for small businesses.

In this article, Benefits and Pensions Monitor discusses employee benefits package for small businesses. We’ll get into the important questions you may have if you run or are a part of a small business in Canada. So, how much do small business employee benefits packages cost in Canada? What comprises a good benefits package for small business? We’ll provide insight into these and more, so let’s get into it.

Introduction to employee benefits package for small business

To begin the discussion, what is considered a small business in Canada? Typically, a small business in Canada is one that has 5 to 99 employees. Having less than 5 is a micro-business, while those with more than 99 workers are classified as medium-sized businesses.

Due to their size, you may think that small businesses cannot offer employee benefits, but that is a misconception. It’s possible even for small businesses in Canada to have employee benefits packages, which can be comparable to their larger counterparts.

Why small businesses should offer benefits packages

If you run or are part of a small business, you must consider a benefits package for your employees.

Some benefits are required by Canadian labour laws, but your company can offer popular employee benefits to enhance existing ones.

Regardless of your business’ size, there are several advantages to offering an employee benefits package. These include:

• creating a work environment that supports employees’ physical and mental well-being
• boosting employee morale
• help maintain, if not improve, productivity
• reduce absences due to stress or illness
• attract and retain high-performing employees
• give your business tax benefits
• protecting your business, i.e., keeping trade secrets safe

The importance and effectiveness of employee benefits

Whenever it is mentioned that employee benefits packages are powerful recruitment and retention tools, there are many studies to back them up. One such study from a benefits provider gives strong evidence of this.

In 2023, Blue Cross Canada surveyed 2,000 employers and employees of small businesses in British Columbia. After getting their opinions on employee benefits, it was found that:

• if given the choice, 48% of small business employees in BC said they would rather have health benefits over a $40,000 raise
• 63% of those surveyed would rather have health benefits over a $10,000 raise, and 72% (almost three-quarters) preferred having health benefits over a $2,000 raise
• 80% of employees look at a company’s health benefits before accepting a job offer or new role
• 73% of employees that already have a health benefits plan at their current employer would not leave even if another company offered them more money
• 39% of the small business respondents cited cost as the main barrier to offering health benefits plans

According to the study, the average cost of these benefits was only around $1,822 per year per employee. The study also found that health benefits offer a significant return on investment across key performance indicators, like employee recruitment, retention, and productivity.

Mandatory benefits

These are benefits that are required by Canadian law and are strictly regulated:

• workers safety insurance/workers compensation insurance
• Canadian Pension Plan
• employment insurance
• legislated leaves

In terms of government-mandated health benefits, Canadians are typically covered by provincial healthcare plans. This universal healthcare program takes care of most essential care.

And while this is coverage that is much appreciated by Canadians, it does not cover every medical need, like some specialized health and dental procedures. In many cases, Canada’s healthcare program may not extend to medical needs like:

• massage therapy sessions
• eye or vision care (optometrist visits)
• dental care
• physiotherapy sessions

There may be some provinces or regions that may cover some of these medical needs, but generally, Canadians must still pay out of their own pocket for these. Depending on the severity of their medical condition, this can cost hundreds of dollars per year.

When businesses, even small ones, offer a well-rounded employee benefits plan, this helps employees bridge the gap between what’s covered by the government and what they might pay for. Additionally, by helping your employees via the health benefits your business provides, this can reduce absenteeism associated with illness as well.

What to include in an employee benefits package for small businesses

Knowing the inadequacies in government-mandated benefits, here are some suggested perks you can include in your employee benefits package:

Coverage for paramedical services

Sometimes referred to as parameds, paramedical services are healthcare services for reducing stress, managing pain, improving an employee’s sleep, and managing their overall well-being.

Parameds include:

• massage therapists
• naturopaths and dieticians
• psychologists and social workers
• physiotherapists and chiropractors

If your business decides to include these benefits, it’s recommended that your employee benefit plans provide a yearly dollar amount coverage. That way, employees and their eligible dependents can use them for treatments to support their mental and physical well-being.

Coverage for prescription drugs

While some provincial healthcare programs cover prescription drugs, this is not always the case.

By offering this as part of your employee benefits package, your employees get the medication they need, making them part of a healthy and productive workforce.

HR staff or a certified employee benefits specialist should ensure that the provider of this benefit:

• regularly reviews industry trends and stays informed of cost-effective drugs for this coverage
• regulates the dispensing fees
• acts in the business’ interests by seeking generic alternatives to keep the cost of this coverage manageable, while providing effective treatment to employees

Prime Benefits Group's Tony Conte highlights three key factors shaping the evolution of employee benefits: specialty drugs, technology, and pension planning. Innovation, knowledge, and experience drive their success.https://t.co/J1ZDUeahQz#benefitsplanning

— Benefits and Pensions Monitor (@bpmonitor_ca) April 29, 2024

Coverage for dental care

Your company may want to consider offering this benefit, especially since the proposed government-provided dental care program recently hit a snag. The Canadian Dental Care Plan (CDCP) is also limited in its scope and coverage of certain dental procedures, making this a potentially high-value employee benefit.

By providing employees with dental care coverage, they don’t have to wait on the CDCP. Coverage can range from routine check-ups and preventative care to major procedures, depending on the plan your company chooses. A dental benefits plan could help cover:

• basic dental procedures and treatments – x-rays, routine tests, cleanings and ongoing care
• major procedures – installing crowns, creating dentures, and doing bridgework
• orthodontic procedures – installing braces and providing retainers

Coverage for eye care

An eye or vision care plan is also a benefit that isn’t covered by government healthcare programs. Instead of having employees pay for their eye care out of their own pockets, affording them this benefit can help boost their productivity, engagement, and morale. Depending on the plan provider and level of the plan, this benefit can cover:

• routine eye exams
• glasses or contact lenses
• corrective procedures, like LASIK surgery

Disability benefits (short-term and long-term)

There may be times when an employee may be unable to work due to an injury, illness, or disability. Helping employees and the business navigate these rough patches can be done with the assistance of disability benefits, either short-term or long-term.

Both these disability benefits use a comprehensive approach to prevent disability and assist employees in managing disability claims. Here’s where disability claims can be of use to employees and the business:

• taking preventative measures – supplying resources and support to help employees remain healthy, avoiding or reducing health-related absences
• aiding in recovery – another feature of short-term and long-term disability benefits is assisting employees to make their disability claim, while helping them recover and get back on the job
• assisting employees’ return to work – support is made available to help employees return to work after a short-term or long-term absence

Taxable employee benefits

Additional benefits offered to employees may be considered a source of income and deemed taxable, unless they meet the criteria for tax exemption.

Before making certain benefits part of your employee benefits package, check the latest CRA benefits allowances to see which benefits are taxable and those that may have tax deductions.

Employee assistance programs (EAP)

An Employee Assistance Program (EAP) can help employees and their family members deal with personal issues. Helping employees deal with these issues can positively impact their job satisfaction, productivity, and morale. EAPs can help them manage or deal with:

• mental health issues
• substance abuse
• work-life balance and more

If you choose to have an EAP, make sure you have the resources to communicate their benefits to your workforce. You must also ensure that employees understand that their personal issues will be held in the strictest confidence to ensure they make use of the EAP.

Insurance

Small business benefits can also include those that can protect employees and their families from unexpected, unwanted events. You can offer these types of insurance as part of a small business employee benefits package:

• life insurance – if the policy holder dies, a lump sum is paid to their beneficiaries. This money can help your employee’s family with funeral costs, paying debts, or serve as compensation for loss of income
• critical illness insurance – following a life-altering diagnosis of a covered condition, this lump-sum payment can reduce an employee’s financial burden as they battle serious illness
• accident insurance – this type of insurance can provide a lump-sum payment if an employee sustains catastrophic injuries. It can also help an employee’s beneficiaries financially after the policy holder’s accidental death.

Emergency medical care and assistance while traveling

This benefit can be invaluable for small businesses that require employees to do some international travel. In situations where they need medical evacuation or medical assistance, this gives employees in unfamiliar environments access to a global support network.

Specialty benefits small businesses can offer

Small businesses can become even more creative when offering benefits like these:

Healthcare expense accounts

This healthcare benefit provides employees with flexible, tax-effective coverage for health-related expenses not typically covered by their plan, or to enhance their existing benefits.

“New to Canada” or expatriate insurance

If your company has new migrants or expatriate workers, this can provide them with health insurance since they are not eligible for universal healthcare coverage.

Retiree health benefits

Your small business can choose to offer this benefit to long-time employees who are up for retirement. This benefit can give them affordable options to keep dental and health benefits even after they retire.

Group savings plans

Offering a group retirement savings plan apart from the usual RRSP can present your business as more forward-looking and concerned for employees’ financial futures. Providing access to a group savings plan can be an effective and cost-efficient way to recruit, motivate, and retain employees, all while helping them build their retirement nest egg. Even your small business stands to benefit from:

• tax deductions – some group savings plans allow you to deduct administrative fees as a business expense
• lower payroll expenses – in some cases, contributions to a deferred profit-sharing plan reduce payroll expenses
• simplified plan governance – with the right provider, a group retirement and savings plan does not have to be burdensome. Some plan providers can ensure that your plan is administered well and remains compliant.

Crafting an employee benefits package for your small business

Even small businesses can have employee benefits plans that attract, motivate, and retain top talent in their industry. When you find the right plan provider, you may even be surprised to find that offering a benefits package that can compete with your bigger rivals in the business.

This short, straightforward video is a sample of how some plan providers make it possible for small businesses to offer similar plans as larger organizations:

To come up with an employee benefits package for your small business, you should first develop the right benefits package that fits your business’s needs, goals, and budget. Consider also the demographics and needs of the sort of employees you want to hire and keep, then find the right plan provider.

Did you find this piece on employee benefits packages for small businesses useful? Let us know in the comments below