Salary, benefits and incentives: a jargon buster
Discover the benefits you could receive when you start your first graduate job.
It’s not just about salary and progression; many graduate jobs also offer a range of other benefits. A number of large graduate employers also allow you to customise or ‘choose your own’ perks from a range of options. We’ve put together a guide to popular perks you might be offered at work, their true value and which to choose if your employer is flexible.
- Bonus. It's pretty obvious... bonuses are extra payments. They're often related to the company's performance, but some are awarded for individual excellence. Many companies give a Christmas bonus, which can be useful for buying presents or if you want to soak up some winter sunshine.
- Commission. If you work in sales or marketing, you may get commission. You have a basic salary and for every sale you make you get a percentage of the profit. The more you sell, the more you earn. You have more motivation, which is good for you and for the company.
- Company car. A free car from your new employer? Sounds fantastic... what's the catch? Bear in mind that there are financial implications – for example, if you use the car for personal use, you will be expected to pay income tax – and so investigate all of your obligations before accepting. Some employers will offer you a car allowance, paid with your salary, if you decide not to take a company car.
- Golden hello. A golden hello is a special bonus awarded when you join a company. Employers realise that moving and starting a new job can be expensive, so a golden hello is designed to help you settle in to your new position. You could use the money to buy new clothes for your new job, as a rental deposit on a house or flat, or for a season ticket.
- Health insurance. Private health insurance means you'll be able to have consultations, tests and operations without joining the end of an NHS waiting list. It's just like any other health insurance, but you don't have to pay for it. In some cases the insurance will cover your immediate family as well. Again, bear in mind that you will have to pay income tax on the cash value of the health insurance. There may also be 'excesses' on some forms of treatment.
- Pension plan. It may seem ridiculous to start saving for your old age when you're starting your first job, but it's not. Really. All companies must now offer some form of pension scheme and they must pay at least the minimum contribution. If you are earning more than £10,000 and are aged over 22, your employer will automatically enrol you in its pension scheme, though it is possible to opt out if you want to. Usually you put in a little money each month, your company puts some in too and the government pays back the tax you paid on it. If you decide to opt out, you are effectively rejecting an extra bit of money your employer wants to give you. But, of course, you have to make an informed decision on the best action for you at any given time.
- Mobile phone, laptop and/or other devices. Some companies provide you with communications equipment for work. This is particularly useful if your job entails lots of time out of the office or you work from home. Some are exclusively for work-related use, but your employer may cover some personal use as well.
Some other incentives you may also come across include:
- Free gym membership. This does what it says on the tin but, if this is an important part of the package for you, it is worth checking that the chosen gym will meet your needs and is in a convenient location for you. Some offices, particularly in the City, will have their own in-house gym.
- Free breakfast. Some companies advertise free breakfast when it is in fact just free fruit. Other companies do offer a legitimate version of breakfast. If you think you might rely on this, maybe check out informally with some of the employees how substantial it is!
- Subsidised café/canteen. If it doesn’t offer you free food, an employer may well subsidise the purchase of lunch, snacks and coffee by subsidising its in-house restaurant.
- Retail discounts/vouchers. A number of employers have corporate agreements with certain brands or retailers to offer you money off purchases. These could include entertainment venues, such as specific cinema chains or theme parks, too. A definite advantage if you’re a shopaholic!
- Travelcards or season ticket loan. Some employers may either subsidise or help you manage your commute on public transport. Sometimes they will offer a London Underground Travelcard or a 16-25 railcard or a season ticket; sometimes they will offer an interest-free season ticket loan, which you usually repay in instalments out of your salary each month. Obviously, these perks will not help you if you plan to drive to work!
- Cycle to work scheme. This government initiative aims to encourage more people to commute by bike. The cost of a bicycle and cycling equipment is deducted from your payslip over a number of months so you don’t pay tax or national insurance on these.
- Wellbeing initiatives. Some large companies have on-site counsellors and masseuses for their employees or offer employees a ‘wellness budget’ that they can spend on an activity that enhances their wellbeing. While a 3.00 pm shoulder rub might sound nice, this might well reflect a stressful environment or long working hours.
- Holiday-related choices. Every full-time worker and employee is entitled to 28 days’ holiday per year, but this number can include bank holidays. Many employers allow you to ‘buy’ extra holiday, sacrificing some of your holiday, and a few even give you your birthday off as an extra day of leave if it falls during the week. It was widely reported in the news that a few employees actually give you a limitless holiday allowance. However, don’t think this means you can work two weeks a month; companies tend to do this when they’re confident that you will be invested in your work enough to be sensible with your annual leave.
- Volunteering days. Some companies offer a certain number of hours or days each year as paid time off to do voluntary work. They enable you to give something back to the local community or a charity without taking up time from your holiday allowance or weekends.
The salaries, perks and benefits offered by different graduate employers
To find out more about salaries and benefits for popular graduate professions, read our guides to salaries and benefits in specific industries:
- Accountancy and financial management salaries and benefits
- Civil engineering, construction and surveying salaries
- Consulting salaries and benefits
- Consumer goods pay and career progression
- Engineering benefits and bonuses
- Insurance, retail banking and actuarial salaries and perks
- Investment banking and investment salaries
- IT salaries
- Law (barrister) salaries
- Law (solicitor) salaries
- Property salaries and benefits
- Public sector salaries
- Teaching salaries