Car crash victim flexed death-in-service for extra holiday

A bereaved family is without death-in-service after a father traded the benefit for extra holiday and was subsequently killed in a car crash.

The man traded cover equivalent to four times salary for three extra days holiday. He died eight months after the new scheme was introduced.

Aspira managing director Derek Miles, who came across the case in a Manchester company he now advises, says the tragedy highlights the risks of allowing too much flexibility in flex benefit arrangements.

In addition to the traditional benefits they had always had for staff, including pension, death in service, income protection and private medical, the company added new choices including gym membership, critical illness cover, discount schemes and additional holidays.

Miles says the case shows the importance of ensuring certain key benefits cannot be surrendered when structuring flex arrangements.

Miles says: “While it seems great to give employees choice and control, sometimes the consequences can be dire. As an employer it is worth checking that whatever benefits you offer your staff and that they do what you want them to do. Helping staff to value the right benefits will always be a challenge, but sometimes good old-fashioned core benefits have the most value of all – even if the staff don’t realise it at the time.

“Don’t be afraid to make sure those core benefits stay in place and cannot be swapped for perceived sexier benefits…you never know when they will be needed.

“Although flex benefits offer staff real control and choice over how an employer provides additional benefits to its staff, there are cautionary tales about what you allow staff to do.

“Unfortunately this employee in his choices placed far more value on three extra days of holiday to spend with his young family, at the expense of that useless four times salary ‘death in service’ – life cover that he didn’t believe he needed, but which would have provided a significant buffer for the family in question. Had he died a year previously before the introduction of the new system, he would have had the life cover – no choice.”