Recently the MD of a small company asked me if I thought they should provide employee benefits such as life cover and retirement funding for their employees. Currently the company leaves that entirely to each employee to sort out for themselves.

Due to the cost and administration implications, small and even medium-sized companies are reluctant to offer any employee benefits, choosing to leave those decisions up to their employees, yet a recent FinScope survey found that when it comes to life cover and retirement funding, unless a company was providing mandatory cover, individuals were very unlikely to have sufficient cover in place.

So my response was that I think the company is carrying a major liability by not providing for their employees. Statistics suggest that it is very unlikely that many of the company’s employees have made sufficient provision themselves, and ultimately the families of the employees will have some expectation that the company will provide for them.

What happens when one of his employees, who has worked for him for 15 years, is in a car accident and unable to work again? Or is killed in that car accident leaving a family, including young children, financially destitute? Or what happens when the employee retires and has nothing to live on except the state pension? How would he, as head of the company, feel?

Ironically, it would be easier for a large organisation, which is more likely to have employee benefits in place, to wash its hands of the situation and point the disabled employee or widower to the employment contract. It would be much harder, emotionally, for the head of a small company who would have worked closely with the employee, and met his or her children at Christmas parties, to take the same line. As a decent human being he would feel obliged to offer assistance, and that for me is where the liability is derived. It would be a responsibility born out of emotion rather than legality.

So, if your company is not providing protection or retirement benefits, are you doing anything about it? And if not, does your family know that should something happen to you, there is nowhere for them to go?

Let us have your comments below: would you prefer your company to deduct money for life cover and retirement or would you prefer to have a higher take-home pay and do it yourself?

This article first appeared in City Press.