Employers are having to meet spiralling employee benefit expectations in order to retain key staff, with company cars heading the most sought-after perks, new research has found.

The study, conducted by FleetLine, found that 60 per cent of staff expected more employee benefits than they did five years ago, with over half wanting company cars over any cash-based incentive.

Although employee demands have risen in recent years, 38 per cent of employers said that having a company car scheme had saved their firms “significant” staff recruitment and retention costs.

Poor public transport was a key reason for company cars being so popular among workers, with 46 per cent of bosses feeling the government’s transport policy wasn’t up to scratch.

The importance of retaining key staff with perks such as company cars has increased dramatically in recent years due to the difficulty in finding skilled employees on the UK job market.

An estimated eight million British workers do not have the correct skills to properly do their jobs, leaving firms competing against each other for high-quality staff, using perks such as free gym membership, company cars and bonus schemes to attract sought-after candidates.

This competition for skilled employees has left many small firms at a disadvantage as most do not have the resources of larger companies to offer attractive benefit packages.

David Harnett, director of FleetLine, said that investing in a company car scheme could be invaluable to employers.

“When our research is paired with existing industry research showing that recruitment and retention was one UK employers’ most pressing and escalating concerns, it becomes even more apparent that company cars remain a relevant business tool.

“It is also quite telling that our research shows a company car is considered a more effective benefit in retaining staff than flexible working hours, company pensions and increased holiday allocation.

“This research provides great insight to employers. In an age of human capital, it is increasingly important to focus on productivity and employee retention.

“Employees are not just accepting the lower standard benefits,” he said.