News & Insights

The Rise of Perkwashing

Some employers have turned to “perkwashing”, to lure potential employees with illusory perks and benefits – but what are the legal risks of this practice?

What is perkwashing?

Perkwashing involves employers inflating the benefits they offer to get new employees through the door. For example, they may offer “flexible working”, which in reality involves employees logging on at evenings and weekends. Alternatively, an employer might claim that they are committed to diversity and inclusion – but fail to offer the schemes that they claim to, which is known as “diversity dishonesty”.

It is important to note that employers often do not engage in perkwashing intentionally, but instead lack the resources to follow through on their promises. To determine whether your organisation might be perkwashing, a good place to start would be to assess each policy on offer and consider the corresponding concrete benefits: how do they play out in practice? How many people have used a particular benefit in the last year? What does the benefit actually entail? What is the motivation behind the policy, and what is the desired outcome?

When offering services such as mental health support, it is also important to consider if these are run by clinical experts and are intended to assist employees, or if they are simply box-ticking exercises which provide no tangible benefit.

What are the practical implications?

While some employers might take the view that perkwashing is a clever way of enticing new employees and improving recruitment without having to substantially increase costs, there are practical risks that should be taken into consideration. In the short term, perkwashing might improve the number and quality of candidates. But, as these employees later come to realise that the benefits that they were initially offered were either overblown or entirely illusory, there is likely to be increased staff turnover, putting additional pressure on recruitment.

While employers can include provisions in settlement agreements and non-disclosure agreements to try and limit the damage caused by discontented departing employees, there is still likely to be some fallout from perkwashing, as former staff may, in spite of their contractual obligations, privately tell their friends and family about the realities of the organisation’s underwhelming benefits packages. Word of mouth may have the knock-on effect of wider reputational damage for the employer, and a regression in applications by new candidates, discouraged by rumours of perkwashing. Once a reputation for this kind of behaviour is acquired, it may be hard to “wash” out the stain (pardon the pun!).

If employers want to mitigate this risk beyond using non-disclosure clauses, it may be wise to offer current employees the opportunity to provide feedback on benefits packages, so that they can flag any dissatisfaction at an early stage. Employers who are responsive to this feedback and improve or alter their benefits accordingly are likely to generate greater job satisfaction and improved employee retention.

What are the legal implications?

There are also potential legal risks associated with perkwashing. Whether such promises are sufficient to give rise to a contractual obligation for employers to uphold depends largely on the intention behind them – were they merely a statement of intent or a guarantee? How clear was the wording? If benefits are deemed to be contractual, employers who fail to deliver could find themselves being taken to a tribunal for breach of contract.

Even where the benefits themselves are not an express term of the employment contract, if an employer overstates the existence of benefits or perks before pulling the rug out from under the employee, then it could be argued that the employee has contravened the implied term of trust and confidence, which is considered to be a natural term of all employment relationships. Again, this could result in a breach of contract claim.

If you require assistance with drafting your employment contracts or policies, or would like any other employment advice, please get in touch at [email protected]