Small firms that have invested in benefit packages for staff could be wasting their money by failing to emphasise the value of such perks to employees.

According to a survey by YouGov on behalf of Oval Financial Services, 76% of employees do not understand their benefits package and 63% of those who are offered benefits only use them rarely.

Over 70% of employees do not understand how 'creative‘ benefits such as providing bikes for work use and leisure vouchers apply to them, while 64% do not see health club memberships as important, the study found.

The least understood benefits were dental, income protection, childcare vouchers and critical illness cover.

"Providing a bells-and-whistles reward package is just not enough," said Chris Metz, head of employee benefits at Oval Financial Services. "A company needs to know exactly what their employees really want, otherwise they are just throwing away millions of pounds with little return on their investment. Many companies are still getting it wrong."

The main reasons for staff failing to understand the benefits that are available to them were poor communication and a failure to provide a statement showing employees their total reward package, including benefits and pay.

Oval advises companies to make their benefits information available on their company websites, after the survey found that 70% of employees use the internet for financial advice. This was twice as popular than any other source.

"We conducted this survey to show companies that they need to rethink their employee benefits scheme," said Metz. "But, more importantly, they need to rethink how they communicate it to their employees in order to get the most out of their investment."

The survey covered 4,180 respondents in a mix of sectors in businesses of all sizes throughout the UK.