Small businesses are suffering a staff brain drain with nearly one in five workers quitting each year for new jobs blaming poor employee benefits, according to research from online provider Pure Benefits.

The study found that 18% of small business staff - around 450,000 people a year - have swapped jobs for a larger employers in the past five years, citing a lack of benefits as a major factor.

Small businesses with fewer than 50 staff employ more than 12.4 million across the UK and have total annual turnover of more than £1.2 trillion but struggle to source employee benefits such as life insurance, income protection and private medical insurance for staff, Pure Benefits said.

The research found that 63% of small business owners are confused by the employee benefits options on offer and don’t know how to find cost-effective solutions for staff. More than a fifth of owners (22%) say they do not offer any benefits.

Stuart Gray, founder and chairman of Pure Benefits, said: “The small business brain drain is a growing issue for small companies with nearly one in five staff leaving every year simply because they are not receiving the benefits the big firms provide

“That is a major brake on the ambitions of small business owners who our research shows are committed to expansion. Around 80% of companies told us they want to grow while 47% say they want to protect their business.

“Well-designed and cost-effective employee benefits are a major driver in enabling businesses to grow and ensure staff feel valued and are more productive as a result.”