UK Employee Benefits
What are the main employee benefits in the UK?
Many people view employee benefits as the icing on the cake of employment - but really, they are much more.
Employee benefits are often what make employment more than just a simple exchange of work for money: they help turn the workplace into somewhere that helps employees grow their careers, take care of their health and build a strong support network. For HR managers, employee benefits help create a healthy work environment, which in turn helps boost productivity and increase employee retention.
What are the main employee benefits in the UK?
Here’s what we’ll be covering in this article:
What are employee benefits?
What are the mandatory employee benefits in the UK?
What are some of the other benefits?
Benefits for health
Benefits at work
Lifestyle benefits
Financial benefits
What are employee benefits?
Put simply, employee benefits are extra incentives that employers add onto a salary. They are designed to increase employee satisfaction and improve productivity, and make a working environment better suited for employees.
There’s quite a few types of employee benefits, ranging from pension schemes, to flexible working hours and childcare. Some benefits are required by law, while others are seen more as “office perks”.
What are the mandatory employee benefits in the UK?
The employee benefits required by law are often called “core benefits”, and there are three main ones in the UK:
A workplace pension
Statutory sick pay (SSP)
Holiday allowance (28 days paid leave)
Since 2018, all employers now automatically enrol employees in an employer’s workplace scheme. Once an employee earns over a certain amount, they are automatically enrolled in a pension scheme that allows them to contribute pre-tax income into a pension. Usually, the employer must contact the employee to explain the various options. There are minimum contributions for both employees and employers, starting with 3% of qualified earnings.
SSP entitles employees to £95.95 per week if they are too ill to work, and employers are required to pay up to 28 weeks. With holiday allowance, employees are entitled to at least 28 days of paid leave every year.
What are some other main benefits?
There are quite a few other company perks employers can offer that help improve company culture as well as attract top employees.
According to Benify’s Employee Happiness Index, there are 4 main types of employee benefits:
Benefits for health
Benefits at work
Financial security
Lifestyle benefits
Benefits for health
Sick pay
Sick pay is one of the most well known employee benefits. As the phrase suggests, sick pay is a benefit that includes paying an employee’s salary for a certain period of time if they get sick. There is a standard sick pay that is mandatory by the government, but employers often have their own sick pay scheme or “occupational scheme”.
Dental and optical insurance
This benefit offers reimbursements for certain dental and optical procedures. There is often a limit to how much an employee can claim back, and it is often paid out as a lump sum.
Private medical insurance (PMI)
Private insurance serves as a benefit that complements the NHS. It allows employees to access private healthcare to treat certain medical issues. Other benefits included might be a private GP, private travel insurance and private cancer treatment.
2. Benefits at work
Free lunch and snacks
For large organisations with many employees, it’s often worth investing in a cafeteria or subsidised meals. These benefits might include lunch meals, free snacks and free coffee. They help encourage healthy eating habits and make life easier for employees who don’t have time to prepare meals at home.
Clubs and activities
This benefit is a great way to build a culture in the company and encourage employees to be part of a community. Clubs and activity could be as simple as organising a regular monthly dinner with the team, or setting up a writing or running club. It also includes organising secret santas, Christmas parties and lotteries.
Company car
Some companies offer company cars to help employees with their job, such as for movers, estate agents and tradesmen. These benefits may come through as a cash allowance, or directly through the supply of a company car.
3. Lifestyle benefits
Lifestyle benefits are designed to help employees manage their work life balance and therefore increase productivity and employee satisfaction.
Flexible working hours
Offering flexible working hours is a great way to encourage employees to be more autonomous and work from home whenever they want to. This is hugely beneficial for parents who have children or need to take care of other members of the family.
Gym membership & discounts
Employers can partner up with facilities or other organisations to offer membership discounts. These could be a gym memberships, flight points or restaurant discounts.
4. Financial benefits
Workplace pension
As mentioned above, it is mandatory by law for an employer to enroll employees into the workplace pension. The most popular pension type is called defined contribution, enabling employees and employers to contribute a portion of their earnings into a pension. Although the minimum is 3%, employers can offer a higher contribution before tax - with some going as high as 18%. Employees use these pension pots to fund their retirement later on.
The other type of pension plan is called a defined benefit pension, and is less common nowadays. Instead of a contribution, employers must issue employees a retirement salary based on the number of years and salary earned by the company.
Salary advance scheme
A salary advance scheme allows employees to receive their wages as soon as they’re earned. With an earned wage scheme (EWA) employees have access to funds and can therefore use their own earned money for emergencies, rather than taking out debt or relying on a payday loan. It’s a great scheme that helps employees manage their money more efficiently and avoids them falling into the cycle of debt.
An EWA system such as FlexEarn helps increase employee productivity as well as retention, and also works as a great way to attract new talent. It’s a great financial benefit for employees that doesn’t cost employers anything - employees just pay £1.50 per withdrawal and can access their funds as soon as they earn them.
To summarise, the main mandatory employee benefits in the UK are workplace pensions, SST and holiday allowance. Employers can then choose to offer additional workplace perks, that are generally categorised under lifestyle, financial, health and work benefits. Employee benefits are a great way for employers to show that they’re invested in their employees, and helps them stand out from the competition - and for benefits such as EWA, it doesn’t cost anything!