Employee Benefits in the UK: All you need to know

What are employee benefits​? A comprehensive overview

Defining employee benefits

Put simply, employee benefits are additional, non-wage compensations provided to employees on top of their regular salaries. Benefits for employees play a crucial role in enhancing an employee’s overall work package and contributing to employee wellbeing, satisfaction and company loyalty.

The importance of employee benefits for companies and employees

Many prospective employees will often consider different companies’ employee benefits packages when deciding whether to switch employers or when deciding between job offers, so offering desirable employee benefits and rewards is a great way to set your organisation apart in a competitive job market and boost overall organisational recruitment and retention.

Employee benefits work to enhance overall employee satisfaction and wellbeing, which in turn helps to build a stronger workplace culture. Benefits can also work to reduce employee absenteeism, leading to increased productivity and higher quality work.

Types of employee benefits in the UK

Essential UK statutory benefits

While some employers choose to enhance their benefits beyond the statutory minimum, the following benefits for employees are legally required for companies within the UK to offer to their employees:

Holiday entitlement

Employees in the UK are entitled to a minimum of 5.6 weeks of paid annual leave per year, which can include bank holidays.

Pensions

Employers are required to automatically enroll eligible workers into a workplace pension scheme and make minimum contributions of 8% to their pension savings, which is split between 5% employee contributions and 3% employer contributions.

Statutory sick pay

Employees who are unable to work due to illness for four consecutive days or more are entitled to receive Statutory Sick Pay, provided they meet certain earnings and employment criteria.

Maternity leave

UK employees are entitled to up to 52 weeks of maternity leave, with statutory maternity pay available for up to 39 weeks, subject to eligibility.

Paternity leave

Eligible fathers or partners can take up to two weeks of paternity leave, with statutory paternity pay, following the birth or adoption of a child.

Adoption leave

Similar to maternity leave, adoptive mothers can take up to 52 weeks of adoption leave, with adoption pay available for up to 39 weeks.

Shared paternity leave

Eligible parents can share up to 50 weeks of leave and 37 weeks of pay following the birth or adoption of their child, allowing for greater flexibility in caregiving responsibilities.

National Insurance contributions

Employers and employees must both pay National Insurance contributions, which fund state benefits such as healthcare, pensions and unemployment support.

Statutory redundancy pay

Employees who have worked at their job for at least two years are entitled to receive statutory redundancy pay if they are made redundant, calculated based on age, length of service and weekly pay.

Voluntary employee benefits in the UK

Common additional benefits offered by UK companies can be split up into four distinct categories:

Health and wellbeing benefits

Many companies in the UK offer a variety of health and wellness benefits that help to support employee physical and mental wellbeing.

This can include offerings such as a Wellbeing and Employee Assistance Programme (EAP), dental care, eye care and private medical insurance.

Financial benefits

UK-based companies can offer financial benefits, for example a salary sacrifice technology scheme or Car benefit, alongside other options like Employee Discounts and Perks.

These provide key advantages to employees by supporting their financial security and stability beyond just their salary, which can help to reduce financial stresses and improve overall job satisfaction.

Lifestyle benefits

Benefits such as Cycle to Work, Gym Memberships and Travel and Leisure salary sacrifices help employees achieve a better work-life balance by supporting them with their personal and family needs.

This helps to reduce employee stress levels and enhance overall wellbeing.

Work-related benefits

Work-related benefits include things such as unlimited annual leave, remote options, flexible hours and professional development opportunities like additional paid training programmes and professional certifications.

This helps employees to feel empowered by their organisation to grow in their career and make their role suit their individual needs and career aspirations.

What benefits do your employees really want? (According to research)

Most wanted benefits by employees

In a survey on what employees want in 2025, workers noted wanting flexible working options, with 59% of employees without flexible options saying that they plan to leave within the next year. Additionally, 30% of employees reported a decline in their wellbeing over the past year, which shows a need for benefits that can help to support employees with their mental wellbeing. Furthermore, 8% of people who were surveyed claimed that good benefits would be their top reason for staying in their current company.

Current and future trends in UK employee benefits

Employers are increasingly focusing on digital health solutions like virtual GP services and mental health apps, financial wellbeing solutions and personalised benefits packages to cater to individual employee preferences and lifestyle needs. There has also been an increased level of support for remote work, such as home office setups and stipends for internet and utilities.

There will likely be a continued shift towards flexible and inclusive benefits, with technology playing a central role in benefit delivery and engagement.

Cost vs Value: The business case for employee benefits

Employee benefits help to create a more positive workforce and build a stronger workplace culture, boosting employee productivity and leading to a strong return on investment. Additionally, competitive benefits packages can reduce hiring costs by helping to attract top talent, enhance employer branding and increase employee retention.

United Kingdom employee benefits taxation

From a financial perspective, offering employee benefits can be tax-efficient as some benefits are exempt or receive tax breaks; however, employers must manage the complexity and administrative load involved with the taxation of employee benefits.

That said, employee benefits often allow companies to provide higher total compensation in a tax-advantaged manner, reducing overall costs for both employers and employees by leveraging tax exemptions and reliefs.

For a greater understanding of how employee benefits and taxes work together, it is always recommended to talk to a qualified tax professional in order to gain proper insights.

Exempt employee benefits

Some examples of exempt employee benefits include:

• Mobile phones
• Workplace parking
• Eye tests and glasses
• Cycle to Work schemes
• Work-related training
• Business travel expenses; etc.

Tax exemptions usually apply only within specific conditions, such as value caps, business relevance or specific employee categories. This requires careful management to ensure compliance with HMRC rules.

How to choose the right benefits package for your company

In order to choose the right benefits package for your employees, you should begin by assessing your peoples’ needs and your organisational goals.

Next, you should determine your company’s budget for benefits, so that you have a clearer understanding of what benefits your organisation can afford to offer as part of its package.

Your organisation should then research and select benefit providers and implement these new benefits within your organisation.

After implementing your organisation’s benefits package, it’s also important that you regularly review and update your offering as needed.

Implementing an employee benefits platform

Benefits of using an employee benefits platform

An employee benefits and rewards platform such as Perkbox can house all your benefits in one simple place, using technology to help you to streamline your company’s benefits administration. A benefits platform also makes it easier to communicate to your employees exactly what benefits they have on offer to them, and makes it simple for them to take advantage of their organisation’s benefits offering.

Customising benefits packages with Perkbox's platform

Perkbox’s benefits and reward platform helps companies tailor their benefits to suit their specific workforce’s needs. The platform’s high level of flexibility and scalability means that it will grow with your organisation’s needs over time.

Book a demo today to learn more about how Perkbox can help your company with its employee benefits and reward offering.