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The Employer’s Guide to Employee Benefits in the UK

Key Takeaways

1. Employers must provide mandatory employee benefits in the UK to their staff. These include pension contributions, holiday leave, sick pay, paternity and maternity entitlements.

2. In addition to the mandatory benefits, employers may also decide to give their staff additional benefits such as memberships, health insurance, extra holiday entitlement, bonuses, flexible working, and staff away-days.

3. Discretionary benefits are ultimately up to the employer to provide and some companies do not provide extra perks at all. It is often a good idea to give employees supplementary benefits as it attracts new talent and also helps retain existing workers. 

4. If a company provides great employee benefits, staff are less likely to want to leave to seek work elsewhere, as work benefits can really make a difference to well-being and work/life balance.

5. Employers operating in the UK must be aware of all the mandatory benefits that employees are entitled to in order to be compliant with local laws.

Employers that are doing business in the UK will need to adhere to UK employment laws and one of the main aspects of this is knowing exactly which entitlements employees should receive in the UK. As such, the government clearly lays out what is required of UK employers.

Not only are employers required by law to provide certain employee benefits in the UK, but it is also usual to offer additional or discretionary benefits to employees. In some industries, highly skilled individuals can have their pick of great organisations to work for, and sometimes, the minimum mandatory benefits are just not enough to attract and retain them, especially where other companies offer more exciting opportunities and benefits to their staff.

Employee benefits such as being offered extra holiday days can add to staff productivity and boost team morale. It is therefore often in the best interests of the company and the staff to provide more than the standard benefits.

What are the compulsory or mandatory employee benefits in the UK?

By law, employers must provide certain mandatory employee benefits in the UK to their staff. We consider each in turn. 

1. Pension entitlements

According to UK law, all employers must offer a workplace pension scheme to their employees. Employees who are over the age of 22 and earning at least £10,000 per year must be automatically enrolled in the employment pension scheme, or employees can choose to enroll themselves if they are not automatically enrolled. As part of the workplace pension scheme, the employer needs to contribute an amount to the employee’s pension and the employee will also need to contribute an amount. Usually, the employee’s contribution is deducted from their payslip or pay stub, or sometimes they can have a “salary sacrifice” or SMART scheme. This means that employees will give up part of their salary which will be put directly into their pension pot and the benefit of this is that sometimes it results in having to pay less tax.

The amount that each side contributes is dependent on the pension scheme. However, generally, contributions will be made based on the amount that an employee earns. The employer will generally pay at least 3% towards the pension and the employee will pay at least 5% towards their pension.

2. Holiday pay entitlements

As part of UK labor law, employers must provide employees with holiday entitlements or annual leave. For most full-time employees this amounts to at least 28 days of paid time off per year or 5.6 weeks. 20 of those days are usually for the employee to choose when they want to take time off, and the other 8 days are mandatory statutory holidays called “bank holidays.”

An employer can choose to give their employees more holiday entitlements than the statutory minimum, and some employers give extra days to those who have been with the company for a year or more as an incentive to stay.

3. Statutory holiday days

Usually in the UK, employees are given 8 days of national statutory holiday days called “bank holidays,” however, in 2022, an extra day has been added for the Queen’s Platinum Jubilee.

The following bank holiday days will fall on the following dates in the UK in 2022:

3 January New Year’s Day (substitute day)

15 April Good Friday

18 April Easter Monday

2 May Early May bank holiday

2 June Spring bank holiday

3 June Platinum Jubilee bank holiday

29 August  Summer bank holiday

26 December Boxing Day

27 December Christmas Day (substitute day)

4. Sick pay

Employers must cover Statutory Sick Pay (SSP) which is £96.35 weekly for up to 28 weeks. Employees will need to provide sick notes and fit notes from the doctors in order to evidence that they are unable to work due to sickness.

5. Maternity entitlements

When women take time off work to have a baby they may be entitled to benefits such as maternity leave, maternity pay, and paid time off to attend antenatal appointments.

  • Maternity leave: Women are entitled to Statutory Maternity Leave (SML) which is usually up to 52 weeks. By law, women should not work in the few weeks after the birth.
  • Paid time off for ante-natal medical appointments: Women are entitled to take time off if they have been recommended antenatal appointments by a medical professional.
  • Maternity pay: Employers must pay UK Statutory Maternity Pay which is 39 weeks of pay in most cases.
  • KIT days: Women may also be able to take up to 10 “keeping in touch” (KIT) days during the maternity leave which means they can return to work and settle back in. This is not however a mandatory benefit and must be agreed upon by both the employer and employee.

6. Paternity entitlements

Fathers are also entitled to rights when their partner is having a baby. The father must be an employee and must have continuously worked for the employer for at least 26 weeks up until the 15th week before the baby is due to be entitled to benefits.

  • Paternity leave: Fathers can choose to take 1 or 2 weeks of paternity leave.
  • Paid time off for ante-natal appointments: Appointments that have been recommended by a medical professional can be given as paid time off for a father who is accompanying a pregnant woman to appointments.
  • Paternity pay: Fathers are entitled to £151.97 per week paternity pay or 90% of their average weekly earnings, whichever is lower.

You can read more about paternity and maternity leave entitlements generally in our Employer’s Guide to Parental Leave.

What are the optional/discretionary employee benefits in the UK?

In addition to the mandatory employee benefits in the UK, employers can also provide additional or discretionary benefits to employees. Supplementary benefits may include things like private health care and dental care since the UK has a free national health care system. Employers can also provide staff bonuses, extra holiday entitlements, gym memberships, discounts, or retirement planning help.

Extra discretionary employee benefits can be important to attract highly skilled employees and can be a good way to retain them. Companies that provide extra benefits than the standard statutory minimum can stand out as good employers to work for, which can help with reducing high staff turnover rates.

Manage UK employment benefits with Horizons

In the UK, there have been a number of recent changes to employment/labor laws such as the IR35 tax changes, ongoing challenges relating to Brexit, and changes to national insurance and health and social care levies. This means that keeping on top of employment laws and compulsory benefits is more complex than ever.

By engaging a global PEO/umbrella company, like Horizons, you can outsource your compliance responsibilities for employee benefits and entitlements. This means that you can focus on core business without getting bogged down in HR matters. 

Contact one of our UK employment specialists to find out more. 

Frequently Asked Questions (FAQ)

The mandatory employee benefits in the UK include pension contributions, holiday entitlement, sick pay, maternity and paternity entitlements. In addition to these, employers can also provide extra benefits such as health insurance, health care, bonuses, or extra holiday days. It is ultimately down to the employer to consider whether supplementary benefits should be provided to employees and which benefits would attract and retain their staff.

It's hard to say. In the short term, it seems that employees value holiday entitlements or annual leave the most, as time off is always appreciated and enjoyed. However, in the long-term, employees probably appreciate the mandatory pension contributions as it means that they have security when they retire. It really depends on employee preference. 

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