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UK employee benefits: the legal requirements and what your team members expect

Employee benefits are more than just something you're required to offer by the law.  They are the secret sauce that can either attract the best talent in your industry or drive them away, keep your team happy or make them leave in droves, and create a thriving company culture or one that feels like a slog to work in.

That said, navigating the landscape of employee benefits can be like trying to work your way through a labyrinth. If you want to be competitive in the hiring market and keep your star employees with you in the long run, you need to go above and beyond what is merely expected. You need to offer your employees something unique that adds real, tangible value to their lives.

This post will help you distinguish between UK employee benefits that you’re required to provide by British law, types of employee benefits in the UK that aren’t legally mandatory but that employees often expect, and benefits you can add to your UK employee benefits package to incentivise the best talent to join your team.

Being a startup ourselves, we will share some of our learnings specifically on selecting and implementing the best employee benefits for UK small businesses.

Understanding UK employee benefits schemes

Let’s start with an overview of the legally mandated benefits in the UK. These are the employee benefits that all businesses based in the United Kingdom, regardless of size or industry, must provide their employees.

National minimum wage

The first (and arguably most important) area of mandatory employee benefits is the National Minimum Wage. This is the minimum pay per hour that almost all workers are entitled to. Its purpose is to ensure that all employees are fairly compensated for the work they do.

In the United Kingdom, the National Minimum Wage is £10.42 per hour for people aged 23 and over as of April 2023, £10.18 for 21- to 22-year-olds, £7.49 for 18- to 20-year-olds, and £5.28 for people under 18 and apprentices.

The National Minimum Wage generally applies to all full-time and part-time employees but does not apply to self-employed people running their businesses, company directors, voluntary directors, workers on a government programme, and members of the British armed forces.

Then we have paid annual leave. All employees in the UK have the right to 5.6 weeks (28 days) of paid holiday, which includes bank holidays. For part-time workers, their holiday entitlement is proportional to the number of hours and days they work.

This ensures that everyone gets a chance to rest and replenish their energies, regardless of their employment status.

Statutory sick pay

One of the things that makes the UK a great country is its healthcare system, in which Statutory Sick Pay plays a part.

Employees who are unable to work due to illness or injury for four consecutive days are entitled to statutory sick pay. While this is a more minimal requirement, employers can provide a more generous sick pay allowance as an employee incentive.

Maternity, paternity, adoption and shared parental leave and pay

Starting a family is one of the most important life decisions a person can make, which is why the UK supports parents with maternity, paternity, adoption and shared parental leave and pay.

All employees who are pregnant or have legally adopted a child are entitled to 26 weeks of ordinary maternity leave and 26 weeks of additional maternity leave. That’s a whole 52 weeks to look after your newborns and loved ones.

The dads aren’t left out either - eligible employees can take two weeks of paternity leave to bond with their bundle of joy.

Workplace pension

Last but not least, there’s workplace pension.

UK employers are required by law to auto-enrol employees into an appropriate pension scheme. The minimum employer contribution is 3% of the employer’s earnings, which helps all workers and employees to maintain a baseline standard of living.

If, like us, you are a small company, you may want to consider picking a small business pension scheme that is designed around your needs.

Common but not legally mandatory employee benefits

British law spells out the employee benefits in the UK businesses are required to provide, but many employees in the UK have come to expect other common benefits as well as these. Including these is not legally mandatory, but they can greatly help you build employee loyalty, trust and satisfaction.

Private health insurance

Many UK employers offer private health insurance that gives their employees quick access to medical care when they need it.  This can also include features that aren't always available through public healthcare, such as access to specialists without needing a referral, health assessments and flu vaccinations.

Life insurance

Life insurance is frequently offered alongside critical illness and is in effect for as long as you keep working with the company.

This is a lump-sum payment made to the employee’s beneficiaries in the event of their death, or if they are diagnosed with a critical illness covered by their policy.

Bonus schemes

Bonus schemes can be a very effective way to put the proverbial cherry on top of the benefits sundae and push your employees to do their best. These employee bonus schemes are an example of employee rewards and provide your employees with a financial incentive or award for meeting work-related performance targets and quotas. This can also help employees build a sense of ownership of their work.

Gym membership

Promoting health and wellness is becoming a more common talking point amongst employees in the corporate world. Many companies offer free or discounted gym memberships as part of their benefits package.

The performance and employee satisfaction advantages of offering this benefit are pretty self-apparent. Regular exercise can help your employees reduce stress, improve their mood and boost their productivity. It's a win-win for both them and you.

Going above and beyond: advisable employee benefits

In a hyper-competitive job market such as the one we’re in today, offering just the bare minimum is unlikely to get you the kind of talent you want on your side.

To stand out from the crowd and get the best and brightest to flock to them, UK businesses should go above and beyond to offer benefits that make a real, tangible difference in their employees' lives. We'd like to suggest some advisable benefits that may help make your company a more attractive place to work. In fact, from flexible working to employee discount schemes, many of these benefits are ones that we offer here at CharlieHR.

Flexible working opportunities

The traditional 9-to-5 work schedule is becoming less common as businesses embrace the shift to remote work and offer fully-remote or hybrid work models.

These can include remote work options, flexible start and finish times, and compressed work times. Not all employees feel their most creative, ambitious and driven when they feel as though they're chained to their desks.

At Charlie, we offer the ability to work from abroad for up to 90 days per year and a 9-day fortnight in which employees get every other Friday off with no negative impacts on their salary or annual leave. There are numerous benefits to offering a remote work model like a better work-life balance, reduced stress from commuting, and higher job satisfaction. You can use this flexible working policy template to work out how this initiative might work at your own organisation.

Health and wellbeing initiatives

You have a unique opportunity as an employer to help your team members be happier, healthier people.

At Charlie, we offer company health insurance that covers private medical appointments, therapy sessions, and mental health services. We also offer discounted gym memberships and a monthly wellness allowance that employees can spend on things that help them feel good, like massages and spa days.

Check out our blog for more wellbeing at work ideas.

Learning and development opportunities

Offering opportunities for skill-building and career development gives your employees a chance to become better at their jobs and learn skills that create more value for your team.

Our employees at Charlie get a generous annual learning budget that they can spend on books, courses, conferences, or other resources that support their professional growth.

Employee perks and discounts

On top of the above, anybody using the Charlie’s HR software gets access to our Perks for Work where they can look through thousands of offers and discounts and choose the ones that they like best, from cinema tickets and groceries to flights and car rentals. The employee benefits platform is included in our basic pricing, which makes it a good way for small businesses to offer their people a wide range of sweet perks.

Charlie is the only HR software with built-in perks platform

Empower your team with powerful benefits

Employee benefits can go a long way towards attracting and retaining the best talent you can, and the landscape of employment benefits in the UK is diverse and dynamic.

That said, offering the best benefits can be a difficult and complex task, especially for small and medium-sized businesses that are strapped for resources as it is.

Fortunately, that’s what you have CharlieHR for. Our employee benefits and perks platform makes it easy to manage employee benefits with features like an integrated perks platform that gives your employees thousands of perks and rewards.

But don’t take our word for it, experience the benefits of our benefits platform by starting a free CharlieHR trial today.