Employee Benefits UK: What to Offer in 2025 (20+ Examples)

Employee benefits are non-wage compensations provided by employers or the State for employee well-being. 

In the UK, employee benefits fall into three categories: 

• Mandatory Benefits: Legally required, like workplace pensions, holidays, and sick leave.

• Supplementary Benefits: Extras such as medical insurance, life assurance, and employee assistance programmes.

• Employee Perks: Added incentives like remote work stipends, gym memberships, company cars, etc. 

Read on for a complete breakdown of UK employee benefits and why they are essential. We’ll highlight 20+ employee benefits examples to help you build a thriving workplace.

Who Qualifies for Employee Benefits in the UK?

Employee benefits are generally provided to those classified as “workers” in the United Kingdom.

UK law defines a “worker” as someone who has entered into a contract (express or implied) to perform work personally. This includes:

• Agency employees (temporary or contract staff recruited through staffing agencies)

• Employees working on zero-hours contracts (those with irregular or on-demand working patterns)

• Temporary workers (including those engaged for short periods or on a seasonal basis)

Workers are entitled to key statutory benefits - such as holiday pay, sick pay, and a workplace pension - regardless of whether they work full-time or part‑time. 

But what about freelancers and contractors?

Independent contractors, freelancers, and self‑employed individuals typically fall outside this “worker” definition. That means they aren’t automatically entitled to these benefits.

Mandatory Employee Benefits in the UK

UK law requires employers to provide mandatory (statutory) benefits to all eligible employees. These benefits include:

• Workplace pension

• Paid annual leave

• Paid maternity, paternity and adoption leave

• Statutory Sick Pay (SSP)

Let’s look at each one in detail.

1. Workplace Pension

Under the UK’s auto-enrolment rules, employers must enrol eligible employees into a workplace pension scheme and contribute to their retirement savings.

• Employers contribute at least 3% of each eligible employee’s salary.

• Employees contribute at least 5%, bringing the total minimum contribution to 8%.  

A 2024 study by Kota and Ravio found that 46% of UK companies go beyond the 3% auto-enrolment minimum, offering extra pension contributions to support their workforce. This shows a growing trend - employers are stepping up their benefits game to attract and retain top talent.

Learn all about UK Workplace Pension Schemes in our in-depth guide.

Effortlessly Manage Workplace Pensions With Kota

Kota is a modern digital benefits platform that helps businesses set up and manage workplace pensions effortlessly.

We’ve partnered with Smart Pension, a trusted pension provider in the United Kingdom, to offer employees extensive pension coverage and retirement benefits. 

With Kota, you can:

• Set up a defined contribution pension scheme - even if your business is based outside the UK or lacks a UK bank account. 

• Meet auto-enrolment requirements by contributing at least 3% of employees’ qualifying earnings.

• Sync with your existing HR tools -  such as HiBob, Rippling, Personio, and more -  for smooth pension administration.

• Manage pension postponements for eligible employees, including postponement letters to notify them.

Make workplace pensions hassle-free with Kota. Get started today!

2. Paid Annual Leave

All UK employees are entitled to legally guaranteed paid leave (holiday pay or statutory leave entitlement) as follows:

• Employees working at least five days a week can receive up to 28 days (5.6 weeks) of paid annual leave.

• Part-time workers receive paid leave in a pro-rated manner. For example, if your employee works four days a week, they are entitled to at least 22.4 days (4 x 5.6) of paid leave.

• Shift workers or those with irregular/flexible hours accrue paid time off based on their working hour calculations.

Public and bank holidays aren’t automatically included in this mandatory benefit. As an employer, you can choose whether to count them as part of the 28 days of annual leave or offer them separately.  

For example, you could offer extra paid holidays beyond the legal minimum (often after one year of service) and allow staff to “buy” additional leave through salary sacrifice schemes.

3. Paid Maternity, Paternity and Adoption Leave

As an employer in the United Kingdom, you must offer paid parental leave to your employees in the form of paternity, maternity, and adoption leave.

A. Maternity and Adoption Leave

Female employees on maternity or adoptive leave can take up to 52 weeks, with 39 weeks paid. 

This leave is split into two parts (the leave structure is the same for adoptive leave):

• Ordinary Maternity Leave (OML): The first 26 weeks, during which employees are guaranteed the right to return to the same job.

• Additional Maternity Leave (AML): The remaining 26 weeks, during which a similar role should be offered if the original position is no longer available.

In 2025, eligible employees on maternity or adoption leave receive:

• 90% of their average weekly earnings (before tax deductions) for the first six weeks and

• Either £184.03 per week or 90% of their average weekly earnings (whichever is lower) for the next 33 weeks.

B. Paternity Leave

Employed fathers or partners (including same-sex partners) can take either one or two weeks of Statutory Paternity Leave. 

Employees can take two weeks of extended leave in cases such as shared parental leave, adoption or surrogacy arrangements, or health complications involving the mother or child.

In 2025, the paternity allowance is £184.03 per week or 90% of the employee’s average earnings (whichever is lower).

Keep in mind:
You must report statutory parental leave payments (paternity, maternity, and adoption pay) to HM Revenue & Customs (HMRC). You must also maintain accurate records of leave, pay, and any adjustments to comply with UK labour laws.

4. Statutory Sick Pay

In 2025, your employees are entitled to a minimum Statutory Sick Pay (SSP) of £116.75 per week for up to 28 weeks.

How does sick pay work?

Sick pay begins on the fourth day of your employee’s absence, meaning SSP covers all days off due to illness after the first three. 

If your company has its own sick pay scheme, you can offer more than the statutory minimum, but never less. Such schemes, also known as contractual or occupational sick pay, must be clearly outlined in your employee’s contract.

Supplementary Employee Benefits in the UK 

Employers often offer additional, non-statutory benefits - beyond the mandatory ones - to enhance the overall employee benefits package. 

Here are some valuable supplementary employee benefits in the United Kingdom:

• Private Medical Insurance

• Life Assurance

• Income Protection

• Critical Illness Cover (CIC)

• Dental Insurance

• Health Cash Plan

• Employee Assistance Programme

• Employer-Financed Retirement Benefit Scheme

Let’s discuss these employee benefits examples in detail:

1. Private Medical Insurance 

The National Health Service (NHS) offers free healthcare to UK residents. 

The problem?

It faces several challenges, including long waiting times and strain on the system. 

That’s why many employers provide private medical insurance (or private health insurance) schemes to their UK employees. 

Private medical insurance ensures health benefits, such as:

• Swift access to top-tier clinics and healthcare providers.

• Comprehensive coverage for medical treatments, including

• Exceptional quality of health services.

It provides a range of different services, which cover:

• The cost of hospitalisation 

• Diagnostic tests like MRI (Magnetic Resonance Imaging) and CT (Computed Tomography) scans

• Surgeries

• Doctor's consultation 

• Nursing care

• Cancer treatments

Private health insurance is a flexible benefit that allows employers to tailor coverage levels to suit individual needs.

Companies can partner with health insurance providers to offer a range of plans as part of a robust employee benefits package. You can bear the plan's full cost or share the premium with your employees.

Moreover, your employees can decide the coverage level they need, such as choosing a basic plan to save money.

Offer Comprehensive Employee Health Insurance with Kota

Kota offers private health insurance through our partnership with Vitality, a leading UK health insurer, ensuring top-quality care for your employees.

With Kota, you can: 

• Sync your existing HR tools like Hibob and Personio right through to insurance providers to automate benefits onboarding and offboarding. 

• Manage all your policies and plans for all your employees from one simple dashboard. 

• Boost employee engagement with an easy-to-use app where your people can access and control all their benefits from one place. 

Join Kota and roll out more engaging health cover with less ongoing admin.  

2. Life Assurance

Life assurance as an employee benefit refers to Death-in-Service, a type of group term assurance. It provides a lump-sum payment to your employee’s family or dependents if they pass away while employed by your company. 

As an employer, you set the level of cover. 

It’s usually a multiple of the employee’s annual salary — often up to four times. You can also choose to offer different cover levels based on factors like job role or age. 

3. Income Protection (Long-Term Disability)

Income protection provides a monthly income to your UK employees who are unable to work due to illness or disability, whether temporary or permanent. 

It’s also known as Group Income Protection (GIP) or disability insurance.

Typically, GIP replaces about 50–60% of your employee’s salary, with your contributions being roughly 1–1.5% of the payroll to fund the plan.

Here’s how this employee benefit works:

• Benefits begin after a minimum four-week waiting period.

• In some cases, if employers continue sick pay for an extended period, GIP benefits begin only after that sick pay ends - potentially delaying payouts by up to two years.

4. Critical Illness Cover (CIC)

Critical Illness Cover (CIC) provides a lump-sum payment to your employees diagnosed with serious illnesses, such as:

• Stroke

• Loss of arms or legs

• Heart attack

• Multiple sclerosis

• Parkinson's disease

• Cancer

5. Dental Insurance

Dental insurance is an attractive benefit that covers both routine and emergency dental treatments.

In the UK, there are two main types of dental plans:

• Dental Insurance Coverage: Employees pay for treatment upfront and then claim the cost back from the insurer.

• Dental Payment Plans: Also known as “capitation” plans, these spread the cost over a set period with regular monthly payments from the employer.

Costs typically range from £65 to £300 per year, varying by insurer and policy. 

Employers can offer dental insurance as a standalone benefit or integrate it into a broader private medical insurance plan.

6. Health Cash Plan

Health cash plans offer an affordable way for employees to cover routine medical and dental expenses.

How does a health cash plan differ from health insurance?

Health insurance covers treatments for diseases that occur after enrollment, while a health cash plan pays for ongoing, routine treatments. 

Under health cash plans, your employees pay a fixed monthly fee (say, £10) and can receive reimbursements up to set limits - such as £200 for dental care, £100 for physiotherapy, and £100 for optical expenses.

7. Employee Assistance Programme (EAP) and Virtual GP (General Practitioner) Services

An employee assistance program provides professional support for personal and work-related issues through counselling sessions that are available:

• Face-to-face 

• By phone, or 

• Online

It helps your employees address challenges affecting their performance, thereby improving well-being, boosting productivity, and reducing absences.

Employers typically offer an employee assistance programme as a standalone benefit or as part of their income protection package.

Moreover, online virtual GP services have gained popularity and may be bundled with private health insurance or GIP plans.  

8. Employer-Financed Retirement Benefits Scheme (EFRBS)

Standard workplace pensions require contributions from both employers and employees. 

In contrast, an employer-financed retirement benefits scheme is entirely funded by the employer and designed specifically for senior management.

The scheme offers senior employees a lump sum, gratuity, or other cash and non-monetary benefits.

Retirees can receive retirement benefit payments: 

• On/after their retirement or death in connection with the service;

• In case of any change in the nature of their service; or

• Due to a pension-sharing order or provision.

Beyond mandatory and supplementary benefits, you can offer several fringe benefits to boost employee satisfaction and attract top talent.

Popular Employee Perks (Flexible Benefits) in the UK

An employee perk (aka ‘fringe’ or ‘flexible’  benefit) is an extra you offer on top of essential benefits like wages, healthcare, and pensions. 

They’re the nice-to-have extras that boost employee morale and job satisfaction and can include:

• Company cars: Employers can offer company cars or provide a car allowance for business travel. Renting vehicles, rather than owning them, helps reduce tax liability. Low-emission and electric vehicles may appeal to eco-conscious employees and help lower Benefit in Kind (BiK) rates.
  

• Cycle to Work: Offer the UK government’s ‘Cycle to Work’ scheme’ where you purchase the bike and employees rent it through salary deductions before buying it at a reduced price after the rental period. This way, your employees can save up to 42% on taxes on new bike purchases.
  

• Gym membership: Provide your staff with free or subsidised gym memberships and access to sports clubs. This attractive benefit boosts physical fitness and mental health, increasing productivity and reducing absenteeism. Many companies club this perk with an employee assistance programme to further support overall health and engagement.
  

• Workplace canteens: When you provide free or subsidised meals at workplace canteens, the benefit’s cost is exempt from tax and National Insurance. The exemption applies to meals in any canteen (on or off-site) and includes lunches provided by third parties during work.  
  

• Travel and subsistence: If your employees travel for business, you can pay for their trips. This includes paying for your employees' accommodation, meals, and other subsistence costs. Subsistence costs include other necessary travelling costs, such as parking charges, tolls, congestion charges, or business phone calls.
  

• Business travel mileage for employees' vehicles: Some employers also reimburse employees for business trips they may take using personal vehicles. Employers can make tax and NIC-free payments to their employees to reimburse these travel expenses.
  

• Relocation costs: If your employees relocate within or outside the UK due to a work transfer, you can cover their relocation expenses. The relocation costs may include:

  • The cost of buying or selling a home

  • Moving costs (paying for labour, moving trucks, etc.)

  • The cost of buying furniture for a new home

  • Availing home loans

• Employee training: Offer your employees a training program or work-related workshops to enhance their skills. You incur the full training cost, including books, travel, course fees, etc.
  

• Remote working expenses: You can cover remote working expenses to support your employee’s financial well-being. This includes:

  • The cost of setting up work-from-home office equipment such as computers, furniture (desks or chairs), an internet connection.

  • Additional household expenses like electricity charges.

• Mental health support: Many UK employers provide mental health support beyond state healthcare and private medical insurance. These wellness programs, typically part of an employee assistance program, include counselling, mental health days, and mindfulness sessions to boost employee well-being.
  

• Employee discount schemes: These programs provide an employee discount on retail, travel, dining, and everyday expenses, helping your staff save money and boost engagement. This practical fringe benefit adds value to a competitive benefits package.
  

• Tax-Free Childcare: This UK government program provides up to £2,000 annually per child to help working parents cover childcare costs, such as nurseries or childminders. Eligibility depends on work status, income, and the child’s age.

Bring Your Own Benefits With Kota

Kota’s ‘Bring Your Own Benefits’ feature lets you host all your flexible benefits seamlessly, helping your employees access all their benefits in one place.

Why Offer Employee Benefits in the UK?

One answer is: Failing to provide mandatory benefits in the UK can lead to serious legal consequences.

As an employer, you may face breach of contract charges, have to appear in civil courts or industrial tribunals, and pay government-imposed fines. 

In extreme cases, companies could even be forced to cease operations in the UK.

But beyond legal compliance, employers gain a competitive edge by offering supplementary benefits.

A well-structured benefits package can:

• Increase job satisfaction & employee engagement: Happy employees are more productive.

• Foster a positive work environment: Providing suitable benefits shows your employees that they are valued.

• Support employee well-being: Health and wellness perks boost both physical and mental health.

• Provide financial security: Pensions, insurance, and sick pay can create stability.

• Improve work-life balance: Flexible working options reduce stress and burnout.

• Reduce turnover & hiring costs: Employees stay longer when benefits meet their needs.

• Strengthen your Employee Value Proposition (EVP): This can make your company more attractive to top talent.

Not convinced yet?

Consider these labour statistics: 

• A human resources management study found that 46% of job seekers would trade higher pay for comprehensive healthcare and life insurance plans.

• Research shows that every £1 spent on workplace mental health and well-being support generates roughly £5 in return on average.

• In a 2024 survey of 234 UK employers, nearly 47% reported that their benefits offering positively impacted employee engagement levels.

How Much Do UK Employee Benefits Cost Employers?

The cost of employee benefits typically depends on the benefits type and the required coverage level.

An Open Sourced Workplace study estimates that 32% of a company’s salary expenses go toward employee benefits.

Recent labor statistics by Boundless show:

• 26% of UK businesses budget between £101 and £150 per employee per month.

• 25% allocate between £151 and £200 per employee per month.

• 23% spend more than £201 per employee per month.

What about the costs of individual benefits?

• Private health insurance can range from £200 to £1,500 annually per employee, depending on age, coverage, and the total number of insured employees.

• Pension contributions, a mandatory employee benefit, typically cost employers 6% of salary, double the legal minimum.

Are Employee Benefits Taxable in the UK?

Some employee benefits in the United Kingdom are taxable, while others offer tax advantages.

• Taxable benefits include private medical insurance, company cars, and gym memberships. A taxable benefit adds to your employee’s taxable income, potentially increasing their tax liabilities.

• Tax-advantaged benefits include employer pension contributions and the cycle-to-work scheme. Such benefits lower the tax burden by providing deductions or exemptions, which helps reduce overall tax liabilities.

The UK also exempts certain small, non-cash benefits (known as trivial benefits) from tax and National Insurance. 

For a benefit to qualify as trivial, it must meet these criteria:

• Cost £50 or less

• Not given in cash or as a cash voucher

• Not a reward for work performance

• Not specified in the employment contract

Employers often use payroll deductions or salary sacrifice schemes to avoid tax implications. 

For example, in a pension salary sacrifice system, an employee gives up part of their gross salary, and the employer contributes an equivalent amount to the pension, saving on income tax and NIC.

3 FAQs on Employee Benefits in the UK

Let’s answer some common queries on UK employee benefits schemes:

1. How Can Employers Enhance the Employee Benefits They Offer?

You can boost your benefits scheme with a few practical steps:

• Focus on employee well-being. Promote a healthy work-life balance and encourage open dialogue about work-related stress.

• Offer flexible and inclusive benefits that meet diverse needs. Design a benefits package that drives employee satisfaction and engagement.

• Improve the work environment in physical offices. Upgrade office lighting, seating, and break areas to support staff well-being.

• Adopt innovative reward strategies. Go beyond standard incentives to deliver unique employee benefits that boost loyalty.

2. Should Employers Benchmark Their UK Benefits Offerings?

Employers should benchmark their UK benefits offerings to stay competitive in today’s job market. 

Comparing your benefits against similar companies helps attract top talent, improve employee retention, and identify cost-saving opportunities. 

It also ensures your employees feel valued and your company remains a desirable workplace.

Read Kota’s State of Benefits in Europe Report to see what the most popular benefits are among top UK companies. 

3. Which Are More Important to Employees? Core or Flexible Benefits

Both core and flexible benefits help to support employees and keep them engaged. But, at Kota, we think that core benefits are, well, core. 

Flexible benefits are great, but companies should start by offering great core benefits before expanding into flexible or ‘fringe’ ones. 

Amid rising healthcare costs, companies are increasingly focused on core benefits - with a 105% increase in spend on medical insurance in 2024, compared to a 10% decrease in spend on well-being benefits. 

Offer Employee Benefits in the UK to Support Employee Well-Being

Whether you're a large enterprise, small business, or startup, offering workplace benefits in the UK is about more than just complying with legislation.

Companies often offer employee benefits beyond the statutory minimum - from paid leave and healthcare coverage to perks like remote work stipends.

These benefits increase employee engagement, boost retention rates, and help attract top talent.

If you’re a UK employer looking to offer your team flexible and affordable retirement and health insurance plans, join Kota. You can set up, manage, and scale your core benefits effortlessly - all in one delightfully simple platform.