Benefits in United Kingdom

Mandatory Employee Benefits in the United Kingdom

Pension

Employers have to offer a pension scheme to all employees within three months of commencement of work on an 'automatic enrolment' base. It is up to each employee to join it or not. The employer doesn't need to enrol an employee in the pension scheme if they already have a plan that meets the automatic enrolment requirements. The same is valid if the employee is from another EU member state and is in an EU cross-border pension scheme.

Employers' minimum contribution is 3%, and employees' is 5%, for a total minimum contribution of 8%. 

Employees are automatically re-enrolled in the scheme every three years if they have previously left the plan. Employees can leave again, but only once they've been re-enrolled.

Flexible working

All employees in the UK can request flexible working from their first day in a job. Flexible working includes job sharing, working from home, part-time, flex time and compressed hours, staggered hours and annualized hours. 

Employers must decide within three months and handle the request in a reasonable manner, such as assessing the advantages and disadvantages, holding a meeting to discuss it or offering an appeal process. An employer can refuse the request if they have a good business reason to do so.

Non-Mandatory Employee Benefits in the United Kingdom

Most common non-mandatory benefits in the UK.

Cycle to work scheme

This government initiative allows employers to sign up to a provider that offers employees an opportunity to get bikes and accessories tax-free.

Private healthcare plan

Healthcare insurance is a common benefit. Companies provide healthcare insurance to their employees (paid 70%- 100% by the employer). Employees are sometimes permitted to include their immediate family in these schemes depending on eligibility requirements.

Dental & vision plan

Dental & Vision plans are also common benefits, paid 70%-100% by the company.

Home allowance

Companies can provide £26 a month tax-free for their employees working from home. This is on top of any home office equipment allowance, which is also tax-free.

Note: the employee cannot claim tax relief if they choose to work from home other than during COVID-19.

Sick leave & disability protection insurance

Most companies provide more comprehensive coverage of sickness payment through sickness & disability (directly or through the income protection insurance):

• Company sick pay from day one until week 10: paid 80%-100% of base salary less statutory sick pay (SSP). The employer’s contribution to the group pension plan is continued for Group Life Insurance.
• Company sick pay from week 11 until week 26: paid 50% -70% of salary less SSP. The employer’s contribution to the group pension plan is continued.
• From week 27: paid 40%-60% of salary less SSP. The employer’s contribution to the group pension plan is continued for mandatory contribution. 

Additional pension contribution

It is common for companies to contribute more than the statutory minimum level into pension funds. There are several types of workplace pension schemes such as defined benefit and defined contribution schemes. Employers can choose which is more suitable for their case.

Life insurance

Companies commonly provide life insurance coverage. Standard coverage is £500,000.

Full pay paternity leave

Employees have the statutory right to 2 weeks of paternity leave with statutory pay of £184.03 or 90% of average weekly wage (whichever is lower). However, most companies choose to provide employees with full payment during the leave.

Interest-free travel loan

Employers can provide employees with an interest-free loan of up to £10,000 in any tax year.

Fuel reimbursement

Reimbursements can be claimed for fuel costs for business travel through expense reporting (excl home/work distance). Reimbursement for the first 10,000 business miles (in the tax year) is 45p/mile and 25p/mile thereafter.

Gym membership

In some companies, a gym membership is provided as an employee benefit.

Counselling service

Many companies offer a counselling service or Employment Assistance Programmes (EAP) as a core benefit to all employees.

Extra holiday

Some companies offer all staff extra holidays for long service.

Income protection

Pays a percentage of an employee’s monthly income (usually 60-80%) as regular income if they become physically unable to work. It is paid once Statutory Sick Pay ends, usually, one to six months after the employee falls ill.