For employers looking to hire in the United Kingdom, there are numerous elements to consider to remain compliant. One of the trickier things to navigate is employee benefits in the UK. Through the UK’s social security system, employees are entitled to receive numerous mandatory benefits. These UK benefits ensure employees receive rest days, sick pay, healthcare, and more.
However, when developing a UK HR benefits plan, many employers consider offering non-mandatory or supplemental benefits. Supplemental UK benefits may help with employee well-being, performance, and retention rates.
Overall, many UK HR benefits are provided to employees, both mandatory and non-mandatory. This article will guide you through common UK benefits and how to offer them.
Who receives benefits in the United Kingdom?
Both workers and employees in the United Kingdom are entitled to mandatory UK benefits. A worker is an umbrella term that refers to numerous groups of people. Workers can be full-time employees, part-time employees, short-term workers, casual laborers, agency workers, or those who participate in the gig economy.
Workers are entitled to paid time off, a minimum wage, protections against unlawful termination, pension contributions, and rest days.
Employees receive all the benefits that workers receive and more. This includes statutory sick leave, maternity leave, parental leave, and others.
Mandatory UK employee benefits
These employee benefits in the UK are mandatory. Employees receive them because of social security contributions and legislation, regulations, and previous frameworks. These mandatory employee benefits in the UK are provided to employees through social security contributions.
Paid time off
Paid time off in the United Kingdom is called leave entitlement, annual leave, or paid holiday. Both workers and employees are entitled to receive 20 days of annual leave plus eight public holidays, in which employees are not required to work. Employers must pay their employees their standard wages when they take paid time off.
Employees in the United Kingdom can only roll over a maximum of eight days of paid time off each year. However, if an employee needs to take another type of leave, such as long-term sick leave, they can carry over 20 days of paid time off into the next calendar year.
Public holidays across the United Kingdom vary. England and Wales offer eight public holidays each year, whereas Scotland offers nine and Northern Ireland offers ten. The dates are also different. England and Wales offer a bank holiday in August, whereas Scotland does not. When hiring in the United Kingdom, be aware of where your employee lives and what public holidays they have.
It’s also important to note that the amount of public holidays changes each year. For example, in 2011, Prince William and Catherine Middleton’s wedding was considered to be a public holiday. In 2022, the UK had an extra holiday on the day of Queen Elizabeth’s funeral. Employers need to be aware of any additional public holidays when they track public holidays and UK benefits for employees.
Healthcare
Citizens in the United Kingdom, regardless of worker classification, are entitled to healthcare from the National Health Service (NHS). This is covered by taxes and social security contributions.
Statutory sick pay
Employees in the United Kingdom are allowed to miss up to one week of work without needing to show their employer a doctor’s note. After one week, though, the employee must provide their employer with the appropriate documentation from their doctor.
Should an employee go on sick leave, they are to receive long-term statutory sick pay. This provides employees with GBP 95.85 per week, which the employer pays. Employers are required to continue to pay statutory sick pay for their employees for up to 28 weeks.
Maternity leave
Maternity leave in the United Kingdom is split into two parts: standard maternity leave and additional maternity leave. Standard maternity leave allows new mothers to take 39 weeks of paid time off. Additional maternity leave allows new mothers to take an additional 26 weeks off if necessary.
The employer pays for maternity leave. Employers must pay 90% of the employee’s average salary for the first six weeks of maternity leave. Afterward, employers must pay 90% of their average earnings or GBP 148.68 per week — whichever is lower.
When the employee wishes to return to work, they must give their employer a minimum of eight weeks' notice. Unlike in many other countries, mothers do not need to work for an employer for a specific amount of time to qualify for maternity leave benefits.
Paternity leave
The United Kingdom is one of the few countries that offers paid paternity leave. Paternity leave in the UK is significantly shorter than maternity leave, though — currently at two weeks.
Paternity leave must not begin before the birth of the child; however, it can be used at any time during the child’s first year of birth. Paternity leave must be taken all at once.
Paternity leave is available to all partners of pregnant employees, regardless of gender. To be eligible for paternity leave, the employee must meet one of the following requirements:
- The father of the child
- The legal partner of the person giving birth
- The person adopting the child
- The child’s intended parent, like if they’re planning to care for the child following surrogacy
Unlike maternity leave, employees who wish to go on paternity leave must work for an organization for a minimum of 26 weeks.
Shared parental leave
Shared parental leave is an additional type of leave employees can take in the United Kingdom. Employees can receive 37 weeks of paid shared parental leave. Parents do not have to take this type of leave at the same time or even consecutively. However, it must be used within the first year of the child’s birth.
Adoption leave
Employees in the UK can benefit from adoption leave. Statutory adoption leave entitles new parents of adopted children to 52 weeks of paid leave. This is split into two 26-week periods, referred to as Ordinary Adoption Leave and Additional Adoption Leave. The pay during this type of leave is the same as maternity leave pay. Parents who are having a child via surrogate are covered under Statutory Adoption Leave and Pay.
Pension
Employers of workers in the United Kingdom are legally required to contribute a minimum of 3% of every worker’s salary towards a pension plan. On the other side of things, employees must contribute at least 5% of their salary towards the plan. If both the employer and employee choose to increase the contribution amount, it must be stated in the employment contract.
There are two primary workplace pension plans in the United Kingdom: defined contribution schemes and defined benefit schemes.
- Defined contribution schemes: In defined contribution schemes, the amount of future pension payments from the employer depends on how much the employee puts in. This is similar to a 401(k) in the United States.
- Defined benefit schemes: With defined benefit schemes, employees contribute a set amount. However, the amount paid does not solely depend on the amount contributed. Rather, there are a variety of different factors that are taken into consideration. This includes how long an employee worked for a company and the highest level of seniority achieved throughout their career.
Statutory redundancy pay
Employers do not legally require severance law in the United Kingdom. In place of this, employees may have the opportunity to receive statutory redundancy pay. Statutory redundancy pay is designed for employees who lost their jobs because they were no longer needed in their roles. To be eligible for statutory redundancy pay, employees must not have been fired from their role. Additionally, they must have been continuously employed with the organization for at least two years.
Flexible working
This new UK HR benefit passed legislation in mid-2023. Under the UK’s new Flexible Working Bill, employees can request flexible working accommodations. This can include different working hours, remote working, or hybrid working. This new bill allows employees to request flexible working from the very first day of employment. Under previous legislation, employees could only request flexible working accommodations after their 26th week of employment with a company.
Supplemental benefits in the UK
Supplemental benefits or non-mandatory or fringe benefits, are additional employee benefits in the UK. When employers are looking to provide fringe UK benefits, what they offer is up to them. There are no elements of compliance when issuing supplemental employee benefits in the UK.
Employers offer supplemental benefits for numerous reasons. A robust employee benefits package helps boost employee engagement, support employee wellbeing, attract new talent, and retain existing employees.
While offering good salaries is important, job-seekers prioritize additional benefits, like private health insurance, professional development, flexible working, home office allowances, and unlimited paid time off. There are also numerous other benefits employers should consider when hiring remote workers.
Aside from giving employers a competitive edge in recruiting, offering supplemental benefits helps with employee retention rates. Providing employees with attractive additional UK benefits helps with employee well-being, performance, and makes employees feel more appreciated.
Private medical insurance
All UK citizens have access to healthcare provided by the National Health Service (NHS). However, waiting lists are often long and finding a General Practitioner (GP) is challenging. Because of this, many employers choose to offer private health insurance as an additional UK benefit. Private health insurance allows employees quick access to healthcare services and treatment.
Private health insurance covers the cost of an employee’s medical procedures at private clinics. This can include dentist appointments, mental health support, optometry visits, or specialist health services. It can also be offered in conjunction with group life insurance.
Gym memberships
Many employers offer gym memberships to their employees in their UK HR benefits plan. Providing employees with a gym membership can help with their health and wellness, and in turn, help with their performance at work. Adding a gym membership as a fringe UK benefit is a good investment for both the employer and the employee.
Transportation stipends
The London Underground, and other public transportation systems in the UK, can get expensive. If an employee is commuting every day, to and from an office, the cost adds up. Many employers choose to subsidize or completely cover the cost of transportation for their employees. This can be done by employees expensing the cost and waiting to be reimbursed, or employers can provide employees with a transportation pass.
Home office allowances
When employees work from home, it saves everyone money. Employees don’t have to worry about the cost of transit or purchasing numerous coffees throughout the day. Employers don’t need to worry about office utility bills, the cost of relocation, real estate, or even security.
Since employers can reduce these overhead costs, many organizations are offering home-working stipends or allowances. While these stipends are a common fringe benefit among employers, some governments are making them mandatory. As of 2023, home office allowances are not legally mandated in the United Kingdom.
Because home office allowances are not mandatory, many employers offer them as a supplemental UK benefit. These allowances are a specific amount, as a one-time payment or regular monthly allowance. They help cover the additional costs of working from home, such as increased utility bills, internet fees, and home office equipment. These allowances cover expenses that an employer would cover if employees were to work on-site.
Coworking passes
Coworking spaces are all over the United Kingdom, especially in London. London is full of WeWorks and independent coworking spaces like Uncommon. An increasing number of remote employees are heading to coworking offices, even just a few days a week, to change their environment and perform better in their roles. While some thrive in their home offices, others enjoy coworking spaces' camaraderie and collaborative atmosphere.
Coworking spaces allow networking opportunities — in fact, WeWork doesn’t only allow for it but encourages it. Their mission is to create a space where people can join as individuals and eventually become part of a community. Giving employees the chance to become part of a community helps them fight any isolation they may experience when they work from home, alone, for a long time.
How to offer coworking as a benefit
Employers can offer coworking in their UK HR benefits package in two ways. One way is to offer employees a yearly or monthly stipend to cover the costs — this allows employees to choose the coworking space of their choice based on their location and preferences.
Providing coworking as a benefit through a stipend also requires less oversight and management — all that employees need to do is expense the monthly cost to the company.
A monthly subscription is the second way to offer coworking as a benefit. Employers can choose to purchase coworking subscriptions for every employee, allowing them to work at their local coworking offices.
Popular coworking offices scattered across the United Kingdom include ImpactHub and WeWork. However, this method is not as flexible as the first. Not every city or town will have a WeWork or ImpactHub, so some of your employees may be unable to access them.
Unlimited paid time off
Rather than offering the minimum amount of paid time off that’s required by local labor laws, employers are offering unlimited PTO.
Currently, unlimited paid time off (PTO) has become a popular component of employee benefit packages in the UK. It’s aimed at helping employees increase their work-life balance.
For unlimited paid time off to be successful, it requires flexibility and transparency from both the employer and employee.
Bonuses
Some countries have mandatory bonuses, like the 13th-month bonus in Mexico, but the United Kingdom does not have any. That doesn’t mean they’re not uncommon, though. Bonuses are widely used among employers in the United Kingdom, predominantly performance-based bonuses. If you decide to offer your employees bonuses, you need first to decide if you’re making it discretionary or contractual.
- Discretionary: Discretionary bonus schemes are not written into the contract. This gives employers more flexibility in the terms and amount of the bonus.
- Contractual: Contractual bonus schemes are clearly outlined in the contract. If the employee meets the terms stated in the contract, you must pay it based on the terms.
All bonuses provided to employees are subject to tax and National Insurance. So, employers must report cash and non-cash bonuses to HMRC.
Employee Discount Scheme
The UK has seen an overall increase in the cost of living, leading to some employers choosing to offer employee discount schemes. Employee discount schemes help employees save money on everyday purchases, whether it be corporate discounts, vouchers, or cashback opportunities.
Group Income Protection
GIP is a valuable employee benefit for long-term financial security. Group income protection pays rehabilitation and financial support to employees who cannot work due to long-term sickness or injury.
This employee assistance program can be available in the form of a lump sum payment or multiple installments paid over time. It can ensure employees' health and wellbeing with a salary sacrifice.
Offer localized benefits with Borderless
Borderless offers localized, tailored benefits compliant with UK labor laws. Borderless will also help you develop competitive supplemental benefits for your employees. Stay compliant and competitive and work with Borderless today. Speak with us today.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
