The importance of employee benefits cannot be underestimated in today’s world when employees put as much focus on the ‘perks’ and extras of working for a company as they do their salary.

Whenever you look at the issue of employee benefits you’re likely to come across a few things that employers tend to offer that they think makes them look ‘cool’.

These are things like free tea, coffee or breakfast, Friday drinks, beanbag chairs, pool tables or ping pong tables.

Some - believe it or not - even include the tech and equipment the employee gets as a ‘benefit’.

Today, these don’t really cut it.

Today’s benefits need to be more in line with an employee’s work/life balance and making work more flexible.

Things like remote working, flexible working hours, additional days off for long service, health benefits etc

How much do employees value these new kinds of benefits?

A lot.

In fact according to one report, the majority of employees (69%) say they’re more likely to stay with an employer who offers good benefits and 68% are more likely to take a job from another employer who offers better benefits than their current employer.

We’ve written more about the types of additional employee benefits you could offer in this guide

But it’s important to understand that some employee benefits are required by law.

In this guide we give a quick introduction to the statutory employee benefits your company needs to offer.

Automatic enrolled workplace pension with minimum contributions

According to the Pensions Act 2008 every employer has to enrol certain staff into a workplace pension scheme, and contribute towards it.

Under the auto-enrolment scheme, which started in the UK in 2012, full and part-time employees have to be put on a company pension scheme if:

  • They work in the UK

  • They’re not already in a UK pension scheme

  • They’re at least 22 years old but under the state pension age

  • They earn more than £10,000 a year

As an employer you’re required to pay a minimum amount into your employees’ pension every month (typically around 3% of their monthly wage) while the employee is also required to pay into their pension contributions every month with a typical minimum payment of 5%.

Although 3% is the minimum employer contribution, many employers offer to match their employee contributions up to a certain point (usually the 5% minimum).


Holiday pay

In the UK all employees are entitled to statutory paid holiday leave. In most cases this entitlement is around 5.6 weeks a year (28 days) as a minimum.

In a lot of cases employers will include bank holidays as part of their employees’ annual leave entitlement (which is legally allowed)

It’s important to understand the rules around holiday entitlement and how employees can accrue holidays.

For example, according to the Government, employees can continue to build up holiday entitlement during maternity and paternity leave (these types of leave are additional) and they can also continue to accrue holiday entitlement when taking sick leave.


Statutory Maternity pay

If an employee is leaving to have a baby then you’re legally required to offer maternity leave and pay.

Statutory leave can be taken for 52 weeks (made up of 26 weeks of ordinary leave and 26 weeks of additional leave).

Employees aren’t legally required to take all of their leave if they don’t want to.

As well as a right to maternity leave, you must offer female employees the right to maternity pay during their time off which, according to the gov.uk website, should amount to 90% of their average weekly earnings before tax for the first six weeks of leave.

It should then equal £156.66 or 90% of their weekly earnings (or whichever is lower) for the next 33 weeks.


Statutory Paternity pay

In the UK, employees are able to take up to two consecutive weeks as paternity leave if their partner is having a baby - but this depends on how long they’ve been working for your company.


Sick pay

If you have an employee who’s too ill to work you may have to provide statutory sick pay of £99.35 a week (as of 2022) for up to 28 weeks.

By law you’re not able to offer less than this amount (although you could offer more as part of your benefits packages) and details of this entitlement must be included in your employee contracts.

You should also be aware that your employees are still able to build up annual leave while on sick leave, regardless of how long they’re absent from work and you can’t assign their annual leave as part of their time off sick (although your employee can use their annual leave at the same time as using sick leave).


Understanding your obligations when it comes to employee benefits

Employee benefits have always been important but with shifts towards flexible working and more focus on occupational health and wellbeing they’ve become a hot topic in all businesses.

While many benefits are at the discretion of your business it’s important you understand your obligations when it comes to statutory benefits and what you’re legally required to offer your employees to avoid falling foul of any laws.

If you’re unsure about the types of benefits you need to offer your employees, or are starting to review your company’s benefits package and want more advice on some of the insurance or financial perks you could offer to improve your chances of attracting or retaining the best talent…

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