Employee Benefits in the UK (2025 Overview)

If you’re considering expanding your US business to the UK, you’ll need to understand how employee benefits in the UK usually work, to ensure you can put together an attractive compensation and benefits package for your team. This guide walks through some of the mandatory employee benefits in the UK, and also some of the additional benefits commonly offered to create competitive employment packages for top talent.

Read on to learn all about UK employee benefits, and before you start to work in the UK, why not also check out BatchTransfer. Signing up to Wise Business allows access to BatchTransfer which you can use to pay multiple invoices in one go.

Table of contents
What benefits do UK employees get? Mandatory employee benefits in the UK 1. Government health provision 2. Social security - National Insurance contributions 3. Paid annual and holiday leave 4. Paid maternity, adoption and paternity leave 5. Sick pay 6. Workplace Pension Supplementary Employee Benefits

What benefits do UK employees get?

The benefits available for UK employees can include both mandatory benefits which are set out in law, and a broad range of additional benefits which are offered to attract talented workers in a competitive market.

Before you start to think about the benefits you must offer UK employees, you’ll first need to establish their likely employment status in law. The most common employment statuses used include¹:

• worker
• employee
• self-employed and contractor
• director
• office holder

Different mandatory benefits may apply depending on the individual’s status in law, with more benefits usually afforded to employees compared to workers and contractors, for example. If you’re unsure of the status of anyone working for you in the UK, you can read more on the UK government website, or take advice from organizations such as ACAS².

This guide is intended for information only. Managing employee benefits - particularly in a different country - can be complex, and can have financial and legal consequences if you get it wrong. Take professional advice if you’re ever unsure about your obligations.

Mandatory employee benefits in the UK

Let’s start with a look at the mandatory employee benefits in the UK. As we've mentioned, not all benefits are afforded to all types of employee or worker, so you may need to take professional local advice to ensure you’re complying with the law based on the employment status of your team member.

1. Government health provision

The UK has a centrally managed National Health Service (NHS) which is free at the point of delivery. This means that UK citizens and residents can access free medical care, and where registered, some free or heavily subsidised dental care. In some cases, people can also get additional support such as eye checks, although costs and availability of this service may depend on the individual’s age and any other risk factors which may apply.

The NHS is funded through taxes. Many UK employers will also choose to add in some additional health insurance cover as a supplementary benefit, to give employees faster access to care when they need it. We’ll look at that in a little more detail later.

2. Social security - National Insurance contributions

Both employees and employers pay National Insurance³ contributions which can vary depending on the individual’s earnings and tax code. These contributions are used to fund other state benefits such as statutory sick or maternity pay, state pensions and child benefits

3. Paid annual and holiday leave

Most people working in the UK have the legal right to at least 28 days holiday⁴. This can include statutory public holidays, although many employers choose to offer the full 28 day allowance plus public holidays as leave.

Many employers offer additional paid annual leave as a long service benefit, so the amount of annual leave you can take increases based on your tenure. In some cases employers also offer options to buy additional holiday days for employees who would like more time off work.

4. Paid maternity, adoption and paternity leave

In the UK, maternity, adoption, paternity and parental leave is protected by law, and must be offered by all employers. The way parents take leave can vary depending on the individual circumstances. Generally, maternity leave can be taken for up to 52 weeks, with the first 39 weeks being paid at the following rates⁵:

• First 6 weeks: 90% of average weekly earnings (AWE) before tax
• Remaining 33 weeks: £184.03 or 90% of their AWE (whichever is lower)

Any additional leave does not have to be paid. Employers may, however, choose to pay higher rates, or to continue to pay maternity leave for a longer period of time, according to their own company policies.

Paternity leave can usually be taken for either one or two weeks, with statutory pay set at £184.03 a week⁶. Employers may choose to pay more than this.

Parents can also choose to share their leave entitlements differently. For example, if the mother of a child chooses to return to work before her maternity leave period is finished, she may be able to pass the remaining leave to heer partner, using a shared parental leave⁷ policy. Rules apply here, which are set out on the UK government website.

---

Pay Employees With BatchTransfer

BatchTransfer has an easy-to-use instant payments system that allows you to make multiple payments, for both domestic and international, in one go. Small businesses and enterprises can get access to BatchTransfer with no additional cost after getting a Wise Business account.

BatchTransfer’s core strengths for payroll:

What sets BatchTransfer apart is its commitment to providing the mid-market rate for currency conversions. This means that businesses get a fair and transparent deal when making international payments.

Another perk of using BatchTransfer for international payroll is its extensive coverage of over countries and currencies! With features like automatic payment scheduling and API integration, small businesses can streamline their payroll process, freeing up valuable time and resources for other important tasks.

• How can businesses use BatchTransfer for payroll?: Businesses can send up to 1000 payments with a single click with BatchTransfer. US-based business can access BatchTransfer at no extra charge.

• Connect to your accounting software: You can easily manage and reconcile your mass payments through accounting software integrations such as QuickBooks or Xero.

Start making payments
with BatchTransfer >>

Wise Features	Price
Mid-market exchange rate for currency conversions Payments to countries in currencies Delivery estimator, real-time tracking, pay-to-email & more	Free to sign up for US business accounts, no monthly fees, no minimum balance requirements. Transparent and competitive rates Free access to API, BatchTransfer, and integrations features. You can also get major currency account details for a one-off fee to receive overseas payments.

---

5. Sick pay

Statutory sick pay is the minimum amount an employer can pay if their employee is unable to work through illness. This is set at £116.75 per week, and should be paid for up to 28 weeks⁸. Employees will need to provide a medical certificate to cover any period off work.

Employers do often choose to increase their sick pay, covering full pay for a certain amount of time to support employees who are unwell.

6. Workplace Pension

UK workplace pensions are operated under an automatic enrolment process for most employees⁹. This ensures that all workers have a private pension, which employers must pay into. Employees can also choose to add money to their pension pot, often under a salary sacrifice scheme which is a tax efficient way to save for retirement. Generally, employers must pay in at least 3% of the employee’s wage to their pension, although many employers choose to increase this amount to make their benefits packages more competitive.

The rules around workplace pensions are relatively complicated, requiring employees to be automatically enrolled on a regular basis if they choose to leave a scheme.

Supplementary Employee Benefits

To attract the very best talent in the UK, you’ll usually find employers offer a broad range of supplementary employee benefits. Supplementary benefits can include additional financial incentives, as well as lifestyle and professional development perks.

When you’re deciding which benefits to offer employees in the UK, it’s worth building out the best package you can, with reference to the things employees in your niche really value. The right benefits can depend a lot on the type of work you do, for example, as well as the physical location of your business and the level of the employees in question. The expectations of UK based employees are likely to be different to those in the US, so getting local advice can be valuable here - there are many specialists in employee compensation and benefits in the UK which can help you design the right benefits package for your business.

1. Additional paid time off

The UK’s mandatory paid annual leave requirements are relatively generous, but employers will commonly offer leave in excess of the legal minimums. This may be offered immediately to all employees, or as a benefit for longer serving employees. In some cases, businesses will offer occasional additional days off, either for company events or on the employee’s birthday for example.

2. Additional retirement benefits

It’s a legal requirement to offer a workplace pension in the UK, and employers may not refuse to allow employees to sign up to their pension scheme. However, employers may choose to make their pension scheme more generous than the legal requirement as an incentive for employees. Employers may also offer different mechanics such as matching an employee’s contributions up to a certain sum, to encourage employees to use their pensions to save. If this is arranged through a salary sacrifice scheme, this may also mean that the employer needs to pay less in National Insurance contributions.

3. Life insurance

Life insurance is often included in an employment contract, which offers a fixed financial pay out in the event that the employee dies while still employed. Usually this payment will be calculated based on the employee’s earnings and will be paid out to a nominated dependent.

4. Income Protection (Long-Term Disability)

Some employers choose to include income protection into their benefits packages, which will then offer ongoing earnings in the case that an employee becomes disabled and is unable to work.

5. Critical Illness Insurance (CIC)

Critical illness insurance is used in the event of an employee suffering a qualifying illness, such as cancer, or if they have a stroke or heart attack for example. The range of conditions and health problems covered varies between policies. This type of insurance may be offered to some or all employees by an employer, or the employee may need to contribute to the scheme to be covered by it.

6. Private Medical Insurance (PMI)

While the UK does have the NHS to offer free or low cost health care for all residents, private health insurance remains a valuable benefit as it allows employees to get fast access to the care they need. Using private health services can mean less of a waiting time, a broader range of available treatments, and a choice of providers. Private sector employers often offer private health cover for their employees, and for their family members, although employees may need to contribute towards this cover themselves.

Some employers may choose to offer a health cash plan instead of full medical insurance. This would allow employees easier access to private medical treatment in set circumstances, but may require the employee to pay a certain amount of any fees.

7. Dental and vision insurance

As well as medical insurance which will offer access to doctors and hospital services, employers may add dental and vision insurance policies to allow employees to visit the dentist of their choice and get eye care. Dental and eye care isn’t free for all under the NHS - costs and available services can vary depending on the individual’s age and any other related conditions - making this a sought after benefit for employees.

8. Employee Assistance Programs and Virtual GP Services

An alternative - or addition - to offering private medical, dental or vision care to employees is to provide different types of benefits like an employee assistance program or access to telehealth services. An employee assistance program may be in place to offer counselling or advice on anything from mental health to nutrition, depending on the program you select, while getting a virtual GP appointment can be quicker and more convenient than planning an in person visit. Both of these options are creative ways to offer health support to your employees.

9. Company cars

UK professionals may be offered a company car, or an allowance towards a car, particularly if their position includes required travel. Some companies have an in-house provider which will provide the employee with a vehicle and manage all maintenance and servicing, while other businesses prefer to pay a certain amount to the employee and have them buy and maintain their own car as they see fit.

10. Season Ticket Loan

Commuting to work can be costly, but having a train season ticket means a lower daily charge. To make it easier to buy a season ticket upfront, many companies offer a loan which employees can use to buy their annual train pass, and pay back month by month from their salary. This lightens the burden of cost on the employee and ultimately means paying less for commuting costs.

11. Tax-free Childcare and Childcare Vouchers

The costs of childcare in the UK are significant. Some employers look to address this by providing childcare facilities, or by offering low cost, subsidised or tax free childcare options. Different childcare schemes exist which can work in slightly different ways. In some cases you’ll need to buy vouchers which are subsidised by the employer, and use these with registered childcare providers or nurseries. There are eligibility rules in place which dictate what individuals are able to access, based on the employee’s salary and the age of the child.

---

Save Time and Money On Overseas Payments With Wise Business

Wise Business can help you save big time on international payments.

Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. The Wise Business account is designed with international business in mind, and makes it easy to send, hold, and manage business funds in currencies.

Signing up to Wise Business allows access to BatchTransfer which you can use to pay up to 1000 invoices in one go. This is perfect for small businesses that are managing a global team, saving a ton of time and hassle when making payments.

Some key features of Wise Business include:

• Mid-market rate: Get the mid-market exchange rate with no hidden fees on international transfers

• Global Account: Send money to countries and hold multiple currencies, all in one place. You can also get major currency account details for a one-off fee to receive overseas payments like a local

• Access to BatchTransfer: Pay up to 1000 invoices in one click. Save time, money, and stress when you make 1000 payments in one click with BatchTransfer payments. Access to BatchTransfer is free with a Wise Business account

• Auto-conversions: Don't like the current currency exchange rate? Set your desired rate, and Wise sends the transfer the moment the rate is met

• Free invoicing tool: Generate and send professional invoices

• No minimum balance requirements or monthly fees: US-based businesses can open an account for free. Learn more about fees here

Use Wise Business >>

---

12. Gymnasiums

Keeping fit and healthy is good for both the employee and the employer. Employers may offer an on site gym or other fitness facilities, or may work with local gyms to offer free or low cost access for employees. You may also choose to reimburse an individual’s gym costs, or pay a monthly amount to cover the cost of signing up to a gym near their home.

If you're unable to provide gymnasium access to your employees, there are other options to encourage your team to stay fit. You may consider setting up a cycle to work scheme for example, which allows employees to buy a bike with a company loan or subsidy, and then use this as a means of getting into the office. This cuts commuting costs and can also be a good way to keep fit.

13. Workplace Canteens

In many workplaces, there is a workplace canteen available for employees to get meals and snacks during their breaks. Workplace canteens may offer free food, or might have low costs for meals to encourage employees to use them. Having employees eat together can help bonding and relationship forming, as well as making the workplace a more enjoyable environment.

Aside from workplace canteens, another common approach is to offer meal vouchers or a rechargeable card which employees can use for their meals. This is a good way to help employees offset the costs of living, particularly when they’re eating one or more meals in the office every day.

Taxes on Employee Benefits

The UK has a range of tax breaks which can apply on employee benefits, and which are designed to encourage employers to offer certain benefits like tax exempt charitable giving, or to buy childcare vouchers to help manage the costs of daily life. Some other tax breaks are available on buying bikes and electric vehicles to commute to work for example, which can mean that offering a broad range of benefits to your employees costs less than you expect. It’s worth getting some professional advice on compensation and benefits in the UK before you start to employ people there, to make sure you’re taking advantage of all the options available to you.

The UK is an attractive place to base your business, with a talented workforce and a stable economy. This guide gives you enough to start thinking about employing people in the UK - and there are many local agencies and providers on hand in the UK to support you on your journey. While you’re looking for the best partners for your new venture in the UK, be sure to also check out BatchTransfer. Signing up to Wise Business allows access to BatchTransfer which you can use to pay multiple invoices in one go.

Country Articles	Learn More About Employee Benefits
Australia	Employee Benefits in Australia: A Complete Guide
Singapore	Employee Benefits in Singapore: A Complete Guide
UK	Employee Benefits in UK: A Complete Guide
Brazil	Employee Benefits in Brazil: A Complete Guide
South Africa	Employee Benefits in South Africa: A Complete Guide
Spain	Employee Benefits in Spain: A Complete Guide

---

Sources:

1. UK government - employment status
2. ACAS
3. UK government - National Insurance
4. UK government - holiday
5. UK government - maternity leave and pay
6. UK government - paternity leave and pay
7. UK government - shared parental leave and pay
8. UK government - statutory sick pay
9. UK government - workplace pensions