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What employee benefits are required by law?

Kyle Chubb | Wednesday 22nd June, 2022

In today's competitive work environment, employee benefits are a great way to keep your best staff happy and engaged.

Of course, not all benefits are optional. Certain benefits are mandated for all UK businesses, regardless of their size.

In this article, we'll comprehensively detail what employee benefits are required by law to guarantee your business complies with UK law.

Are there employee benefits required by law?

Employee benefits are often given as incentives by employers alongside their remuneration - however, there are a few legally mandated employee benefits. These are:

  • Holiday pay
  • Statutory sick pay
  • Auto enrolment pension
  • Maternity, paternity, and adoption paid leave

Let's take a close look at the exact standards you'll need to meet.

Holiday pay

Depending on how many hours and days an employee works, they’ll need to be given a certain amount of holiday pay.

The amount of holiday pay is determined by the number of hours worked. To figure this out accurately, check out this holiday entitlement calculator

For example, somebody working five days a week should have 28 days of paid leave each year (5.6 weeks). However, you have the choice of whether you include public/bank holidays or not.

Statutory sick pay

As an employer, you are also legally required to provide the minimum amount of Statutory Sick Pay (SSP) to employees, which is £99.35 per week for 28 weeks.

In most cases, employers choose to increase these minimum benefits voluntarily. Some might offer full pay for a number of weeks but this isn't mandated by UK law.

legally required employee benefits include holiday pay, statutory sick pay, maternity/paternity leave and an auto enrolment pension

Auto enrolment pension

In the UK, it's a legal requirement for companies to provide a pension scheme.

You'll need to enrol every eligible employee into your pension scheme. An eligible employee is someone who:

  • Earns over £10,000 annually 
  • Aged between 22 and the State pension age
  • Typically works in the UK (including those that travel abroad for work)

Remember, employees will have to opt-out manually if they don't wish to take part.

As the employer, you'll need to add a minimum of 8% of an employee's pensionable earnings into their pension each month. Although you can pay in more, this normally breaks down as:

  • 3% from you
  • 5% from your employee's pre-tax salary

For more on managing your workplace pension scheme, check out our complete guide to auto enrolment for employers.

Maternity, paternity, and adoption paid leave

Paid maternity, paternity, and adoption leave are more employee benefits required by law. Fathers, mothers, partners, and adoptive parents are all entitled to this in the following ways: 

  • Maternity - Includes compulsory leave, statutory maternity leave (SML), and shared parental leave, offering mothers 39 weeks of statutory maternity pay (SMP) at 90% of their earnings 
  • Paternity - Allows fathers to have a minimum of 2 weeks of 90% statutory paternity pay (SSP) from the baby's birth date
  • Adoption - Entitles employees to statutory adoption pay (SAP) for 39 weeks at 90% of their earnings. Note that the mother and father cannot get SAP together; one must have paternity leave

Optional employee benefits

Of course, on top of the legally required employee benefits, employers can also offer extra benefits to attract and retain their best performers. Here are a few of the best optional employee benefits employee's in the UK are looking for. 

  • Private healthcare
  • Life insurance 
  • Flexible working
  • Holiday allowance  
  • Improved pension contributions

Having optional employee benefits is critical for all businesses in the UK, as it's one of the three main reasons why millennials change jobs.

extra benefits like a better pension scheme are a fantastic way to boost employee engagement and retention

Conclusion

After reading the above, you should understand the mandated employee benefits, as well as a few extra benefits you might like to offer on top.

For most employers, their workplace pension is their most expensive employee benefit, yet many wouldn't consider it a benefit. That's because the majority of workplace pension providers make things difficult for their savers.

Penfold's is the workplace pension built for an unbeatable employee experience.

Looking to retain and engage your brightest and best for no extra cost?

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