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Employee Benefits in the UK

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Employee Benefits in the UK


Employee benefits come into play when an employer compensates an employee above normal wages. Employee benefits are a vital part of any workplace and should be reviewed yearly. You want to make sure that you are being fully compensated for your work and that you’re receiving all the benefits your company offers.


Two of the most important aspects of employment are finance and security. This article focuses on nine employee benefits in the UK that may not be present in other countries or jurisdictions. Some of these benefits are mandatory and others are optional for employers in the UK.


Mandatory Employee Benefits in the UK

  • Paid Holiday
  • Sick Pay
  • Maternity Pay
  • Paternity Pay
  • Pension Plans 

Optional Employee Benefits in the UK

  • Tax-Free Salaries 
  • Childcare Allowances
  • Flexible Working Hours 
  • Company Cars and Allowances

Mandatory Employee Benefits in the UK


Paid Holiday


Paid holiday is also known as paid annual leave and it is an employee benefit that UK companies offer. If you are an employee, an agency worker, an apprentice, a casual worker, or a zero-hours worker, you are entitled to paid holiday.  Paid holiday provides an opportunity for workers to take time off during certain periods of the year without losing their pay. In many countries, it also provides a chance to rest from work and spend time with family or to travel.


All employees who work 5 days a week in the UK are entitled to 5.6 weeks (28 days) of paid holiday a year from the start date of their employment. An employee who works full-time is entitled to 28 days of paid holiday per year, but it is not uncommon for employers to offer more paid holiday than the statutory minimum. 


Some employers give their new employees these 28 days of paid holiday from the first day of employment, but other employers use an accrual system. In the accrual system, employees are given their paid holidays in 12 increments, so the number of paid holiday days increases at the start of every month.


Employees can choose to take the entirety of their annual leave at once or spread it across more than one year. Employees are not expected to use their annual leave in consecutive weeks and there are no longer any limitations on when an employee must begin to use their holiday entitlement.


Annual leave benefits are usually distributed by an employer in increments over the course of many months, perhaps spread out in groups of five or ten. Some employers give employees six weeks' paid annual leave while others only allow three or four weeks during a given year. Each company has different policies on how much paid time off you can take in a year.


Paid vacations are typically calculated according to the employee's salary and the amount of time they have been working for the company. The more experience you have or seniority you enjoy, the more you will be compensated. For example, a newly appointed receptionist may only receive up to eight weeks' paid annual leave while an executive could receive up to twelve weeks. The money is usually taken from your paycheck, and if you are receiving full-time pay, then your income level will not decrease while on vacation.


Sick Pay


We are often invited by our employer to take some paid time off work when we fall ill. This is a common benefit called sick leave and it’s included in your employment contract.


Employees are entitled to 28 days of unpaid sick leave per year if they work for an employer that employs more than 18 employees.


Legislation regarding sick leave is more complex than paid annual leave. Employees have a statutory right to 28 days of unpaid sick leave per year. This can be shared by two or more employees and it can be carried over from one year to the next provided they are earning at least a weekly amount of £112 in the same year. However, like annual leave, it does not have to be used in consecutive weeks.


Additionally, as an employee in the UK, you could also be entitled to additional paid sick leave from your employer. This comes into effect if you are absent from work due to illness for more than 6 weeks in a single 12-month period. This can be a timescale dependent on when the sickness started, or an ongoing issue between you and your employer.


In the UK, employers must pay employees sick pay if they’re absent from work due to an illness whose legitimacy is backed by a fit note issued by the employee’s GP or, under certain circumstances, another medical professional. The fit note is meant to indicate to the employer that the patient is not fit to work. 


The main point of contention is typically whether you’re truly ill or not. If your employer claims that the situation aligns with this definition, then they have to pay you according to the statutory regulations. Employers should not insist that you take time off work if there is no justification for it. Additionally, employers can ask employees for details of any illness that they are suffering from, but they should not ask for medical records.


It’s difficult to prove that some people are being unfairly dismissed for being off sick. It’s possible to argue that if an employee is repeatedly absent on long-term sickness, they may have a problem with their job. If this is the case, then employers cannot act in a way that makes their job unbearable. One should keep in mind that if someone is suffering from stress at work because of the way in which their employer conducts business, then this could affect their ability to do their job effectively.


Maternity Pay


All eligible employees should receive 39 weeks of maternity pay and 52 weeks of maternity leave. In order to receive maternity pay, the employee must meet an earning requirement, give a correct notice to the employer within a certain timeframe and provide proof of pregnancy.  Read our article on Statutory Maternity Pay (SMP) and Leave for detailed information on maternity pay in the UK.


Paternity Pay


Employees who meet all the requirements receive two weeks of paid paternity leave in the UK. Employees seeking paternity leave must also provide sufficient notice and fill out the correct form to qualify for the pay. Read our article on Paternity Leave and Parental Leave in the UK for more info on paternity pay.


Pension Plans 


A pension plan is an economic insurance policy that allows the employee to earn a pension upon retirement. It is a mandatory benefit in the UK, but you must be an eligible worker to receive it. You must be an employee who is 22 or older and you must earn at least £10,000 per year. Currently, there are three types of pensions available to employees. These include final salary (defined benefit pension), money purchase (defined contribution pension), and the hybrid pension.


Optional Employee Benefits in the UK


Tax-Free Salaries 


New employees in the UK may have as much as £14,000 placed into their salary account during their first year of employment within just 20 weeks from the start date. This accounts for an additional 10 percent of the basic salary in the first year of employment. The employer must inform the employee beforehand in regards to this surplus of funds.


Childcare Allowances 


Childcare is costly and many parents are working parents. The UK government has added a tax-free childcare allowance to those employees that have children under the age of five. This is an additional amount aside from the existing allowance that goes towards the cost of child-related services. This money can be used to pay tuition fees for young children in local schools, purchase educational toys and even pay for school clothing.


Flexible Working Hours 


The UK has a flexible working hours policy which can be a great benefit for employees looking to balance their work and family schedules. Usually, employers are required to allow their employees to have flexible time schedules outside of normal working hours. This benefit is not guaranteed by law but your employer may offer it as a loyalty reward to regular employees who have been part of the company for many years.


Company Cars and Allowances


In order to simply transport themselves to and from work, employees may not only receive a company car but also up to £3,165 for this purpose. There are other special allowances allocated by employers for commuting purposes such as public rail travel, travelling tax-free on public transport and even living allowances.


Please note: This article offers general information and should not be taken as legal or financial advice for your particular situation. Take care to receive professional advice and guidance on your specific case from your union, your personal lawyer or accountant, a solicitor on Welink Legal, or an accountant on Welink Accountants before taking any action.

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