A competitive salary may get someone in the door, but it’s the benefits that make them stay. For today’s workforce, a strong employee benefits scheme is no longer a nice-to-have — it’s essential. From supporting employee wellbeing to offering financial flexibility, benefits shape the day-to-day experience of work and help define your company culture.

In this guide, we’ll walk through the key components of modern employee benefits schemes, explain why they matter, and share practical tips for building a package that works for your people and your business.

What is an employee benefits scheme?

An employee benefits scheme is a structured package of non-salary perks offered by employers to support employees' health, wellbeing, lifestyle and financial security. These can include everything from pension contributions and private medical insurance to gym memberships, meal allowances, and flexible working options.

Some benefits, like workplace pensions and statutory sick pay, are mandatory. Others, like fertility support or cycle-to-work schemes, are discretionary but increasingly expected. Together, they help attract and retain talent, boost engagement, and enhance your overall employee value proposition.

What is the importance of employee benefits in the workplace?

Employee benefits are no longer just add-ons — they’re strategic tools for recruitment, retention, and productivity. A well-designed scheme helps employees feel valued and supported, while also reducing stress, improving work-life balance, and boosting overall job satisfaction.

In a recent survey by People Management Insight, only 27% of HR professionals felt confident their benefits package was competitive. Meanwhile, nearly half of employees said their current offering wasn’t strong enough to attract top talent. Clearly, there’s a gap between what companies offer and what employees need. Closing that gap is where strategic benefits design comes in.

What are the types of employee benefits?

Benefits fall into two broad categories: mandatory and voluntary.

Mandatory benefits

These are required by law and form the foundation of your benefits scheme. In the UK, this includes National Insurance contributions, auto-enrolment pensions, and statutory leave entitlements. In the US, this includes Social Security, Medicare, unemployment insurance, and job-protected leave under the Family and Medical Leave Act (FMLA).

Voluntary benefits

These are additional perks that employers can offer to enhance the employee experience. They include:

• Health and wellness: Private medical insurance, mental health support, and health cash plans.
  
  
• Financial benefits: Pension contributions above the legal minimum, employee discounts, and salary sacrifice schemes.
  
  
• Lifestyle perks: Cycle-to-work schemes, gym memberships, meal allowances, and travel reimbursement.
  
  
• Flexibility: Flexible work arrangements, remote and hybrid work policies, and annual leave purchase.
  
  
• Personal development: Training budgets, education reimbursement, and learning stipends.
  
  

How do employee benefits impact satisfaction and retention?

Benefits are a direct expression of how much an organisation values its people. When employees feel supported by their benefits package, they’re more likely to stay, perform better, and advocate for your company.

More than just improving morale, the right benefits reduce absenteeism, increase productivity, and even save the business money. For example, tax-efficient schemes like workplace nursery benefits or cycle-to-work reduce National Insurance contributions, creating room in the budget for further investment.

What are the legal and regulatory aspects of employee benefits?

Compliance is non-negotiable. In the UK, employers must provide workplace pensions and statutory leave, and ensure taxable benefits are correctly reported. Globally, compliance will vary depending on your workforce location, so it’s essential to work with partners who understand regional regulations.

So, how should you design an effective employee benefits scheme?

A well-designed scheme balances employee needs with business goals. Here’s where to start:

Understand your employees

Use surveys, focus groups and platform usage data to understand what your people actually want. Don’t guess. A benefit only delivers ROI if people know about it, understand it, and value it.

Budget intelligently

Maximise your spend by reallocating budget from underperforming benefits to higher-impact ones. Salary sacrifice schemes, like EV leasing or annual leave purchase, can create budget-neutral ways to introduce new perks.

Use the right tools

Platforms like Ben allow you to centralise all your benefits, automate admin, track engagement, and scale your offering globally. Make sure your technology partner isn’t just a platform, but a strategic enabler.

What are common challenges in implementing a benefits scheme?

• Cost control: Without the right data, benefits spending can spiral.
  
  
• Low engagement: Benefits that no one uses are wasted budget. Comms and visibility are key.
  
  
• Compliance complexity: Especially for international teams, staying on top of tax and legal frameworks can be challenging.

How do employee discount schemes work?

Employee discount schemes give employees access to exclusive deals on everyday expenses — from shopping to travel to tech. When well-communicated, they can save employees over £1,500 a year and boost perceived value without increasing costs.

What types of employee benefits are tax-efficient?

Benefits like workplace nursery schemes, cycle-to-work, and pension contributions via salary sacrifice can significantly reduce your tax liabilities and stretch your benefits budget further. These are smart wins for both employer and employee.

Do you need an employee benefits scheme?

If you're hiring, growing, or trying to build a culture where people thrive, the answer is yes. A thoughtful benefits scheme helps you stand out, support your team, and achieve better business outcomes.

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