Which Employee Benefits are Mandatory in the UK?

Fixed vs Flexible Employee Benefits
There are several mandatory employee benefits in UK employment law that businesses must make available to their workers, but understanding what they are, how they work and how different levels of employment affect them can be challenging—particularly for smaller organisations without dedicated HR departments. However, as an employer, you are legally responsible for offering certain benefits and ensuring employees are free to take advantage of them.

What are mandatory benefits?

Mandatory benefits are those that employers are legally required to provide to their employees. In the UK, these benefits are designed to protect employees’ rights, ensure their well-being and provide financial stability during key life events.

These entitlements include workplace pension schemes, maternity and paternity pay, statutory annual leave, and statutory sick pay. Employers who fail to provide these benefits may face serious legal consequences.

Let’s take a closer look at each of these mandatory employee benefits

Workplace Pension Scheme

A workplace pension scheme is a savings plan designed to help employees build a retirement fund.

In the UK, the introduction of automatic enrolment in 2012 revolutionised how pensions work, ensuring that millions of workers are saving for their future.

 

How does it work?

Employers are legally required to enrol eligible employees into a workplace pension scheme. The eligibility criteria include:

– Being aged between 22 and the State Pension age (currently 66 in the UK)
– Earning at least £10,000 per year from a single job
– Working in the UK

Both the employer and the employee contribute to the pension pot. As of 2024, the minimum contribution rates are:

– Employer contribution: 3% of the employee’s qualifying earnings
– Employee contribution: 5% of their qualifying earnings (this can include tax relief)

Qualifying earnings refer to annual earnings between £6,240 and £50,270. This threshold is an employee’s pre-tax earnings and includes their wages or salary, commissions and bonuses, overtime pay, Statutory Sick Pay (SSP) and Statutory maternity, paternity and adoption pay.

Employers must comply with these requirements or risk penalties from The Pensions Regulator.

 

Opting out

Employees can choose to opt out of the scheme, but employers are obligated to re-enrol them every three years if they remain eligible.

Maternity and Paternity pay

The UK’s maternity and paternity leave policies aim to support workers while they take time off following the birth of a child, offering financial stability and job security for new parents.


Statutory Maternity Pay

Pregnant employees are entitled to up to 52 weeks of maternity leave, which is divided into:

 Ordinary Maternity Leave: The first 26 weeks
 Additional Maternity Leave: The remaining 26 weeks

Employees are not required to take the full 52 weeks but must take at least two weeks of leave (or four weeks if they work in a factory) after the baby is born.

Statutory Maternity Pay (SMP) is provided for up to 39 weeks. The current rates are:

 First six weeks: 90% of the employee’s average weekly earnings (before tax)
 Remaining 33 weeks: £172.48 per week or 90% of their average weekly earnings (whichever is lower)

To qualify, employees must:

– Have worked for their employer for at least 26 weeks by the 15th week before the baby is due
– Earn at least £123 per week before tax


Statutory Paternity Pay

Fathers or partners are entitled to up to two weeks of paternity leave.

Statutory Paternity Pay (SPP) is paid at the same rate as SMP for the latter 33 weeks—£172.48 per week or 90% of their average weekly earnings, whichever is lower.

Eligible employees must:

– Have worked for their employer for at least 26 weeks by the 15th week before the baby is due
– Be responsible for the child’s upbringing
[H3] Shared Parental Leave
Employed mothers can choose to transfer some of her maternity leave to her partner, allowing them to take up to 50 weeks of SPP in the child’s first year.

Shared Parental Leave allows new parents to take off more time together to help raise their child, allows the mother to return to work sooner for financial reasons, or if the mother wants to take leave in chunks rather than all at once (which can’t be done during regular maternity leave).

Statutory Annual Leave

Annual Leave allows employees to take time off work throughout the year. In the UK, full-time workers are entitled to 28 days of paid annual leave per year, which includes bank holidays such as Christmas Day and New Years Day.

There’s nothing in law that states how much notice an employee should give when submitting a holiday request, but Acas recommends booking holiday ‘as far in advance as possible’, and at least giving twice the number of days they wish to take. For example, if an employee wishes to take 5 days of annual leave, they should submit the holiday request at least 10 days before the first day of leave.

Can employers refuse or cancel Statutory Annual Leave?

Employers are entitled to refuse or cancel holiday, but they must inform the employee by at least the same amount of time they’ve requested off. Note that you need to have a good business reason to refuse or cancel a holiday request.

Company policies around taking Statutory Annual Leave should be published and made available as part of Employee Handbooks to ensure workers understand when and how to request annual leave.

Employers can dictate when holidays are taken, such as during specific shutdown periods, but they cannot deny employees their statutory entitlement. Accruing leave while on sick leave or maternity leave is also permitted by law.

Part-time workers

For part-time employees, holiday entitlement is calculated on a pro-rata basis. For example, if someone works three days a week, they would be entitled to 16.8 days of annual leave (3 days × 5.6 weeks).

Statutory Sick Pay

Statutory Sick Pay (SSP) provides financial support to employees unable to work due to illness and ensures workers are not left without income.
How does it work?

Employees are entitled to SSP if they:

– Are off work for at least four consecutive days (including non-working days)
– Earn at least £123 per week before tax
– Notify their employer about their sickness within the required timeframe

The current SSP rate is £109.40 per week, paid for up to 28 weeks. Employers can request a ‘fit note’ from a doctor if the absence extends beyond seven days.

If an employer offers a company sick pay scheme, it must at least match the SSP terms and cannot provide less.

Legal consequences for employers

Failing to offer or refusing workers their statutory employment benefits can have severe legal repercussions. These consequences include:

Financial Penalties: For example, employers who do not meet pension auto-enrolment obligations may face fines or enforcement action from The Pensions Regulator.

Employment Tribunals: Employees can file complaints if they are denied their rights to statutory benefits, potentially leading to compensation claims or legal costs for the employer.

Reputational Damage: Non-compliance can harm an employer’s reputation, making it harder to attract and retain talent.

Criminal Charges: In extreme cases, such as deliberate breaches of health and safety laws, employers could face criminal prosecution.

Employers must also ensure they are familiar with updated employment legislation to remain compliant. Regular audits of HR and payroll systems can help ensure all statutory benefits are provided correctly.

Understanding and adhering to the mandatory employee benefits in the UK is essential for fostering a fair and compliant workplace. 

From pensions to parental leave, these benefits are designed to protect employees and support them during key moments in their lives.

Employers who uphold these standards not only comply with the law but also demonstrate a commitment to employee well-being, fostering trust and loyalty within their workforce. However, simply offering statutory benefits to employees won’t separate your business from any other employer in the industry, potentially impacting your ability to hire and retain the best talent in the sector.

Here at Zhoosh, we enable businesses to supercharge their offering with benefits that engage and reward employees and promote a positive workplace culture. Learn more about how our end-to-end employee benefit solution works, or book a demo to speak directly with a member of our team.

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