Employee benefits and reward strategies have become a core part of workforce planning for UK employers. Pay still matters, but so do wellbeing support, flexible perks, meaningful recognition and employee-centred benefits packages that help people feel valued and stay with the business.
This guide explains how employers can structure employee benefit schemes, rewards and wellbeing initiatives in a practical and sustainable way, including options for small businesses and approaches that support long-term employee retention.
What counts as an employee benefit and why it matters
In simple terms, employee benefits are non-salary advantages provided to employees as part of the overall employment package. These can include financial benefits, health and wellbeing support, discounts, lifestyle perks and structured schemes that improve engagement and retention.
For employers, a strong benefits offering can help differentiate the business in a competitive hiring market. For employees, it can shape how they experience work, particularly when benefits are easy to access and feel relevant to everyday life.
Many employers formalise their offering through an employee benefit scheme, which provides structure and consistency across the workforce. Where benefits are provided through a more formal framework, employers may also refer to an employee benefits scheme as the umbrella arrangement governing eligibility, administration and participation.
Small business employee benefits: getting the basics right
Benefits are not only for large employers. In many sectors, competitive small business employee benefits can be a key driver of attraction and retention, especially where smaller firms cannot compete purely on salary.
The practical approach for small businesses is to focus on benefits that are valued, manageable to administer and aligned to workforce needs. Even a modest benefits package can improve recruitment outcomes and reduce turnover when it is well communicated and consistently applied.
Perks, incentives and rewards: motivating people day to day
Beyond formal schemes, many employers use day-to-day incentives to motivate staff. Workplace perks can range from discounts to lifestyle benefits offered through platforms such as perks at work, which can be attractive to employees because they provide tangible value without changing base pay.
Employers may also use employee incentives to encourage performance, attendance, productivity or engagement. Where incentives are structured and transparent, they can support fairness and avoid perceptions of favouritism.
More broadly, employee rewards programmes are often used to reinforce performance and behaviours aligned with organisational goals. These can include financial awards, additional leave, vouchers, or tailored recognition based on team performance and contribution.
Employee wellbeing programmes and health screening
Workplace wellbeing has moved from “nice to have” to a key strategic issue for many employers. Supporting employee wellbeing can improve performance, reduce sickness absence and strengthen retention, particularly in high-pressure roles and people-facing sectors.
Some employers adopt a formal employee wellbing programme to structure wellbeing support in a consistent way. Where wellbeing is treated as part of the overall employment proposition, it is more likely to be trusted and used by employees.
Depending on the sector, employers may also consider employee health screening or workplace health checks as part of the wider wellbeing strategy. These initiatives can be especially valuable when integrated with occupational health support and clear confidentiality safeguards.
Employee share schemes and long-term incentives
For some employers, long-term incentives create a stronger alignment between employee contribution and business success. An employee share scheme can be used to support retention, reward performance and build a longer-term sense of commitment, particularly for senior hires or key technical talent.
Share schemes can vary significantly in structure and tax treatment, so employers should take advice on the most appropriate approach for their business objectives and workforce profile.
Using benefits to improve employee retention
Benefits are most effective when they support wider workforce strategy rather than being bolted on as an afterthought. Employers looking to improve retention should ensure benefits are:
- relevant to the workforce, not generic
- clearly explained and easy to access
- supported by line managers and HR processes
- reviewed regularly to stay competitive
When benefits are well structured and aligned to employee needs, they can reinforce loyalty and reduce churn. In practice, strong benefits often work best when combined with broader initiatives focused on progression, recognition and employee experience. For employers seeking practical steps to reduce turnover, improving employee retention is typically a combination of reward strategy, wellbeing support and day-to-day management quality.
Bringing it all together
Employee benefits, rewards and wellbeing initiatives can play a significant role in how organisations attract, motivate and retain staff in the UK. The most effective approaches are those that combine structured schemes with practical, everyday perks and recognition, supported by clear communication and consistent application.
By building a benefits strategy that is realistic for the business and meaningful for employees, employers can strengthen engagement and improve retention outcomes over time.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services - a Marketing & Content Agency for the Professional Services Sector.
